Financial Accounting, GST, Income Statement

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Assignment instructions:
There are three parts to this assignment. Please answer each part separately in your own words. You should use the text book and other sources to help you as well as the articles provided. These should be appropriately referenced.

Part A

The Nguyen family is just about to open a new restaurant. They invested $200,000 of their own money and also got a $200, 000 bank loan. They bought an old house for $280,000 and spent another $50,000 renovating it. They have also bought second hand tables and chairs and other furniture for $20,000. Kitchen equipment cost $8,000 and a computer for the business cost $2000.

The bank requires a report on their activities before they open to the public. The Nguyens reviewed their bank statement which showed a cash balance of $40,000. They are pleased with the profit they have made and prepare the following income statement for the bank:

Nguyen Restaurant

Income statement

For the six months ended 30 June 2012


Investment by owner $200,000

Bank loan 200,000

Total revenues 400,000
Cost of the house 280,000

House renovation expenses 50,000

Furniture expense 20,000

Kitchen equipment expenses 8,000

Computer expenses 2,000

Total expenses 360,000

Profit 40,000

If you were the bank that received this report what would be your comments?

Include answers to the following questions in your comments:

  • Would you congratulate them on their profit? Explain why or why not.
  • Is cash the same as profit? Explain
  • Is the income statement prepared properly? If not, please explain and prepare appropriate financial statements.

Part B

You should use the In The Black(ITB) article on GST, Chapter 5 of your text book and at least one other resource to help you answer the following questions:

  • What is GST and how does it work?
  • Why was it introduced into Australia?
  • Is this similar to other countries? – give at least 2 other examples of countries with GST.
  • Summarise the arguments for changing GST from the ITB article. Then give your opinion as to what you think should happen and why.

Part C
You should use the In The Black (ITB) article on Intangibles, Chapter 10 of your text book and at least one other resource to help you answer the following questions:

  • What are intangibles ?
  • Give 3 examples of intangible assets.
  • How are they recorded for accounting purposes?
  • Which Accounting standard applies to Intangibles?
  • What does the ITB article say about recording and valuing software as intangibles? Summarise the arguments, then give your opinion.
SKU: financial-accounting-gst-income-statement Category: