Financial Accounting and Reporting
Unit Learning Outcomes
1 Understand the regulatory framework for financial reporting
2 Be able to prepare financial statements from complete or incomplete records
3 Be able to present financial information in accepted formats for publication
4 Be able to interpret financial statements.
BUSINESS SCENARIO
You are a newly appointed consultant in XYZ Financial Consultant Company. You provide financial consultancy to multiple different companies.
Below are financial statements of different clients and your Manager has requested you to provide suitable financial statements for different types of companies.
The types of companies vary from sole trader, partnership and limited liability.
TASK 1:
The senior management of the company have requested you to provide a report on the following
1 Select one or more companies that you want to invest in Dubai stock exchange. Provide justification as to WHY you want to invest in this company or companies Who will be the company's stakeholders? Why would they be interested in this company?
2 Describe the different users of financial statements and their needs
3 Explain the legal and regulatory influences on financial statements
4 Assess the implications for users.
What are the advantages for this global harmonisation?
Explain how different laws/regulations are dealt with by accounting and reporting standards. Please provide examples.
The discussion should indicate that learners have used a range of sources of information. Include the references in the body of the discussion (I.e. in the assignment itself) as well as in the bibliography.
Learner's evidence should show that they have used an independent approach and worked individually to produce the discussion paper.
TASK 2
2 Prepare financial statements for a variety of businesses from trial balance, making appropriate adjustments
On 31.3.x7 the business made the following transactions
1. Bought material for $1,000 half for cash and half on credit
2. Made $1,040 sales $800 of which was for credit
3. Paid wages to shop assistants of $260 in cash
Please prepare the following financial statements
1 - Draw up a trial balance showing the balances as at the end of 31.3. 20x7
2 - Prepare a profit and loss
Q-2 Prepare a statement of financial position for the Ted Hills Hardware Store as at 31 December 20X6, This is a sole trader.
Capital as at 1 January 20X6 $ 47,600
Profit for the year to 31 December 20X6 $8,000
Freehold premises, net book value at 31 December 20X6 $50,000
Motor vehicles, net book value at 31 December 20X6 $9,000
Fixtures and fittings, net book value at 31 December 20X6 $8,000
Long-term loan (mortgage) $25,000
Bank overdraft* $2,000
Goods held in inventory for resale $ 16,000
Receivables $500
Cash in hand* $100
Payables $1,200
Taxation payable $3,500
Drawings $4,000
Accrued costs of rent $600
Prepayment of insurance $300
* A shop might have cash in its cash registers, but an overdraft at the bank.
Q3 - Prepare a trial balance, P&L and a Balance sheet for Consulting Company
Cash $7,000
Accounts Receivable $3,000
Office supplies $3,000
Office Equipment $5,000
Bank Loan $5,000
Accounts payable $ 1,000
Capital $10,000
Consulting revenue $ 7,000
Rent $600
Salaries $2,500
Stationery $1,200
Utilities expenses $700
3- Prepare consolidated profit or loss and Balance sheet for a company
M Ltd acquired 75% of the share capital of N Ltd on its incorporation. The Balance Sheets of the two entities as at 31 December 20X7 are as follows:
M Ltd had not paid N Ltd for goods purchased therefore the sum of $6,000 is included in M's payables and in N's receivables.
Prepare a Consolidated Balance Sheet at 31 December 20X7. Show all workings.
BUSINESS SCENARIO
You are a newly appointed consultant in XYZ Financial Consultant Company. You provide financial consultancy to multiple different companies.
One of your clients is a very successful retail company that has a company structure. The board is contemplating an adaption of IFRS and more formal reporting as they are expanding the business.
The company is in retail business in the UK and has shops that sell food, clothing and house hold items.
Task 3 -
Consolidated Financial Statements
1- Explain how the information needs of different user groups vary
2 Prepare financial statements in a form suitable for publication by a sole trader, partnership & Limited company
Below is trial balance of a sole trader
NICO is a sole trader
The following final adjustments are required
1. Inventories at 31 July 20x9 were valued at $12,000
2. Selling and distribution expenses of $4,000 are to be accrued
3. Administration expenses of $6,000 were prepaid
4. The allowance for the receivables is to be adjusted to 5% of the receivables
5. Depreciation on the plan and machinery is $15,000 for the year to 31 July 20x9
Prepare the Profit and Loss for the year end 31 Jul 20X9 and the Balance sheet
as at 31 Jul 20x9 in a suitable for publication.
Below is a trial balance of a limited company
Prepare the financial statement suitable for publication
Un-urned income - is where the company collects money from the customer prior to the sale taking place example - deposit
The entries are
DR - Cash
Cr - Unearned income
Partnership accounting
Crossly, Steel and Nabs are partners in a business sharing profits in the ratio 5:3:2 respectively.
Their capital and current account balances on 1 Jan 20X1 were as follows
Crossly
Capital 24,000
Current 2,000
Steel
18,000
(1,000)
Nabs
13,000
1,500
Interest at 10% per annum is given on the fixed capital
Salaries of 8000 per annum per paid to Crossly and Steel
Crossly made a personal loan of 20,000 on the partnership on 1 July 20X1
Above loan to be paid in full on 30 June 20X4 - interest rate for this loan is 15% per annum and was credited to Crossly's account every half year
The partnership profit before charging loan interest for the year ended 31 Dec 20X1 was 63,000 and partners have made the following drawings
Crossly
16,000
Steel
16,500
Nabs
19,000
Prepare appropriate accounts and partner's capital and current accounts and the partnership statements of financial position in the respect of the year ended 31 Dec 20X1
4 P Co. acquired 75% of the ordinary shares of S co on that company's incorporate in 1 Jan 20x3
Q1. The summarised statements of provide and loss of the two companies for the year ended 20X3
Require d to prepare the consolidated statement of profit and loss for the year ending 31 March.
TASK 4 Interpretation of Financial Statements
4.1 calculate accounting ratios to assess the performance and position of a business
4.2 prepare a report incorporating and interpreting accounting ratios, including suitable comparisons. Statements of Financial Position and Profit or Loss for Marks and Spencer are given below
(4.1, 4.2) You are required to calculate accounting ratios which reflect profitability, liquidity, efficiency, and gearing of the company for the financial years 2013, 2014 and 2015 Compare the ratios between two accounting periods and comment on the company's performance.
Balance Sheet
Cash Flow
- Demonstrate an effective approach to study and research and submit the report on the specified date
- Present your work using an appropriate structure and approach
- Show that synthesis has been used to generate and justify valid conclusions
- Show problems have been solved using creative thinking Task
Please remember to present your reports in a professional format, using technical language and respect the submission date.
Note:
- Follow the report style (Arial font, size 12, with 1.5 spacing, black colon) with appropriate title page, page numbers, Titles & sub- titles, Introduction, Conclusion, Bibliography;
- Turn-It-In Certificate and cover sheet is mandatory otherwise the assignments will not be graded.
- Sources of information and references are not included in your word count.
- Word length: Approx. 2,000 words (Task - 1 & 4)
- For Task 1 and 4, please submit your work on Turnitin for online marking. A hard copy will not be required unless requested by the lecturer.
- If you need any further assistance with this assignment please contact your tutor