Question

Key Insurance Agency was organized on October 1, 2020. Assume that the accounts are closed and financial statements prepared each month. The company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown below:

Answer 1

1. Income Method GNPFC = Compensation of employees + Rent + Interest + Undistributed Profits + Dividend + Net

Factor Income from Abroad + Consumption of fixed capital = 1850 + (400 +500 +900 + 200) + (-) 50+ 100 = 3900

CRORE Note: o GNPFC = NNPFC + Consumption of fixed capital o NNPFC = Compensation of employees + Rent +

Interest + Undistributed Profits + Dividend + Net Factor Income from Abroad o Compensation of employees is

income from work which includes wages and salaries in kind and cash, and contribution to social securities