Due to poor health, the owner of Swan Pty, Ltd, an importer, intends to sell their business. To facilitate

the sale, the owners have prepared the following statement of financial position for prospective

purchasers as of 31 October 2022. Your father is interested in purchasing the business and has taken

this statement of financial position to you for advice.

Notes to the accounts:

a. The entity also has a $15,000 bank overdraft.

b. The profit of $49,500 is the reported profit for the current reporting period.

c. The plant and equipment is at cost.

d. The inventory is measured at cost price

question :

1. Discuss at least five errors or divergences from acceptable accounting practices revealed by

this statement of financial position and explain your answer clearly! (20 points)

2. List three limitation of the statement of financial position and give your explanation! (5 points )

SWAN PTY LTD Statement of Financial Position As of 31 October 2022