Question

Based on your financial statements for Business Solutions answer the following questions: 2. In discussing Business Solutions latest financial statements, you as the manager say that it is the "the net income results on the bottom line" that really count. What do you mean? Which financial statement are you referring to? Are the results reflected on your financial statement satisfactory? Explain your answer. Business Solutions Unadjusted Trial Balance Adjusted Trial Balance Post-Closing Trial Balance Credit Credit Credit Debit | 52 014 5 768 4445 1 980 3220 8500 Debit 50 614 5 768 640 1 485 805 8500 Debit 50 614 5 768 640 1 485 805 8500 22 000 22 000 22 000 1375 1375 1 800 1 800 December 31, 2018 Account Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent Office equipment Accumulated depreciation Office equipment Computer equipment Accumulated depreciation-Computer equipment Accounts payable Wages payable Unearned computer services revenue Common stock Retained earnings Dividends Computer services revenue Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Income Summary 1 600 68 000 420 1 600 68 000 1 800 420 1 600 68 000 16192 60001 7400 40259 40259 2830 425 1375 3250 495 2415 3 805 2678 759 250 1215 2678 759 250 1215 Totals 111659 111659 113879 113879 [ 89812 89812

Answer 1

In any business, profitability is measured by “the net income results” that is shown in income statement. Increase in net income means there are less expenses and resources are managed in an efficient manner. Net income reflects management, control and efficiency of an organisation. Higher net income means business is doing good and investors invest in firm with the expectation of more profit in future whereas decreasing net income shows that organisation is not able to manage its resources efficiently and investors as well shareholders start losing trust over it and withdraw their investments too. Therefore, it is the net income amount that talks a lot about the position of an organisation.

In the financial statement, expenses are increased as there are more expenses that are added. Whereas there is no change in income. Also, this is reducing the profit. Results are nearly satisfactory as there are no major changes, but there is a need to control the expenses.

Answer 2

In discussing a firm's latest financial statements, a manager says that it is the "results on the bottom line" that really count. What does the manager mean?