You are a senior accounting manager at Radovich Researchers, an accounting consulting firm and have been asked to provide accounting advice to Maan Company. The owners of Maan Company provide the following preliminary financial information which has been prepared by their junior accountant Lara Steele. The owners have informed you that they have $50,500 in their business bank account as at 30 June 2019. The owners are very concerned when they were informed by Lara that the profit for the years ending 2019 and 2019 are $10 650 and $17 210 respectively. The owners have questioned why $50,500 has not been added to their profit for the year ended 30 June 2019. Based on your accounting knowledge, explain to the owners providing them 5 reasons why the net profit has decreased for the year ending 30 June 2019 compared to 2018, even though the sales are higher in 2019 compared to 2018. (10 marks) 1

ACCOUNTING TEST 4 - Saved - lindsay Mailings Review View Help O Search E... ALI EEEE . 1 No Spac.. 1 Normal Heading 1 Heading 2 Subtitle Emphasis Title Subtle Em... Intense E Paragraph Styles Maan Company Income Statement for the year ended 30 June 2019 30 June 2019 30 June 2018 $ $ Sales 185 000 150 000 Less: cost of goods sold 105 000 80 000 Gross profit 80 000 70 000 Other income 7500 6 800 Total operating income 87 500 76 800 Marketing and selling expenses Selling expenses Advertising cost Total marketing and selling expenses 6 000 10 000 2 000 2 500 16 000 4500 Administration expenses Office salaries Rent General expenses Total administration expenses 35 000 22 000 2 200 59 200 33 500 19 500 1 600 54 600 Financial expenses Interest paid Bad debts Total financial expenses 450 1 200 1650 50 440 490 Total operating expenses Net Profit 76 850 10 650 59 590 17 210 B L