Joe Sephume, the owner of a small business, Joe's Car Shop, that sells and repairs cars, hasrecently received a copy of the financial statements for the current year. Joe is confused aboutsome of the items in the financial statements and has asked you to answer a few questionsthat he has. You have agreed to do this.Joe's questions are as follows:a) What does the term "asset" mean? My knowledge and skill are assets to my business.I would like these assets to be recognised on the financial statements but I do not seethese assets disclosed in the financial statements. Can you explain this omission to me?b) Why is the "bank" balance on the statement of financial position different from theprofit amount in the statement of comprehensive income?c) You are required to:Answer each of Joe's questions, using full explanations of any terms and concepts outlined inthe Conceptual Framework.

Answer:- Financial statements meaning:- Financial statements are documents that describe a…

Answered: Joe Sephume, the owner of a small…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are Melina’s CPA, she to whom Walter “Buck” Swords left $50,000 and a used car in his will. What do you advise Melina as to her tax return – i.e., that she should report (include in her gross income) – both the $50,000 and the value of the car? the cash but not the car? the car but not the cash? neither the cash nor the car? What and why?
Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Coleen has told her accountant to provide the bank with just the balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year. The accountant, Jim Long, only sent over the balance sheet to First Federal Bank Did Jim act ethically or unethically? Why?
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During the year, I used a business cheque to buy a new washing machine for my wife to use at home. Why is this not included on the Balance Sheet?
Fulfill the requirements in the attached image.
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Could you please help me solving this question? Please
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Word has gotten around that you know accounting and can explain it well. Jim, another of your friends has a unique business. During the summer he buys hats that cost $5.00 each and sells them at the beach for $12.00 each. Other than the cost of the hat, his only other expense last summer was $120 for parking. He sold 78 hats last summer. His accountant prepared a financial statement for him and he has several questions about the income statement. He asks: What does the cost of goods sold and gross profit mean? How much gross profit do I make on each hat? Why show both gross profit and net income? Using Jim's figures, calculate his cost of goods sold, gross profit and net income - SHOW YOUR CALCULATIONS If I have hats returned or a give a discount, how will that be shown on the income statement?
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