Question

4. Discuss the three major business activities in organization in detail.

5. What information is reported in income statement and in balance sheet. Discuss and give examples for both.

Answer 1

4:- Answer:-There are three major activities of normal business opration cycle that continue the business properly. These are Financing activity, investment activity and operating activity.

(a):-​​​​​​ Financing activity : There is First requirement of Fund (money) to start the business. Financing activities includes all the transactions regarding raising fund . Raised fund could be get by Owners equity capital , issue of debenture and bonds, taking loans from banks and other financial institutions , issuing of preference shares etc . All these are initial activities to starts the business.

(b):- Investing activity:- when we get the fund in form of money ,we have to required the invest these amount in Fixed assets that helps to produce the product and help in generate Income through operating activities for long term period. Investing activities include transaction regarding puchase and sale of equipment, machines, land , offer furniture etc .

(c):- Operating activity:- This activities include all transactions that are related to generation operating income. These transactions are purchase and sales of inventory, operating expenses, payment to supplier, received payment from receivable etc .

5:- Answer:- (a) Income statement:-Income statement is part of financial statements that prepared for determining Net Income for fiscal year .It contains all transactions related to generating income , expenditure, losses and gain .These are income transaction like Cash sales , credit sales, sales return , interest income , other income from any source and expenses transaction like Cost of good sold , operating expeses amd losses like Depreciation, interest payment , rent payment, tax payment, discount givens to account receivable,loss due to any incident etc . Income statement show the profit or loss for fiscal /period ended.All these information are reported in income Statement

(b):-​​​​​​ Balance sheet:- Balance sheet is part of financial statements that shows the financial position of business organization on particular day (normally at ending date pf fiscal year). It contains All asset , liabilities, owner capital at their current value .Asset could be in form of inventory, account received,note receivable,cash , prepaid expenses, equipment, machinery, building ,land , patient,goodwill etc . liabilities could be in form of account payable, interest payable bond payable,note payable, loans , borrowing etc .Owner capital can be common stock , raitained earning , Additional pain in capital etc .All these information are reported in Balance sheet.