Financial Statements: February Explained

In the previous segment, you learnt how to calculate the break-even point for the pizza food truck business. Let’s resume our exercise in this segment. 

In the upcoming video, our faculty member will brief the operations carried out in the month of February.

Now that you are aware of the operations carried out in February, use the excel file 'The Pizza Food Truck Exercise' and try to fill in the three financial statements based on the transactions given.

Now, let’s hear from Marie-Lys as she debriefs how the operations carried out in February will translate into the financial statements.

In this video, you learnt the following: 

• Sales revenue is recorded on the basis of the ‘Realisation of sales’ principle. This principle states that the sales should be recognised as the sales revenue when the goods/service becomes the property of the company’s customer irrespective of the receipt of cash for them.

• ‘Sales on credit’ translate into ‘Accounts receivable’ on the asset side of the balance sheet.

• The cumulative undistributed profits or losses of the company for the previous period is recorded as the ‘Retained earnings’ for the current period. 

In the next segment, you will learn how to analyse the performance of the pizza food truck for February.