Unit 10 Financial Accounting and Reporting

Assignment Front Sheet Qualification Qualifica tion

Unit number and title

Pearson BTEC Level 5 HND Business (Accounting)

Unit 10: Financial Accounting and Reporting Unit code: F/601/0864 Credit value: 15 credits

Student name

Assessor name

,

Sajid Saeed Khan Date issued

Completion date

Submitted on

Validity

3rd December 2013

3rd January 2014

Assignment title

Preparation of financial statements, complying with relevant legal and regulatory provisions

Assignment no

10- F/601/0864-13IND

3rd April 2014

Hand-in Policy You must complete this assignment on time. If you experience experience difficulties, you must inform your tutor accordingly. Late Work Policy Consideration will be given to students who have valid reasons for late submission (eg, illness). Plagiarism In cases of plagiarism, college college regulations will be applied. You must must declare that this assessment is your your own work by signing the following statement:

Learner declaration I certify that the work submitted for this assignment is my own and research sources are fully acknowledged.

Student signature:

Date:

Assessment Criteria Learning Outcome

Learning outcome

Understand the regulatory

LO1

LO2

LO3

LO4

framework for financial reporting

Be able to prepare financial statements from complete or incomplete records Be able to present financial information in accepted formats for publication Be able to interpret financial Statements

Assessme nt Criteria

In this assessment you will have the opportunity to present evidence that shows you are able to:

Task Evidence no. (Page no)

1.1

Describe the different users of financial statements and their needs

1

1.2

Explain the legal and regulatory influences on financial statements

1

1.3

 Assess the implications for users

1

1.4

Explain how different laws/regulations are dealt with by accounting and reporting standards

1

2.1

Prepare financial statements for a variety of businesses from a trial balance, making appropriate adjustments

2.2

Prepare financial statements f rom incomplete records

2

2.3

Prepare a consolidated balance sheet and profit and loss account for a simple group of companies

3

3.1

Explain how the information needs of different user groups vary

4

3.2

Prepare financial statements in a form suitable for publication by a sole trader, partnership and limited company

4

4.1

Calculate accounting ratios to assess the performance and position of a business

5

4.2

Prepare a report incorporating and interpreting accounting ratios, including suitable comparisons

5

2,4

In addition to the above PASS criteria, this assignment gives you the opportunity to submit evidence in order to achieve the following MERIT and DISTINCTION grades Grade Descriptor

Indicative characteristic/s

Contextualisation To achieve M1, an effective approach to study and research has been applied (Task 1)

M1 Identify and apply strategies to find appropriate solutions Effective judgements have been made. An effective approach to study and research has been applied.

To achieve M1, an effective approach to study and research has been applied. (Task 2) To achieve M1, an effective approach to study and research has been applied. (Task 3) To achieve M1, effective judgements have been made (Task 4) To achieve M1, effective judgements have been made. (Task 5)

M2 Select / design and apply appropriate methods / techniques

A range of sources of information has been used a range of methods and techniques have been applied Complex information/data has been synthesised and processed

M3 Present and communicate appropriate findings

D1 Use critical reflection to evaluate own work and justify valid conclusions

D2 Take responsibility for managing and organising activities

To achieve M2, complex information/data has been synthesised and processed (Task 3) To achieve M2 a range of methods and techniques have been applied (Task 4) To achieve M2, relevant theories and techniques have been applied (Task 5)

Coherent, logical development of principles/concepts for the intended audience

To achieve M3, coherent, logical development of principles/concepts for the intended audience. (Task 1)

Conclusions have been arrived at through synthesis of ideas and have been justified

To achieve D1, conclusions have been arrived at through synthesis of ideas and have been justified. (Task 1)

The validity of results has been evaluated using defined criteria

To achieve D1 the validity of results has been evaluated using defined criteria. (Task 2)

Autonomy/independence has been demonstrated

To achieve demonstrated. To achieve demonstrated.

D2, autonomy/independence (Task 1) D2, autonomy/independence (Task 2)

To Achieve demonstrated. To Achieve demonstrated. To achieve demonstrated,

D2 autonomy/independence has been (Task 3) D2 autonomy/independence has been (Task 4) D2, autonomy/independence has been activities have been managed (Task 5)

Activities have been managed

D3 Demonstrate convergent /lateral / creative thinking

To achieve M2 a range of sources of information has been used. (Task 2)

has

been

has

been

To Achieve demonstrated. To Achieve demonstrated. To achieve demonstrated,

D2 autonomy/independence has been (Task 3) D2 autonomy/independence has been (Task 4) D2, autonomy/independence has been activities have been managed (Task 5)

