Question 1

1. You are an accountant employed to KPMG Limited. Paula Wilson, who operates Wilsons Stationery & Internet Caf is your client. On the 30th of June 2021, you visited her business and noted the following activities for the month:

1. Sales for the month amounted to $500,175.00.
2. $150,225.00 was used to purchased goods for resale
3. Ms. Wilson paid $1,515.00 to transport the goods to her store

(a) Electricity	-	$ 5,387.56
(b) Water	-	$ 2,399.65
(c) Rent	-	$45,000.00
(d) Advertising	-	$ 2,000.00
(e) Internet Services	-	$ 10,000.00
(f) Salaries	-	$70,000.00
(g) Delivery Services	-	$ 2,000.00
(h) Telephone Services	-	$ 4,199.78
Other Income earned for the month includes:
(a) Subletting of premises		-	$25,000.00
(b) Photocopying documents		-	$ 1,000.00
(c) Internet caf		-	$ 2,000.00
(d) Printing of documents		-	$ 4,765.00

Operational expenses for the month are:

5.

Using the information above please prepare an income and expenditure statement for the business at the end of June 2021. (10 marks)

2. Mrs. Wilson indicated that, as a new entrepreneur, she is still somewhat confused as it relates to assets and liabilities and asked that you explain the terms to her. As the Accountant, please provide suitable explanation to Mrs.

Wilson, giving her examples

1. Assets (fixed and current)
2. Liabilities (long-term and current) (10 marks)

Ms Wilson indicated that each month she is required to prepare a budget; however, she is unsure of what is a budget and asked for an explanation from you. Provide Ms. Wilson with a brief explanation of a budget.