Referring to Example 7.4, examine Mei Loon’s profit and loss account and balance sheet. What does the information tell you? How well has her consultancy done during the years 31 March 2009? Is she likely to go bankrupt shortly?

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Example 7.4 A service entity account Mei Loon: Educational training consultant Profit and loss account for the year to 31 March 2009 INCOME (1) Article fees 5000 Author's licensing and collecting payments 2000 Consultation fees 90000 Lecture fees 30000 Public lending right payment 1000 Royalties 20000 148000 EXPENDITURE (2) Computing 5000 Depreciation equipment (3) 2000 : furniture (3) 500 Heat and light 1000 Insurances 600 Photocopying 200 Postage 100 Rates 1500 Secretarial 30000 Stationery (4) 700 Subscriptions 400 Travelling 6000 48000 Net profit for the year (5) 100000