MNE3701
ASSIGNMENT 2 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 8 MAY 2025
, MNE3701 Assignment 2 Semester 1 2025
QUESTION 1: Constructing Financial Statements for a Small Business
To prepare financial statements for my small business, I would follow three key steps:
creating the Income Statement, Balance Sheet, and Cash Flow Statement. These
documents give a clear picture of how the business is performing financially.
1. Income Statement
The income statement shows whether my business made a profit or loss during a
certain period. First, I would list all the income earned from sales. Then I would subtract
the cost of goods sold (for example, ingredients or materials). After this, I’d deduct
operating expenses like rent, salaries, and utilities. The final amount after subtracting all
costs and expenses is the net profit or loss.
Example: If I own a small bakery, my revenue would include all the money earned from
selling bread and cakes. The cost of ingredients like flour, sugar, and eggs would be my
cost of goods sold. If I pay R5,000 for rent and R10,000 in wages, I would deduct these
from the gross profit to calculate the final profit.
2. Balance Sheet
The balance sheet gives a snapshot of my business’s financial position on a specific
date. It shows assets (what I own), liabilities (what I owe), and owner’s equity (the
difference between assets and liabilities).
Example: If I own baking equipment worth R20,000 and have R10,000 in the bank, my
total assets would be R30,000. If I owe R15,000 for a loan, then my equity would be
R15,000 (assets minus liabilities). This helps me track the value of the business.
3. Cash Flow Statement
ASSIGNMENT 2 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 8 MAY 2025
, MNE3701 Assignment 2 Semester 1 2025
QUESTION 1: Constructing Financial Statements for a Small Business
To prepare financial statements for my small business, I would follow three key steps:
creating the Income Statement, Balance Sheet, and Cash Flow Statement. These
documents give a clear picture of how the business is performing financially.
1. Income Statement
The income statement shows whether my business made a profit or loss during a
certain period. First, I would list all the income earned from sales. Then I would subtract
the cost of goods sold (for example, ingredients or materials). After this, I’d deduct
operating expenses like rent, salaries, and utilities. The final amount after subtracting all
costs and expenses is the net profit or loss.
Example: If I own a small bakery, my revenue would include all the money earned from
selling bread and cakes. The cost of ingredients like flour, sugar, and eggs would be my
cost of goods sold. If I pay R5,000 for rent and R10,000 in wages, I would deduct these
from the gross profit to calculate the final profit.
2. Balance Sheet
The balance sheet gives a snapshot of my business’s financial position on a specific
date. It shows assets (what I own), liabilities (what I owe), and owner’s equity (the
difference between assets and liabilities).
Example: If I own baking equipment worth R20,000 and have R10,000 in the bank, my
total assets would be R30,000. If I owe R15,000 for a loan, then my equity would be
R15,000 (assets minus liabilities). This helps me track the value of the business.
3. Cash Flow Statement
