a) From an accounting perspective, explain the meaning of these terms for a software company:

Question

i) Goodwill

ii) Budget

iii) Overheads

iv) Owner’s equity.

b) A software development company will start operation next January. They will sell 20 annual licenses each month from March to June. The licenses in March and April will be sold at £500 each, the price will be increased to £600 in May. Prepare a cash flow statement from January to June with following monthly data:

• Rent to be paid: £400.

• Utilities: £200.

• Payroll: £500.

• Marketing: £300, with a 20% increase each month.

• Other expenses: £500.

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