Unit number 5: Accounting Principle Assignment Brief Student Name/ID Number Y/618/5038 Qualification Unit Number and Title Level Unit Credit Pearson BTEC Level 5 Higher National Diploma in Business Unit 5 – Accounting Principles 4 15 Academic Year June 2022/23 Unit Tutor Sanaul Mallick (Module leader), Ian Abbey, Bismark Tawiah Akoi, Anderson Emegbo, Juliana Moore, Diane Flemming. Assignment Title Financial reporting & Statements Issue Date Monday, 13th Feb 2023. Submission Dates Formative Activity: Sunday, 5th March 2023. 23:59 Formative submission: Sunday, 25th March 2023 23. 23:59 Summative submission: Sunday, 29th April 2023. 23:59 Submission Format for Assessment activity 1.: blog The submission format is in the form of a blog. The blog must be presented as an online blog in an engaging, practical and in a concise style. You are required to make use of headings, paragraphs, and subsections, images as appropriate. All work must be supported with research and referenced using the Harvard referencing system. You will need to provide a bibliography using the Harvard referencing system. Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly. The recommended word limit is 1500 (+- 10%) words for the report. Assignment Submission Format: blog How to write a blog – guideline: 1. Choose blog topic, for example, the Role of Accounting 2. Research your topic with keyword 3. Who will be your audience: small and family-run businesses 4. Outline research topic, refer to assignment activity 1 below. 5. Write engaging/interesting content 6. Choose a blog template 7. Select a blog domain name 8. Insert relevant images 9. Publish the blog post online. Unit Learning Outcomes for Assessment activity 1. LO1 Examine the context and purpose of accounting Transferable skills and competencies developed for Assessment activity 1. • Reasoning and analytical skills • Written communication • Intra-personal skills: plan priorities, self-management, independent learning • Critical thinking / analysis Vocational scenario for Assessment activity 1. Once a start-up and small business off the ground, one of the most important challenges it faces is to maintain the accounting system. A local accounting firm provides services ranging from personalised advice to small business owners to understand and follow financial rules and regulation, explain financial statements, business plan and prepare payroll and help them to file correct tax/VAT returns to Inland Revenue. Fairfield is a local Chartered Accountancy firm, specialising in start-up and small/family business. You are working with the firm as a trainee assistant accountant. As part of advertising and promotion of accounting and business services, Fairfield interested to reach out local businesses via online blog. Assignment activity 1 and guidance: blog As a trainee accounting assistant with Fairfield Accounting Firm, you have been instructed to write a blog covering following points: i) Examine the purpose and scope of accounting function in complex operating environments ii) a critical evaluation of the accounting function in informing decision making and meeting stakeholder and societal needs and expectations iii) Examine the main branches of accounting and job skillsets and competencies iv) Evaluate the accounting systems and the role of technology in modern-day accounting v) Assess issues of ethics, regulation and compliance and the extent to which they are constraints or threats to the organization. Submission Format for assignment/assessment activity 2.: Financial Statements & Report with spreadsheets This submission is in the form of spreadsheet with accompanying written report as per below instruction: Income statement, balance sheet, financial ratio, and cash budget: prepare it on spreadsheet and then copy and paste the spread sheet as picture on word file on which you will write the follow up report. All work must be supported with research and referenced using the Harvard referencing system. You will also need to provide a bibliography using the Harvard referencing system. Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly. The recommended word limit is 1,500 – 2000 words, although you will not be penalised for going under or exceeding the total word limit. Unit Learning Outcomes for Assessment activity 2. LO2 Prepare basic financial statements for unincorporated and small business organisations in accordance with accounting principles, conventions, and standards. LO3 Interpret financial statements. LO4 Prepare budgets for planning, control and decision-making using spreadsheets Transferable skills and competencies developed for Assessment activity 2. Managing financial data Manipulating and interpreting data using spreadsheets Effective communication of relevant information across the organization and to appropriate stakeholders Critical thinking and decision-making creation and interpretation of information and showing how that information can be used most effectively to add value to the organization Problem solving ability to use quantitative