Current Attempt in Progress Ridley and Scott Mercantile operates two stores, one on Crane Avenue and the other on Blue Road. Results for the month of May. which is representative of all months, are as follows: Crane Avenue Store Blue Road Store Total Sales revenue S81,900 $122,000 $203,900 Variable expenses 31,400 85,000 116,400 Contribution margin 50,500 37,000 87,500 Direct fixed expenses 19,300 41,000 60,300 Common fixed expenses 4,300 5.200 9,500 Total fixed expenses 23,600 46,200 69,900 Operating income $26,900 $(9,200) $17,700 The following information pertains to Ridley and Scott's operations. Forty percent of each store's direct fixed expenses would continue if either store were closed. Ridley and Scott allocates common fixed expenses to each store on the basis of sales dollars. Management estimates that closing the Blue Road store would result in a 20% decrease in the Crane Avenue store's sales, while closing the Crane Avenue store would have no effect on the Blue Road store's sales. (a1) Your Answer Correct Answer * Your answer is incorrect Calculate the operating income if the Blue Road store is closed. Enter negative amount using either a negative sign preceding the number eg. 45 or parentheses e (45) Operating income 4820
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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