KIM FULLER - REPORT

1. What information will Fuller need to manage the business? Classify this information in two categories: accounting information and non-accounting information.

• Kim Fuller will require data about all the incomes, expenditures, liabilities and assets of the business, apart from all the non-accounting information.

• The accounting information includes the purchase of a used truck, three trailers, two grinding machines, supplies and parts, personal computer, accounting system software and a warehouse. It also includes his capital, the capital provided by his siblings and the mortgage given by the bank. He would also have to provide information about the tax returns.

• The non-accounting information includes the signing of contracts with two bottling companies, seeking the advice of Marion Zimmer and hiring a truck driver and two grinding machine workers.

2. See what you can do to draw up a beginning-of-business list of the assets and liabilities of Fuller's company making any assumptions you consider useful. How should Fuller go about putting a value on the company's assets? Using your values, what is the company's opening owners' equity?

Balance Sheet

Liabilities Amount Assets Amount

Fuller's Capital 75000 Cash 49800

Fuller's sibling's Capital 90000 Building 162000

Bank Loan 112000 Vehicles 42000

    Machinery 20000

    Supplies and parts 1000

    Computer 2000

   Accounting Computer Software 200

  277000   277000

• To calculate the total value of the assets, Fuller has to take the sum of all the individual assets available to his business, which amounts to $277,000.

• The company’s opening owner’s equity = Fuller’s capital + Fuller’s siblings’ capital = $165,000.

3. Now that Fuller has started to make sales, what information is needed to determine "profit and loss"? What should be the general construction of a profit and loss analysis for Fuller's business? How frequently should Fuller do such an analysis?

• To determine profit and loss, Fuller needs to consider all the expenses incurred and incomes earned by the business.

• The expenses would include all trade expenses and office expenses, which are debited. The incomes would include all operating and non-operating incomes, which are credited.

Dr. Cr.

Trading and Profit and Loss Account for the period ending

Particulars Amount Particulars AmountTo Opening stock   By sales  To Purchases   By closing stock  To gross profit c/d             To selling and distribution expenses   By Gross Profit b/d  

To administrative expenses   By interests received  To depreciation and maintenance   By discounts received  

To financial expenses  By commission received  

To abnormal losses      To net profit transferred to capital             

• Kim Fuller should ideally do such an analysis on a quarterly basis as the business is young and small.

4. What other kinds of changes in assets, liabilities, and owners' claims will need careful recording and reporting if Fuller is to keep in control of the business?

• Fuller must carefully record and report the changes in the value of his current and future assets.

• He should record the change in liabilities to assets if and when he pays back the bank loan and the capital provided by his siblings.

• As Fuller is working at the company, he needs to record any salary that he claims for himself.

• He must also consider his siblings’ claims against their investments.

Thank You.

Prepared by,

Group ASukanya T.Nivin VinoiTomin BabyJoseph PhilipDeepu Jacob