, MNE3701 Assignment 2 (COMPLETE ANSWERS) Semester 1
2025 – DUE 8 May;100% CORRECT AND TRUSTED
SOLUTIONS {In text references included}
QUESTION 1
Demonstrate how you would go about constructing financial statements
of your small business with reference to practical examples. (10)
To construct financial statements for a small business, one must follow a
systematic accounting process grounded in the accounting cycle,
beginning with the identification of financial transactions and
culminating in the preparation of financial statements. Below is a
comprehensive explanation of how financial statements—namely the
Statement of Profit or Loss and Other Comprehensive Income, the
Statement of Financial Position, and the Statement of Cash Flows—can
be constructed, supported with practical examples.
1. Recording Business Transactions (Source Documents and
Journals)
The process begins with collecting source documents such as invoices,
receipts, and bank statements. These documents serve as the foundation
for entering data into the journals (subsidiary books), such as the cash
receipts journal, cash payments journal, sales journal, and purchases
journal (Weygandt, Kimmel & Kieso, 2018).
Example:
If a small bakery called “Sweet Crumbs” sells cakes for R10,000 in a
month and receives the payment in cash, the transaction would be
recorded in the cash receipts journal.
2025 – DUE 8 May;100% CORRECT AND TRUSTED
SOLUTIONS {In text references included}
QUESTION 1
Demonstrate how you would go about constructing financial statements
of your small business with reference to practical examples. (10)
To construct financial statements for a small business, one must follow a
systematic accounting process grounded in the accounting cycle,
beginning with the identification of financial transactions and
culminating in the preparation of financial statements. Below is a
comprehensive explanation of how financial statements—namely the
Statement of Profit or Loss and Other Comprehensive Income, the
Statement of Financial Position, and the Statement of Cash Flows—can
be constructed, supported with practical examples.
1. Recording Business Transactions (Source Documents and
Journals)
The process begins with collecting source documents such as invoices,
receipts, and bank statements. These documents serve as the foundation
for entering data into the journals (subsidiary books), such as the cash
receipts journal, cash payments journal, sales journal, and purchases
journal (Weygandt, Kimmel & Kieso, 2018).
Example:
If a small bakery called “Sweet Crumbs” sells cakes for R10,000 in a
month and receives the payment in cash, the transaction would be
recorded in the cash receipts journal.