skills to manipulate data, evaluate, estimate, and model business problems Application of accounting knowledge to consistently deliver high-quality, accurate data and information in a timely fashion Vocational scenario for Assessment activity 2. Assignment activity 2 and guidance Businesses are required to produce a variety of financial information both internal and external purposes. Business owners/managers need financial information for planning, monitoring and decision making. Also, they to provide financial information to external stakeholders, such as lenders, suppliers, and tax authority. Fairfield Chartered Accountancy firm has many local family-run small businesses as its clients. You, now as an accounting assistant, have been assigned to a local catering business, Fresh Kitchen, to prepare three financial reports and associated tasks as provided below: 1. Income Statement and Balance Sheet: a) Prepare income statement and balance sheet for the Year Ending 31st December 2022 based on a trial balance attached to ‘appendix A’. Make sure it meets relevant accounting principles, conventions, and standards. Show appropriate adjustments, such as accruals, prepayments, bad debts, and depreciation to the income statement. b) The client is also interested to understand the differences between sole trader, partnership and non-profit organization while creating an income statement. Hence, briefly outline the differences. c) Outline how digital software (e.g., QuickBooks, Sage, Xero etc) could have been useful for preparing the financial statements for the client 2. Financial ratios: a) Evaluate the client’s organizational performance over two years (2021 and 2022) applying varieties of financial ratios (e.g., profitably, liquidity, asset usage and investment ratios etc) based on performance Financial Data attached to Appendix B. Outline the limitations of using ratios as a performance measurement tool. b) Critically evaluate the importance of presenting financial statements to the external stakeholders of the client. 3. Cash Budget: a) Prepare a 12-month cash budget for the client using Excel spreadsheet based on the base data attached to Appendix C. Discuss the benefits and limitations of the cash budget and budgetary planning and control of the client. b) Identify problems (e.g., sudden increase / decrease in cash position due to different scenarios etc) revealed by budgetary planning and control prepared for the client. Provide solution to such problem. Then justify the impact of such solution on the client’s business operations Academic Honesty and Avoiding Academic Misconduct Every student of GBS is expected to always act with integrity in relation to the production and presentation of their academic work. Academic integrity is central to academic and professional life and requires that students are honest and responsible in acknowledging the contributions of others in their work The GBS Academic Good Practice and Academic Misconduct Policy and Procedure provides definitions and examples of the types of academic misconduct; procedures followed, and penalty tariffs applied when cases of academic misconduct have been raised. Academic misconduct is easily avoided by ensuring appropriate referencing conventions are followed. Pearson has developed Guidelines on Harvard Referencing which are available in the Academic Support Area for Students on Moodle (VLE) as well as on respective unit pages. If you are concerned about referencing techniques, please draw the matter to your Unit Lecturer or Academic Support Team on [email protected] so that you may receive extra advice. This is to confirm that this submission is my own work, produced without any external help except acceptable support from my lecturer. It has not been copied from any other person’s work (published or unpublished) and has not previously been submitted for assessment either at GBS or elsewhere. I confirm that I have read and understood the ‘GBS Academic Good Practice and Academic Misconduct: Policy and Procedure’ available on Moodle. I confirm I have read and understood the above Student Declaration. Student Name (Print) Signature Date Recommended Resources Please note that the resources listed are examples for you to use as a starting point in your research – the list is not definitive. Weblinks Accounting Coach courses. Available at: https://www.accountingcoach.com/accountingbasic/explanation The Association of Chartered Certified Accountants ACCA). Available at: https://www.accaglobal.com/gb/en.html Chartered Institute of Management Accountants. Available at: https://www.cimaglobal.com/ Indeed Career Guide to Memo Writing. Available at: https://www.indeed.com/career-advice/career-development/memo/writing-guide HubSpot. How to write a memo: Templates & examples. Available at: https://blog.hubspot.com/marketing/how-write-memo HN Global HN Global HN Global (2021) Reading Lists. Available at: https://hnglobal.highernationals.com/learning-zone/reading-lists HN Global (2021) Student Resource Library. Available at: https://hnglobal.highernationals.com/subjects/resource-libraries HN Global (2021) Textbooks. Available at: https://hnglobal.highernationals.com/textbook Textbooks Atrill, P. and McLaney, E. (2018) Accounting and Finance for Non-Specialists. 