D3 Demonstrate convergent /lateral / creative thinking

Assignment brief Unit Name number and title

Unit 10: Financial Accounting and Reporting Unit code: F/601/0864 Credit value: 15 credits

Qualification

Pearson BTEC Level 5  HND Business (Accounting)

Start date

3rd December 2013

Deadline/hand-in

3rd January 2014

Assessor

Sajid Saeed Khan

Assignment title

Preparation of financial statements, complying with relevant legal and regulatory provisions

,

Task 1 (LO1, 1.1, 1.2, 1.3, 1.4 and M1, M3, D1 and D2) You are working as a Senior Accounts Manager in a joint stock company, ABC Limited. Your company is conducting a seminar on the topic of “Understand the regulatory framework for financial reporting’’ . You have been asked to present the following on behalf of your company: 1. Prepare a presentation on the topic ‘‘Users of financial statements and their needs''. 2. Prepare and present a detailed report on the following: a) Explain the legal and regulatory influences on financial statements and assess its implications for different users?

Assignment brief Unit Name number and title

Unit 10: Financial Accounting and Reporting Unit code: F/601/0864 Credit value: 15 credits

Qualification

Pearson BTEC Level 5  HND Business (Accounting)

Start date

3rd December 2013

Deadline/hand-in

3rd January 2014

Assessor

Sajid Saeed Khan

Assignment title

Preparation of financial statements, complying with relevant legal and regulatory provisions

,

Task 1 (LO1, 1.1, 1.2, 1.3, 1.4 and M1, M3, D1 and D2) You are working as a Senior Accounts Manager in a joint stock company, ABC Limited. Your company is conducting a seminar on the topic of “Understand the regulatory framework for financial reporting’’ . You have been asked to present the following on behalf of your company: 1. Prepare a presentation on the topic ‘‘Users of financial statements and their needs''. 2. Prepare and present a detailed report on the following: a) Explain the legal and regulatory influences on financial statements and assess its implications for different users? b) Explain in detail how different laws/regulations are dealt with by accounting and reporting standards?

Task 2 (LO2, 2.1, 2.2 and M1, M2, D1, D2) Mr. Shujrah run a small business for many years, he has never kept adequate accounting records. He requires final accounts for the year ended 31 August 2003 to obtain a bank loan for the expansion of the business. As a result, the following information has been obtained after a careful research: All takings have been banked after deducting; cash drawings of £8,000, labour of £1,200 and Purchase of goods for resale for £1,800. (Takings have been the source of all amounts banked). Gross profit of 33(1/3) % on cost has been obtained on all goods sold. Despite the availability of minimum accounting records, Mr. Shujrah confirmed that he has taken goods costing £600 out of the business during the year for his own use. Mr. Shujrah’s business assets and liabilities are as follows:

 As at

'1 September 2002

'31August 2003

£

£

Stock in trade

8,600

16,800

Debtors for sales

3,900

4,300

Creditors for purchases

7,400

8,900

Rent prepaid

300

420

Electricity accrued

210

160

2,300

1,650

360

330

Balance at bank Cash in hand

Bank payments during the year ended 31 August 2003 have been summarized as follows:

£ Purchases

101,500

Rent

5,040

Electricity

1,390

Delivery costs (to customers)

3,000

Casual labour

6,620

Required: (a) Calculate total purchases for the year ended 31 August 2003. (b) Prepare a trading and profit and loss account for the year ended 31 August 2003 and a balance sheet as at that date. Task 3 (LO2: 2.3 and M1, M2, D2) The following figures for the year to 30 September 1997 have been extracted from the books and records of two companies, A-One Ltd and its subsidiary, B-One Ltd, which form a group: Profit and Loss Accounts for the year to 30 September 1997 A-One Ltd

£(In

B-One Ltd

£(In Millions)

Millions) Turnover 1,700 Cost of sales ( 920) Gross profit 780 Administration expenses (300) Income from shares in group company 120 Profit on ordinary activities before taxation 600 Tax on profit on ordinary activities ( 30) Profit on ordinary activities after taxation 570 Dividends: paid ( 90) proposed (270) Retained profit for the year 210 Retained profit brought forward 220 Retained profit carried forward 430

450 (75) 375 (175) – ___ 200 (20) 180 (50) (100) 30 70 100

Balance Sheets at 30 September 1997

Fixed tangible assets Investments: Shares in group company Current assets Stocks Debtors (including, for A-One Ltd, The dividend proposed by the subsidiary) Cash at bank and in hand Creditors (amounts falling due within one year) Trade creditors Other creditors, taxation and social security Proposed dividend Net current assets Total assets less current liabilities Provisions for liabilities and charges Taxation, including deferred taxation Capital and reserves Called-up share capital (ordinary shares of £1 each) Profit and loss account

