Nonie spent much of her childhood learning the art of cookie-making from her grandmother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. Now at the start of her second semester of first year in university, Nonie is investigating various possibilities for starting her own business as part of the requirements of the entrepreneurship program in which she is enrolled. A longtime friend insists that Nonie has to somehow include cookies in her business plan. After a series of brainstorming sessions, Nonie settles on the idea of operating a cookie-making school. She will start on a part-time basis and offer her services in peoples homes. Now that she has started thinking about it, the possibilities seem endless. During the semester break, she will concentrate on holiday cookies. She will offer individual lessons and group sessions (which will probably be more entertainment than education for the participants). Nonie also decides to include children in her target market. The first difficult decision is coming up with the perfect name for her business. In the end, she settles on Cookie Creations and then moves on to more important issues. After researching the different forms of business organization, Nonie decides to operate Cookie Creations as a sole proprietorship. She then starts the process of getting the business running.

A). Nonie also need to aware of the importance of financial statements. Help her to describe the four financial statements, how they are prepared, and what are their functions. (4 marks)