Final answer:
To analyze and record the business activities of AH Consultancy Services, accounting principles are applied to each transaction, affecting assets, liabilities, and owner's equity which are recorded in the general journal. Financial statements, including income statement, statement of owner's equity, and balance sheet, are prepared using the trial balance and reflect the company's performance and financial position for the month.
Step-by-step explanation:
Analyzing and Recording Business Transactions
To analyze and record the business activities for AH Consultancy Services, we must follow the principles of accounting. Each transaction would affect the accounting equation (Assets = Liabilities + Owner's Equity), and would be recorded in the general journal. For example, if Alemu Haba invested capital into the business, it would be recorded as an increase in assets (cash) and an increase in owner's equity. Similarly, revenue earned from providing consultancy services would increase assets (cash or accounts receivable) and increase owner's equity (through retained earnings).
Preparing Financial Statements
To prepare the financial statements for AH Consultancy Services, we would start by creating a trial balance to ensure that the debits equal the credits. Following the trial balance, the income statement would be prepared to reflect the revenue and expenses, providing the net income or loss for the period. Subsequently, the statement of owner's equity would show the changes in the owner's equity. Finally, the balance sheet would summarize the company's financial position as of January 31, 2003, outlining the assets, liabilities, and owner's equity.