A-One Ltd £(In Millions) 1,280 400

B-One Ltd £(In Millions) 440

–

300

250

280 40 620

150 10 410

( 80) ( 160) ( 270) ( 510) 110 1,790

(160) ( 70) (100) (330) 80 520

( 460) 1,330

( 20) 500

900 430 1,330

400 100 500

Additional information: (a) A-One Ltd acquired 80 per cent of the shares in B-One Ltd on 1 October 1994. B- One Ltd’s Profit and loss account balance as at that date was £40,000. (b) Goodwill arising on acquisition is to be written off against the group’s retained profits. (c) A-One Ltd takes credit within its own books of account for any dividends receivable from B-One Ltd. Required: Prepare A-One Ltd & its subsidiary B-One Ltd consolidated profit and loss account for the year to 30 September 1997 and a consolidated balance sheet as at that date.

Task 4 (LO2 2.1 and LO3, 3.1, 3.2and M1, M2, D2) A). Explain the importance of financial information of the company for different stakeholders. B). You are to draw up a trading and profit and loss account for the year ending 31 March 2012, and a balance sheet as at that date from the following trial balance and details of:

Description Bank

Amount in £(000) 8,100

Debtors

321,219

Creditors

237,516

Stock at 31 March 2011

290,114

Buildings at cost

800,000

Equipment at cost

320,000

Profit and loss account as at 31 March 2011

136,204

General reserve

120,000

Foreign exchange reserve

20,000

 Authorized and issued share capital

800,000

Purchases

810,613

Sales Carriage inwards Carriage outwards Salaries Business rates

1,606,086 2,390 13,410 384,500 14,800

Office expenses

9,100

Sundry expenses

2,360

Provisions for depreciation at 31 March 2011: Buildings

80,000

Equipment

96,000

Directors’ remuneration

Notes at 31 March 2012: 1. Stock £317,426. 2. Business rates owing £1,700; Office expenses owing £245. 3. Dividend of 15 per cent proposed. 4. Transfers to reserves: General £70,000; Foreign exchange £30,000. 5. Depreciation on cost: Buildings 5 per cent; Equipment 15 per cent.

119,200

Task 5 (LO4, 4.1,4.2 and M1, M2, D2) The following are the summarized Profit Statements and Balance Sheets for A2Z Motors Ltd, a manufacturing company, and Fashion Do-Do Ltd, a retailer. A2Z Motors Ltd

Fashion Do-Do Ltd

2009

2010

2009

2010

£000

£000

£000

£000

500

610

425

460

Cost of sales

(245)

(355)

(210)

(230)

Operating costs

(225)

(230)

(190)

(200)

Loan interest paid

(7)

(10)

(7)

(3)

Net profit

23

15

18

27

150

225

220

175

Stock

50

60

27

20

Debtors

20

30

 –

 –

Bank

10

(35)

13

57

(25)

(20)

(35)

(50)

205

260

225

202

Share capital

50

50

50

50

Retained profit

95

110

100

127

Long term loans

60

100

75

25

205

260

225

202

Sales

Fixed Assets at Net Book Value

Creditors

Required 1. Use ratios to compare the management’s performance from 2009 to 2010 for each company. (Use year ended figures to calculate ratios) 2. Prepare a report incorporating and interpreting accounting ratios, suitable comparisons, weaknesses and limitations of ratio analysis.

Evidence checklist

Summary of evidence required by student

Task 1

Presentation on the topic ‘‘Users of financial statements and their needs'' and report on legal and regulatory influences on financial statements

Task 2

Calculate total purchases and prepare a trading and profit and loss account

Task 3

Prepare A-One Ltd & its subsidiary B-One Ltd consolidated profit and loss account

Task 4

Report on the importance of financial information of the company for different stakeholders and draw up a trading and profit and loss account for the year

Task 5

Comparison of the management’s performance and prepare a report incorporating and interpreting accounting ratios, suitable comparisons, weaknesses and limitations of ratio analysis.

Evidence presented

Submission guidelines You must: Complete all tasks  

 

Present your work in one business report-style document which should include a table of contents, references list, foot or end notes if any and appendices if any. Complete, sign and submit the usual statement of authent icity. Submit your work in a single word processed document of 4000-5000 approx .words. This word limit is only for guidance and is not applied on grading.



Produce clear specific reasoning and arguments in support of your answers.



Make appropriate reference to the relevant concepts, techniques and theories.



Appropriately cite all information success (in the text and bibliography) as per references guidelines given to you before.