Part 1 The Business Letter

You work for the accounting firm that provides accounting services to Mr David Smith. Mr David Smith has asked the firm that you are working for, "Accounting Brains", to explain some accounting concepts to him.

You are required to write letter to Mr D Smith to answer the three questions that he has (see below). Your letter to her must be a formal business letter, properly addressed, and professionally written in business style language. . Penalties may be applied if the word limit is exceeded.

REQUIRED: In the "Assignment part A - Student Submission File", write a letter to Mr D Smith to answer the three questions that he has. Your are only required to write ONE letter, in which you address ALL THREE of the questions below.

Question 1 Mr David Smith has heard about 'financial statements' and he knows that it includes an Income Statement, Statement of Changes in Equity and a Balance Sheet. Mr Smith is however not sure about the following:

a) what each of these financial statements refer to,

b) when these financial statements are prepared,

c) how the different financial statements link together. In your letter, you need to address these questions that Mr David Smith has about financial statements.

Question 2 Mr Smith knows that the "Conceptual Framework" provides guidance about how Accounting Transactions need to be recorded. By referring to the correct accounting element (Asset, Liability, Equity, Income and Expense), you need to explain to Mr Smith which accounting element "Sales Income" refers to. In your explanation, you need to refer to the definition of the correct accounting element and explain why, in your opinion, Sales Income is classified as that element (Asset, Liability, Equity, Income or Expense).

Question 3 Mr D Smith can see that the accounting firm that you work for has done the following adjusting entry at June, 30:

June 30 Doubtful Debts Expense $800

Allowance for Doubtful Debts $800

(Allowance for 3% of Accounts Receivable balance that may not be recoverable)

Part 2 Use of communication skills The following aspects of your written communication skills development will be awarded a total of BEING RELEVANT Does what is written contribute to answering the question(s)

Setting out to specifically answer the question(s) by using relevant information,

Staying 'on track' with answers,

Avoiding straying from the question and going off on irrelevant tangents.

WRITING FOR A PROFESSIONAL BUSINESS AUDIENCE (including good presentation)

The written work is clear and understandable,

Where applicable, the written work is based on the facts and available evidence,

Exaggeration and bold statements which are not supported by the facts and evidence are avoided.

Good presentation

The written work contains no spelling and grammatical errors. Obvious evidence of editing displayed.

Any headings and sub-headings display properly, and are used consistently throughout the document,

Page numbering is used. It is usual for page numbering to commence on page 2 of a business document as "2",

Font size and font style are used consistently throughout the document,