I. From the following financial information on the business of George and Well Enterprises, you should construct the accounting equation that reflects the transaction(s). At the end of transaction, draw up a balance sheet, income statement, retained earnings statement and cash flow statement as at 31 October 2020.

1. On 1 October, 2020, they invest $ 50,000 cash in the business in exchange for $ 100,000 of common stock.
2. Purchased new office equipment for $ 5,000 and paid cash.
3. Paid for office furniture $ 450.
4. Received $ 980 for investment advice.
5. Paid mobile phone bill $ 88.
6. Received $ 640 from a customer for cash services.
7. Paid energy connections $ 202.
8. George purchased new Tiffany ring with his personal funds $ 5,200.
9. Purchased a computer on credit form JB Tech $ 2,300.
10. Borrowed $ 18,000 from National Bank.
11. Invoiced a client for investment advice $ 250.
12. Paid wages to a casual member of staff $ 210.

Notes: When you construct the accounting equation, you can use the accounting worksheet.

( 35 marks)

II. Evening Books Limited is considering the acquisition of a bookbinding company to expand its publishing interests. Its chief executive has highlighted two possible targets, Crawl Binding Limited and TriPot Publishing Services Limited. The following information has been obtained for their most recent financial years:

	Crawl Binding		TriPot Publishing
Income Statement Sales (-)Cost of Sales Gross Profit (-) Distribution expenses Administration expenses Profit before tax (-) Taxation Profit after tax	16,000 10,000	68,000 (30,000) 38,000 (26,000) 12,000 (3,000) 9,000	10,000 6,500	61,500 (38,000) 23,500 (16,500) 7,000 (1,750) 5,250
Balance Sheet Non-current Assets Current Assets Inventory Account receivables Cash Current Liabilities Creditors Bank overdraft Net current Assets Total Assets less Current Liabilities	18,000 28,000 - 46,000 26,000 5,000 31,000	10,600 15,000 25,600	8,000 10,000 2,000 20,000 6,000 - 6,000	8,300 14,000 22,300
Capital and Reserves Common Stock Retained earnings Long-term Loan Total Equity and Long Term Liabilities		10,000 5,600 15,600 10,000 25,600		12,000 10,300 22,300 - 22,300

Required:

As the companys financial advisor, you have been asked for your assessment of the two companies, from the particular view points of:

1. Liquidity;
2. Profitability;
3. Capital structure;
4. Efficiency.

(35 marks)

III. Suppose you have a degree in Financial Accounting and you are applying for a vacant accountant position in International Company. CEO of the International Company asks you to write a report because he wants to evaluate the skills of your accounting knowledge.

The points to be included in your report are as follows:

• Importance of accounting
• Activities of accounting
• Differences between management accounting and financial accounting
• Fraud and internal control
• Ethics in financial reporting

Required:

Write a report of about 1,500 words based on the knowledge you have studied.