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Case Study of Lone Pine Cafe (B) : Presented & Made By: Harjyot Kaur Nalini Koul Mamta Solanki Shweta Pandita Ajeet Sharma

The document presents a case study of the Lone Pine Cafe owned by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers. It details their initial investment, expenses incurred in starting the business, and distribution of responsibilities. However, the cafe was unsuccessful in its first winter. In March 2010, Mr. Antoine and Mrs. Landers disappeared with the cash register and cash. An accounting statement prepared on March 30, 2010 showed the cafe had incurred a loss of $11,482 for the year. The income statement and conclusion indicate that continuing to operate the cafe solely would still result in losses.

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Parmvir Singh
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266 views15 pages

Case Study of Lone Pine Cafe (B) : Presented & Made By: Harjyot Kaur Nalini Koul Mamta Solanki Shweta Pandita Ajeet Sharma

The document presents a case study of the Lone Pine Cafe owned by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers. It details their initial investment, expenses incurred in starting the business, and distribution of responsibilities. However, the cafe was unsuccessful in its first winter. In March 2010, Mr. Antoine and Mrs. Landers disappeared with the cash register and cash. An accounting statement prepared on March 30, 2010 showed the cafe had incurred a loss of $11,482 for the year. The income statement and conclusion indicate that continuing to operate the cafe solely would still result in losses.

Uploaded by

Parmvir Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Case Study of Lone Pine Cafe (B)

Presented & Made By:


Harjyot Kaur
Nalini Koul
Mamta Solanki
Shweta Pandita
Ajeet Sharma
Introduction

■ Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers contribute $16000
each on 1 November 2009.
■ It was agreed upon the deal sharing equal profit or loss.
■ They signed a one year lease on the monthly rent of $1500.
■ They took a loan of $21000 from local bank.
■ They bought equipment worth $53200 and incurred expenses $2800 for
food and beverages.
■ On 1 November 2009 they paid annual license fees of $1428.
■ They bought a new cash register of $1400.
■ Then the work was distributed and Mr. Antoine worked as head cook.
Continue..

■ Mrs. Antoine was responsible for food, beverages and supplies, operated the
cash register and was responsible for checking account.
■ Also Mrs. Landers and Mrs. Antoine waited for customers.
■ Restaurant operated through winter of 2009-2010, was not very successful.
■ On morning of march 31, 2010, Mrs. Antoine discovers her husband and Mrs.
Landers are missing.
■ Mrs. Landers took her every belonging where as Mr. Antoine had left behind
most of his clothing.
■ They took cash register and all the cash it had.
■ Mrs. Antoine continued operating the restaurant, she asked Donald Simpson
to make accounting statement on 30 March 2010.
Accounting Concepts

1) Money Measurement concept:


Money Measurement Concept in accounting, also known as Measurability Concept, means that
only transactions and events that are capable of being measured in monetary terms are recognized
in the financial statements.
2) Business Entity Concept:
This Concept assumes that for accounting purposes, the business enterprise and it's owners are
two separate independent entities.
Thus the business and the  personal transactions of its owner are  separate.
There are a number of reasons for the business entity concept, including: 
■ Each business entity is taxed separately 
■ It is needed to calculate the financial performance and financial position of an entity
■ It is needed when an organization is liquidated, to determine the amounts of payouts to the
various owners.
3) Accounting Period Concept.
■ An accounting period is the span of time covered by a set of
financial statements. This period defines the time range over which
business transactions are accumulated into financial statements, and
is needed by investors so that they can compare the results of
successive time periods.
4) Going Concern Concept. 
■ The going concern concept is a fundamental principle of
accounting. It assumes that during and beyond the next fiscal period
a company will complete its current plans, use its existing assets
and continue to meet its financial obligations.
5) Dual Aspect Concept:
■ The dual aspect concept states that every business transaction
requires recordation in two different accounts. This concept is
the basis of double entry accounting, which is required by all
accounting frameworks in order to produce reliable financial
statements.
6) Consistency concept: 
The consistency principle states that, once you adopt an
accounting principle or method, continue to follow it consistently in
future accounting periods. Only change an accounting principle or
method if the new version in some way improves reported financial
results. 
7) Materiality concept: 
The materiality principle states that an accounting standard can be
ignored if the net impact of doing so has such a small impact on the
financial statements that a reader of the financial statements would not
be misled.
8) COST CONCEPT
Cost is "a foregoing, measured in monetary terms, incurred or
potentially to be incurred to achieve a specific objective" (American
Accounting Association).
Cost refers the monetary measure of the amount of resources given
up or used for some specified purpose. It is the value the goods or
services expended to obtain current or future benefits.
 
What's is the purpose and Importance of
income statement?
 
Purpose:
■ The income statement is one the major financial statements used to analyze a
company. The other important documents are the balance sheet, the cash flow
statement and the statement of shareholder's equity. The income statement is
used to give a summary of the company's revenues and expenses over a specific
period of time. This information is then used to determine the total profit or loss
to the company over the stated accounting period. 
Importance: 
■ The financial statements of a company provide a representation of the company's
current performance to investors. This information is used to evaluate the overall
value of a company and its share price. The income statement is one of the most
important financial statements because of its indication of profits, its timely
reporting, and its classification of revenues and expenses.
What Is the Purpose  and
Importance of a Balance Sheet?
■ A balance sheet is a snapshot of a company's assets and
liabilities at a specific point in time.
■  It lists all the company's assets in cash balances, accounts
receivable, inventory and fixed assets, including real estate,
plant buildings and equipment. The liabilities side of the balance
sheet itemizes all the company's debts – short- and long-term –
and the amount of equity capital.
■ Managers use a balance sheet to analyze the liquidity and
financial leverage of the company.
Importance of balance sheet:

■ Balance sheet analysis can reveal a lot of important information about a company’s
performance. Importance of balance sheet is listed below:
■ It is an important tool used by the investors, creditors and other stakeholders to
understand the financial health of an entity.
■ The growth of an organization can be known by comparing the balance sheet of
different years.
■ It is an essential document required to be submitted to the bank to obtain a business
loan.
■ Stakeholders can understand the business performance and liquidity position of the
entity.
■ Ability to undertake expansion projects and meet unforeseen expenses can be
determined by analyzing a company’s balance sheet
■ If the company is funding its operations with profit or debt can be known
Income Statement of Lone Pine Cafe for the year ended 30th March 2010

Particulars Amount($)
Amount($)
Revenue

Sales 43480

Less:
Expenses

Food and beverages 10016

Wages 5480

Interest 540

Telephone and electricity 3270

Miscellaneous 255

Rent 7500

License 595

Depreciation 2445

Loss of cash register 1711

Payment to partners 23150

Total of expenses 54962

Loss during the year (11482)


Working notes

■  License fees:
Amount for 1 year= 1428
Amount for 5 month= 595(1428*5/12)
■ Loss of Cash Register
    Cash register =      1400
+Register containments= 311
                                        1711
CONCLUSION

■ It tells Mrs Antoine about the income position of the firm.


■ And that the firm is running into losses if we consider the
payments to the partners.
■ But even if she was to carry on as a sole proprietory she will
have to appoint managers and pay salary to the say.
■ So it does not seem a good idea to carry on with the cafe.
THANK YOU!

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