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Authors:
Anupam Mehta (Institute of Management Technology, Dubai)
Published in:
2011
Revision date:
01-Nov-2011
Length:
8 pages
Data source:
Generalised experience

Abstract

Dubai Pet World Kennel and Grooming Centre, founded in 2006, is a profit making organization and intends to capture a big share of the growing pet market. The company is determined to enhance the profitability level to 50,000AED for 2011 and establish itself a prominent player in the field of luxury services, providing the full range of the products starting from luxury grooming, boarding, and training and cemetery services. Last year the company had earned a profit of only 20,000AED. The Company undertakes a wide range of events and transactions in the month of Jan 2011. These events include the issue of capital stock, purchase of assets etc. The case requires the students to prepare an accounting equation for all the transactions undertaken by the company and prepare financial statements: income statement, statement of retained earnings, balance sheet and cash flow statements for the month ending 31 Jan 2011.The students are required to evaluate whether the company’s financial position has become stronger as compared to previous balance sheet. The case poses tricky questions which test the students' understanding of the basic accounting concepts and principles. The case aims to achieve the following pedagogical objectives; (1) to demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners’ Equity; (2) to prepare financial statements - income statement, balance sheet, statement of retained earnings from transactional analysis; and (3) explain how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation.

Topics

Accounting equation; Transactional analysis; Preparing the financial statements; Balance sheet; Statement of retained earnings; Cash flow statement; Owner's equity; Corrected balance sheet; Dubai; Pet World; Accounting principles; Concepts; Entity concept; Assets; Liabilities
Location:
Size:
Total assets for 2011, AED521,500
Other setting(s):
January 2011

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