Task 1 The following trial balance was extracted from the books of Zen Ltd. for the year ended 31/12/2015: (All figures in 000) 1575 15 43 Purchases & Sales Returns Inventory (1/1/2014) Accounts receivable & payable Carriage inwards Rates & insurance Communication expenses Light & heat Audit fee Bad debt Directors remuneration Interest on bank loan Land & buildings at cost Vehicles at cost Vehicles - accumulated depreciation Bank & cash Wages 1 Ordinary shares 6% Long term bank loan Retained profit Totals 945 10 39 81 5 50 25 34 7 1 70 5 450 140 35 7 184 200 100 85 2053 2053 Notes at 31/12/2015: Inventory was valued at 45,000 Insurance prepaid- 2,000. Wages owing 5000 and audit fee accrued 1000. Vehicles are to be depreciated by 20% on reducing balance basis. The directors wish to provide 40,000 for taxation. The directors propose a dividend of 15p per share. . 3 You are required to prepare: 1. Outline the principles of double entry system and the steps in the accounting cycle 2. Highlight the role of financial statements and how they may be analysed/used. In addition, explain how the accrual, prepayment, revenue & expense recognition, depreciation, inventory costing and liability recognition provide guidance to accountants in preparing balance sheet and income statement. 3. Prepare the statement of comprehensive income for the year ended 31/12/2015:. Candidates to provide screenshots/printouts of their workings using excel 4. Prepare the statement of Financial position (Balance Sheet) as at 31/12/2015:. Candidates to provide screenshots/printouts of their workings using excel