Accounting Assignment Example | Topics and Well Written Essays - 1250 words - 6

Accounting - Assignment Example b) If we were to compare the 2013 Income Statement with the 2013 Statement, we would find that Helen Harris Handbags had a decline in profitability of  £69127. Various reasons can be outlined for this decline in profits. Some reasons can be identified through an Income Statement others may be issues affecting the business such as increase in competition, recession in the markets etc. However, looking at the Income statement alone, we can see a sharp increase in Marketing Expenses of the year 2013, as well as a slight fall in Total Sales. Other expenses have increased as well, but marginally. As total sales have fallen, inventory has gone up. The fall total Sales might be matter of concern for the business, especially since Marketing Expenses have increased. a) The Balance Sheet of a business is used to show the â€Å"net worth† of a company at a given point of time. (e-conomic(UK), 2014). It is particularly useful in monitoring the health of the company that is what the business owes and what it is owed. The Assets and Liabilities are the two main sections in a Balance Sheet and are always equal. The Balance Sheet is divided into two parts as mentioned above, and into various sub parts which include Fixed Assets, Working Capital, Current Assets, Equity or Shareholders Stake (which includes any profit/loss and drawings) b) In the case of Helen Harris Handbags, Inventory has increased, that has been the result of fall in Sales (discussed earlier). However, a matter of concern is a huge increase in Bank Overdrafts from 2012, in 2013. This tells us that business has increased its debts considerably since last year. There is an increase in the Debtors as well. a) The purpose of the Cash Flow Statement is to evaluate the cash inflows and outflows of a business during a financial period. (e-conomic(UK), 2014). The main avenues of Cash Inflows and Outflows can be described in