The chart shows the expected level of resources including both physical and financial resources that would be used in the company. These items would be put under the asset class of the chart of accounts. The sources specific to these resources including equity and liability and the exact sources of expenditure and revenues in the company are accounted for in this chart of accounts. A mention of the detailed product lines, divisions and business units is also included in the chart of accounts to represent the forecasted financial position of the company and the control of the business owner on the financial management of the business venture (Pandey, 2006).
The fixed costs and the variable cost of the company as depicted under the chart of accounts are given below. Also, the capital cost and the total expenses of the business in the start-up phase are included in the chart of accounts below. Since, the Bakery house would be opened up as a sole proprietorship business venture, therefore, abiding by the Generally Accepted Accounting principles (GAAP) would be a mandate for the company.
Any recent modifications made in the accounting systems under the GAAP would be implemented in the books and records of the bakery house so that the company can be managed in a legally compliant and viable manner. The pro forma income statement and balance sheet for the company are prepared by assuming the initial investments, formulating the fixed costs, variable costs and total costs for the business and also estimating the revenues and profit retention in the business. The pro forma balance sheet for the Passion Bakery House is given below. Suitable internal controls have to be maintained in the Passion Bakery House to ensure that the regulations and procedures imposed by the external business and regulatory environment of the food and beverages segment of the US are adequately complied with.
The bakery house has to abide by the specific food safety rules and other rules of conducting business in the food and beverages segment of the country. This is really important because, the bakery house would operate in the food and beverages sector which is one of the most strictly and stringently monitored business sectors.
The Passion Bakery House would focus on the formulation and implementation of internal controls in five basic arenas which are the control
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