K34
Case Overview of Rosario’s Dress Shop
When Rosario Daeng started her business she set aside the receipts in a shoebox which paved way for these to be used as a reference when she consulted Marie. It is also significant to take good note of the date when certain things are purchased, as well as the time period that it covers. First Marie helped Rosario classify her payments. They arranged all the inflows and outflows together in their specific categories, namely Operating Activities, Investing Activities, and Financing Activities. The preparation of the Statement of Cash Flows determines if a business is gaining or merely just earning liabilities. Cash flows from operating activities incorporate the income created from the business and costs acquired amid the entire operation. While cash flows from investing activities deals with all the investments that would profit years of operation. And the financing activities include all sources of funds to be able to secure all the investments. After preparing the Statement of Cash Flows, Marie suggested for Rosario to make another statement in order to know if her business performed favorably. The statement that Marie is referring to is the Income Statement where other equally important data such as the revenue, expenses, and the net income will be presented. Following the Income Statement, Rosario wanted to know if her initial investment of P50, 000 increased by the end of the year. Marie advised her to prepare a statement of owner’s equity wherein Rosario will see the composition of equity and how it evolved over the year. And the last statement that they did is the Statement of Financial Position in order to find out how much assets and liabilities were gained during the first year of Rosario’s Dress Shop.
Discussion Questions
1. Why would Rosario or anyone else go into business?
Anyone should go into business because of the fact that s/he will have the chance to manage their own business and