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Question: I must confess I am rather confused as to how the profit for the year' in the draft financial statements has been calculated. Ihave been closely monitoring our cash position with our online banking system and as your statement of financial position shows, we ended the year with (8,500 in the bank. Could you please explain the basis of accounting and why the profit does not equal the bank balance at the end of the year as I would have expected. Furthermore, could you please explain what a trial balance is, how it is produced and whether or not it will ensure the financial statements are always correct as indicated by the office manager.

5,000 17,000 23,000 45,000 Statement of financial position Assets Non-current assets Office equipment Motor vehicles Furniture and fixtures Total non current assets Current assets Trade receivables Cash and cash equivalents Account receivable prepayment Total current assets Total assets Equity and liabilities Owners' equity Capital Drawings Total equity Non-current liabilities Bank loans 36,000 8,500 5,500 11,500 61,500 106500 75,000 2,000 77,000 50,000 3 50,000 50,000 Non-current liabilities Bank loans Total non-current liabilities Current liabilities Trade payables Deferred income accruals Total Current liabilities Total liabilities 25,500 3000 5500 34000 34050 531,000 Statement of profit or loss Sales income loss cost olsales Opening inventory Purchases Carriage inward Closing inventory 0 355,000 7,000 60,000 302,000 229,000 Gross profit Pro w ON 11/20/2001 re w Ver A 15. A DU . e Mapiecep 1s Spas Heading 1 M2 Sther 1 No. TH 10 St Change Ph 48,000 32,500 9,000 14,000 6,000 3,000 Less: Expenses Rent Carriage outwards Telephone Gas and electricity IT expenses Publishing and printing expense Insurance Wages and salaries Wages and salaries-sales commission Depreciation Motor expenses Discount allowable Finance cost 5,000 77,500 27,000 5,000 4,000 500 1,500 Total expenses Profit for the year (237,000- 233,000) 233,000 4000 Type beton ES 233 PM 12/2021 Me met pel M V A 11.15 1: ] . A Hep TU Non TN Sedlading 2 Title le Sum Cung Pano SA TULIS andes SH050 531,000 Statement of profit or loss Sales Income Less: cost of sales Opening inventory + Purchases + Carriage inward Closing inventory 0 355,000 7,000 60,000 Gross profit +Sundry income + Discount receivable 302,000 229,000 6,000 2,000 237,000 Type RAM T12/21

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