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Business & Marketing
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Homework. Business Financials, answer three questions.

Essay Instructions:

Please answer these three question.


2. An entrepreneur with $52,500 plans to open a convenience store called Kevin’s Convenience Store on June 1, 2020, following a two-month start-up phase. Using the schedule of start-up costs provided below, create a pro forma pre-revenue balance sheet and a pro forma start-up phase expense statement, including reconciliations of cash and owner’s equity, for Kevin’s Convenience Store, LLC.Kevin’s Convenience Store, LLC Schedule of Start-up CostsFor the Two April May Months Ended 2020 2020 May 31, 2020Rent $ 4,000 $ 2,000 $ 6,000Utilities 400 400 800Insurance 600 300 950Cleaning and maintenance 200 200 400Food inventory - 10,000 10,000Non-food inventory - 7,500 7,500Checkout counters and equipment 8,500 - 8,500Racks and shelving 6,000 - 6,000Computers and software 5,000 - 5,000Security system 4,500 - 4,500Total $29,200 $20,400 $49,600
Notes: Rent is paid on the first day of the month to which it applies.
Utilities are paid in the month after the services are used.
Insurance is paid in the month previous to the month to which it applies. All other costs are paid in the same month as incurred.


5. When creating comparative balance sheets, there are a few special items to remember. List and describe those items.
6. What is breakeven revenue, and why should every entrepreneur calculate it for any new venture she’s considering starting?

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Business Financials
Q5
Comparative balance sheet is a summary of what a business owns at a specific period of time, it shows the financial status of a business. A balance sheet indicates the assets of an entity and the liabilities it owes as well as equity. Equity is the difference between the company’s’ assets and liabilities. Assets are categorized into two; current assets and non-current assets. Current assets include stock, cash at hand, money in the bank, prepaid expenses and inventory A distinction between current assets and non-current is that the current assets can be converted into cash within a short time. Fixed assets are also referred to as long term assets, they include motor vehicle, fixtures and fittings, land, furniture those whose life span exceeds one year from the day the balance sheet was created.
Liabilities are divided into short term and long term and are arranged in order of urgency. Short term liabilities are those payable within less than a year, they include accrued expenses, taxes payable. Long-term liabilities on the other hand refer to the debts whose repayment period exceeds one year such as long-term loans from banks.
Equity is the third aspect in a comparative balance sheet, it indicates the difference between total assets and liabilities. An individual who wishes to invest in a company will seek to know different business’ equity in order to decide on the best option.
Q6
Break even revenue is the amount of money an entity must generate to cover its costs. The breakeven revenue point has no monetary gain since the products are equivalent to their price. The calculation involves dividing the fixed costs by the profit.
Break even revenue=fixed costs/profit (gross margin in %)
Entrepreneurs need to calculate the break...
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