Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 4 [25 Marks ] 4.1Rose Limited presented the Statement of Comprehensive Income below for its most recent financial year. Required: 4.2 The Statement of

QUESTION 4 [25 Marks] 4.1Rose Limited presented the Statement of Comprehensive Income below for its most recent financial year. Required:

image text in transcribed

image text in transcribed

4.2 The Statement of Comprehensive Income for 2022 and 2021 given below were extracted from the accounting records of Pinky limited: image text in transcribedRequired:

Refer to the Statement of Comprehensive Income of Pinky Limited for 2022 and 2021 and comment on the performance of the company including the operating profit earned. Take into account that the profit margin (percentage Profit after tax to sales) for the industry was 4.51% for 2018 and 2.60% for 2022. (8 marks)

4.3 Name THREE (3) transaction that improves cash flow but does not increase profit. (3 marks

\begin{tabular}{|l|c|} \hline & R \\ \hline Sales & 743000 \\ \hline Cost of sales & 402000 \\ \hline Gross profit & 341000 \\ \hline Operating expenses & 145000 \\ \hline Income from operations & 196000 \\ \hline Other income & 1100 \\ \hline Other expenses & 26000 \\ \hline Profit before tax & 171100 \\ \hline Income tax & 60000 \\ \hline Net profit & 111100 \\ \hline \hline \end{tabular} Answer the following questions: 4.1.1 Explain the difference between "sales" and "other income". (4 marks) Rose Limited would like to earn a large gross profit by selling its products at a much higher price than its cost. Describe two factors that may prevent it from doing so. (2 marks) Explain how cost of sales, operating expenses and other expenses are different from one another. (3 marks) Explain why cost of sales, operating expenses, other expenses and income tax are listed separately in the Statement of Comprehensive Income rather than being lumped together as one item? (3 marks) Explain why the Statement of Comprehensive Income presented above is inadequate to provide a proper interpretation of the financial result of Rose Limited for the financial year. (2 marks) Statement of Comprehensive Income for the vear ended 31 December \begin{tabular}{|l|c|} \hline & R \\ \hline Sales & 743000 \\ \hline Cost of sales & 402000 \\ \hline Gross profit & 341000 \\ \hline Operating expenses & 145000 \\ \hline Income from operations & 196000 \\ \hline Other income & 1100 \\ \hline Other expenses & 26000 \\ \hline Profit before tax & 171100 \\ \hline Income tax & 60000 \\ \hline Net profit & 111100 \\ \hline \hline \end{tabular} Answer the following questions: 4.1.1 Explain the difference between "sales" and "other income". (4 marks) Rose Limited would like to earn a large gross profit by selling its products at a much higher price than its cost. Describe two factors that may prevent it from doing so. (2 marks) Explain how cost of sales, operating expenses and other expenses are different from one another. (3 marks) Explain why cost of sales, operating expenses, other expenses and income tax are listed separately in the Statement of Comprehensive Income rather than being lumped together as one item? (3 marks) Explain why the Statement of Comprehensive Income presented above is inadequate to provide a proper interpretation of the financial result of Rose Limited for the financial year. (2 marks) Statement of Comprehensive Income for the vear ended 31 December

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Complete Personal Finance Handbook

Authors: Teri B Clark

1st Edition

160138047X, 978-1601380470

More Books

Students also viewed these Finance questions

Question

21. Compute the expected value of the random variable in Problem 1.

Answered: 1 week ago