AssignmentQuestions

Total marks: PASS or FAIL. There are NO grades

StudentsshouldanswerALLquestions.

AssignmentScenario:

Mr.Aownsafactorywhichissuccessful,soheisinterestedinexpandinghisbusinessand
establishinganotherpremises.Mr.Aknowsthatyouarestudyingfinanceaspartofyour
qualificationandhasaskedyouradviceonfinancialmattersrelatedtohiscurrentbusinessand
futureinvestmentplans.

AdditionalInformation:

MrA.wantstosetupthenewfactoryeitheraspartnershiporasalimitedliabilitycompany.He
isnotsureoftherequirementsandtechniquesforfinancialrecordingandreportingforthese
formsofbusinessorganisations.Heisawarethathehasalegalobligationforthepreparationof
financialstatements.Alsoheiswonderingifsuchreportingisbeneficialatallandwhetherit
providesanyusefulinformationtostakeholders.

Task:

YouarerequiredtogiveabriefingtoMr.Acoveringfollowingissues.Prepareabriefingpaper
whichyouwilltaketoameeting

Explainthelegalandtaxpurposesforkeepingfinancialrecords,andexplaintheinternal
controlrequirementsinmaintainingfinancialrecords
ProvideanoverviewofthetechniqueofdoubleentrybookkeepingandAnalyseingreater
depthfurthertechniquesforrecordingfinancialinformation

Analysetherequirementsforfinancialreportingindifferentformsofbusinessentities

Analysethedifferentfinancialstatementsnecessaryforabusinessentityandevaluatethe
usefulnessofthesefinancialstatements.

Purposeoffinancialrepoting

Usefulnessoffinancialstatementstostakeholders.
Question2:

AdditionalInformation:

Mr.Aisconcernedwiththeincreasinginvestmentsinworkingcapitalforhiscurrentbusinessand
hehasprovidedyouwiththefollowinginformationforfurtheranalysisanddiscussion.

000
Sales
900
Costofgoodssold
350
OpeningInventory
50
ClosingInventory
350
Debtors
140
Bank
260
Creditors
450

Task:
Youarerequiredto

Analysethecomponentsofworkingcapitalbycalculatingtherelevantratiosandinterpreting
theirresults.

Explainhowbusinessorganizationscaneffectivelymanageworkingcapitalusingatleasttwo
methods

EndofQuestion2
Question3:

AdditionalInformation:

Mr.Ahasrecentlyattendedaconferencehighlightingtheimportanceofdifferentmanagement
accountingtechniquesandtheroleofmanagementaccountants.Hehasaskedyoutoexplainthe
budgetarycontrolprocessandpresentedyouwithfollowinginformation.

Budget
Actual
Production and Sales
20,000 units
17,600 units

Sales Revenue
100,000
90,000
Indirect labour
20,000
19,540
Consumables
800
1,000
Material
4,200
3,660
Depreciation
10,000
10,000
Semi variable overheads *
5,000
4,760
Budgeted Gross Profit
60,000
51,040

*Semi-variable overheads are budgeted to be 4500 at a level of production of 15,000 units.

Mr.Aisalsobitconfusedabouttheterms,characteristicsandfunctionsofmanagement
accountingandfinancialaccounting.

Task:

Youarerequiredto

Explainthedifferencebetweenmanagementandfinancialaccounting.

Explainthebudgetarycontrolprocess.

Calculateandinterpretvariancesfromtheabovebudget.

Evaluatetheuseofatleasttwodifferentcostingmethodsforpricingpurposes.
EndofQuestion3

Question4:

AdditionalInformation:

Mr. A is interested to know about financial viability and potential sources of finance for setting
up a new factory. He estimates that setting up a factory will require a capital of 1,70,000 in
initial investment and is expected to provide operating cash inflows of 52,000, 78,000, and
90,000 at the end of each of the next 3 years. Due to the technological nature of the product
Mr. A believes that there will be no demand for the product after three years and the business
may need to be closed down by selling all its assets for 10,000 or alternatively some
diversification will be required.
Task:

Youarerequiredto

Usingtheaboveinformation,Applyappropriatemethodstoappraisetheprojectandcomment
onitsviability.

Evaluatethemethodsofprojectappraisal

Explainthevarioussourcesoffinanceforabusinessprojectandexplainhowyouwouldmakea
caseforabusinessproject.

EndofQuestion4

EndofAssignmentQuestions