11th Ed. Harlow: Pearson Weetman, P. (2019). Financial and Management Accounting: An Introduction.Harlow: Pearson Submission Instruction: You must submit both sections of assignment into one file on Turnitin via Moodle. Works done on spreadsheet must be embedded (pasted as picture) within the assignment (word file). Additionally, you must fill in, sign, and attach the declaration form below Learning Outcomes and Assessment Criteria Pass Merit Distinction LO1 Examine the context and purpose of accounting P1 Examine the purpose of the accounting function within an organisation. P2 Assess the accounting function within the organisation in the context of regulatory and ethical constraints M1 Evaluate the context and purpose of the accounting function in meeting organisational, stakeholder and societal needs and expectations. LO1 D1 Critically evaluate the role of accounting in informing decision making to meet organisational, stakeholder and societal needs within complex operating environments LO2 Prepare basic financial statements for unincorporated and small business organisations in accordance with accounting principles, conventions, and standards. P3 Prepare financial statements from a given trial balance for sole traders, partnerships and not-forprofit organisations, to meet accounting principles, conventions and standards. M2 Produce financial statements from a given trial balance, making appropriate adjustments LO2 and LO3 D2 Critically evaluate financial statements to assess organisational performance using a range of measures and benchmarks to make justified conclusions. LO3 Interpret financial statements. P4 Calculate and present financial ratios from a set of final accounts. P5 Compare the performance of an organisation over time using financial ratios M3 Evaluate the performance of an organisation over time, using financial ratios with reference to relevant benchmarks. LO2 and LO3 D2 Critically evaluate financial statements to assess organisational performance using a range of measures and benchmarks to make justified conclusions. LO4 Prepare budgets for planning, control and decisionmaking using spreadsheets P6 Prepare a cash budget from given data for an organisation using a spreadsheet. P7 Discuss the benefits and limitations of budgets and budgetary planning, and control for an organisation. M4 Identify corrective actions to problems revealed by budgetary planning and control for effective organisational decision making. LO4 D3 Justify budgetary control solutions and their impact on organisational decision making to ensure efficient and effective deployment of resources. Appendix A – Trial Balance Fresh kitchen company Trial Balance For the Year ending 31Ist December 2022 Debit Credit Owner’s capital 200,000 Sales Revenue 350,000 Opening stock 70,000 Purchases 110,000 Rent and Rates 60,000 Salaried & Wages 100,000 Utility Bills 12,000 Machinery & equipment 150,000 Van 15,000 Interest on Bank Loan 1,200 Bank loan 75,000 Trade creditors 23,200 Debtors 40,000 Cash withdrawn (Owner) 60,000 Cash in hand & Bank 25,000 Insurance premium 2,000 Petrol & Repairs 3,000 648,200 648,200 End of the year adjustment entries: 1.Closing stock, £35,000 2. Depreciate machinery & equipment by 20% and Van by 30% using straight line Method 3. Write off 10% Bad debts 4. Rent & Rates includes £5,000 paid in advance 5.£2,000 utility bills outstanding at 31st December 2022 Requirements: Prepare Income statement Statement of Financial Position (Balance Sheet) Appendix B – Performance Financial data Fresh Kitchen Year 2021 2022 Current asset 60,000 70,000 Current liability 35,000 60,000 Fixed Assets 100,000 130,500 Fixed/long term liabilities 80,000 70,000 Owner’s equity 180,000 200,000 Gross Profit 140,000 205,000 Net profit/(Loss) (30,000) 91,300 Sales Revenue 300,000 350,000 Stock 20,000 35,000 Calculate below given performance financial ratios for both years: Profitability Liquidity Assets usage Investment Appendix C: Cash Budget base financial data Fresh Kitchen Start -up capital and Cash Budget of Good Foods Company £ Owner’s Capital One off 200,000 Bank Loan One off 80,000 Sales Revenue Per month 25,000 Marketing expenses Per month 2,000 Rent/property expenses Per month 15,000 Purchases Per month 4,000 Wages & salaries Per month 3,000 Machinery & Equipment One off 90,000 Utility expenses Per month 2,000 Loan & interest payment Per month 2,000 Requirements: Prepare 12-month Cash Budget based on the data provided above. However, you can also consider the following scenario to upgrade your work 1. Increase the marketing budget by 10% per month, which in turn generates an additional 20% in sales revenue. 2. Reduce rental / property expense by 10% per month 3. There were no purchase in month 6th 4. Owner withdraws cash £5,000 quarterly, starting second quarter.