MNE3701 Assignment 2 (DETAILED ANSWERS) Semester 1 2025 - DISTINCTION GUARANTEED

MNE3701
Assignment 2 Semester 1 2025
Unique #:

Due Date: 8 May 2025

Detailed solutions, explanations, workings
and references.

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, QUESTION 1

The three primary financial statements that need to be prepared are the Income
Statement, Balance Sheet, and Cash Flow Statement.



1. INCOME STATEMENT (PROFIT AND LOSS STATEMENT)

The Income Statement shows the business's revenues and expenses over a
specific period, resulting in a net profit or loss.

Practical Example:

Suppose I own a small bakery called Sweet Treats Bakery.

 Revenue: R150,000 (sales of cakes and pastries)
 Expenses:
o Rent: R15,000
o Salaries: R50,000
o Ingredients and supplies: R30,000
o Utilities: R5,000
o Marketing: R10,000
Income Statement Example:

Income Statement for Sweet Treats Bakery Amount (R)

Revenue 150,000

Less: Expenses

- Rent (15,000)

- Salaries (50,000)

- Ingredients and supplies (30,000)

- Utilities (5,000)

- Marketing (10,000)

Net Profit 40,000



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, 2. BALANCE SHEET

The Balance Sheet shows the business's assets, liabilities, and owner’s equity at
a specific point in time.

Practical Example:

Using Sweet Treats Bakery:

 Assets:
o Cash: R30,000
o Equipment (baking ovens, counters): R70,000
o Inventory (flour, sugar, ingredients): R10,000
 Liabilities:
o Loan from the bank: R40,000
 Owner’s Equity:
o Owner’s investment: R70,000
Balance Sheet Example:

Balance Sheet for Sweet Treats Bakery Amount (R)

Assets

Cash 30,000

Equipment 70,000

Inventory 10,000

Total Assets 110,000

Liabilities and Owner’s Equity

Bank Loan (40,000)

Owner’s Equity (70,000)

Total Liabilities and Equity 110,000




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