Question A: Financial statements of business organisations (40 marks):

1. Compare and contrast the financial statements of sole traders and limited liability companies by: (i) explaining features and examples of account items (maximum 10) that are common to both sole traders and limited liability companies, (ii) explaining and illustrating differences in how profits are disbursed/distributed, and (iii) explaining how both types of organisations are financed. These should be presented under subheadings. (10 marks)

2. Referring to and using the trial balance in appendix A of this brief prepare an income statement and statement of financial position for the named business. (20 marks, 10 for each statement)

3. Discuss to what extent the financial statements prepared in 2 above will be useful to the business owners and any other stakeholder, for example: supplier, employee, government and management. (10 marks)

APPENDICES: Appendix A: Trial Balance of Godwin Trading Enterprise DR a CR 105,81644 23,1724 136,6004 19,2084 91,2444 1,8604 1,9324 Capital Salaries & Wages Sales Opening inventory Purchases Carriage in Purchases returns Carriage out Rent & Rates Motor expenses Telephone Electricity General expenses Buildings Motor Vehicles at cost Fixtures & Fittings Trade receivables Cash at Bank Trade payables Sales returns Drawingse Totale 1,2004 2,2924 2,6564 2,6244 9964 1,8844 50,0004 20,8004 12,1004 23,3764 2,892 20,386 1,2304 7,2004 264,734 264,734 Additional information: 1. Closing inventory 27,7004 2. Electricity charges amounting to 150 had been omitted from the books and remain unpaid. 3. Management has decided that an amount of 376 of trade receivables cannot be recovered and should be written off from the books completely