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10 marksPreparation of Corporate Financial Statements

CAPE Accounting Unit 1 · 2006 · Paper 2 · Question 3(a)(i)

Trial balance items are extracted for CARICOM Company for the year ended December 31, 2005. Average common shares outstanding was 150,000. Directors declared final preference dividend. Gain on condemnation of land is extraordinary. Corporation tax rate is 35%.

Prepare a multi-step income statement for CARICOM Company for the year ended December 31, 2005 in a form suitable for publication according to IAS requirements.

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Other parts of this question

  1. 3(a)(ii)Prepare a statement showing the appropriation of the profits for the year ended December 31, 2005.[5 marks]
  2. 3(a)(iii)Prepare the shareholders' equity section of CARICOM Company's balance sheet as at December 31, 2005.[10 marks]
  3. 3(b)Briefly describe the purpose of the income statement and the balance sheet.[4 marks]
  4. 3(c)Briefly discuss THREE limitations of financial statements as a source of information for assessing the financial condition and performance of a company.[6 marks]

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