MNE3701
ASSIGNMENT 2 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 8 MAY 2025
, MNE3701 Assignment 2 Semester 1 2025
QUESTION 1: Demonstrate how you would go about constructing financial
statements for your small business with reference to practical examples.
To create financial statements for my small business, I would follow the basic steps of
preparing the three main types of financial statements: the Income Statement, the
Balance Sheet, and the Cash Flow Statement. Here's how I would approach each:
1. Income Statement: This shows how much profit or loss my business made over
a specific period. I would start by recording all of my revenue (sales of
goods/services), then subtract the direct costs (like raw materials or production
costs) to find the gross profit. Afterward, I'd list operating expenses (rent,
salaries, marketing) and subtract them to find the operating profit. Finally, I'd
include any other income or expenses, such as interest or tax, to determine the
net profit. For example, if I run a bakery, the income from sales of cakes and
bread would be my revenue, and the flour, sugar, and wages for bakers would be
the costs.
2. Balance Sheet: This statement provides a snapshot of the financial position of
my business at a particular time, showing what I own (assets), what I owe
(liabilities), and the owner's equity. To create it, I would list all the assets (like
equipment, inventory, and cash in the bank) and liabilities (such as loans or
unpaid bills). The difference between assets and liabilities is the equity, or the
value that belongs to the owner. For instance, if I purchased a delivery van, it
would be an asset, while any loan I took out to finance it would be a liability.
3. Cash Flow Statement: This shows how cash moves in and out of my business.
I'd categorize it into three parts: cash from operations (like payments from
customers), cash used for investing (like buying equipment), and cash from
financing (like loans or investments from owners). It helps me understand if I
ASSIGNMENT 2 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 8 MAY 2025
, MNE3701 Assignment 2 Semester 1 2025
QUESTION 1: Demonstrate how you would go about constructing financial
statements for your small business with reference to practical examples.
To create financial statements for my small business, I would follow the basic steps of
preparing the three main types of financial statements: the Income Statement, the
Balance Sheet, and the Cash Flow Statement. Here's how I would approach each:
1. Income Statement: This shows how much profit or loss my business made over
a specific period. I would start by recording all of my revenue (sales of
goods/services), then subtract the direct costs (like raw materials or production
costs) to find the gross profit. Afterward, I'd list operating expenses (rent,
salaries, marketing) and subtract them to find the operating profit. Finally, I'd
include any other income or expenses, such as interest or tax, to determine the
net profit. For example, if I run a bakery, the income from sales of cakes and
bread would be my revenue, and the flour, sugar, and wages for bakers would be
the costs.
2. Balance Sheet: This statement provides a snapshot of the financial position of
my business at a particular time, showing what I own (assets), what I owe
(liabilities), and the owner's equity. To create it, I would list all the assets (like
equipment, inventory, and cash in the bank) and liabilities (such as loans or
unpaid bills). The difference between assets and liabilities is the equity, or the
value that belongs to the owner. For instance, if I purchased a delivery van, it
would be an asset, while any loan I took out to finance it would be a liability.
3. Cash Flow Statement: This shows how cash moves in and out of my business.
I'd categorize it into three parts: cash from operations (like payments from
customers), cash used for investing (like buying equipment), and cash from
financing (like loans or investments from owners). It helps me understand if I
