Assignment front Sheet

Qualification

Unit number and title

Business

10. Financial Accounting and Reporting

Student name

Assessor name

Date issued

Completion date

Submitted on

2nd Dec 2015

15th Jan 2016

Assignment Title

Financial statements interpretation and reporting

Learning
Outcome

Learning
Outcome

Assessment
Criteria

In this assessment you will have

the opportunity to present
evidence that shows you are
able to:

Task
No.

LO1

Understan
d the
regulatory
framework
for
financial
reporting

1.1

describe the different users of

financial statements and
their needs

1.2

explain the legal and regulatory

influences on financial
statements
assess the implications for users

explain how different

laws/regulations are dealt with
by
accounting and reporting
standards
prepare financial statements for
a variety of businesses
from a trial balance, making
appropriate adjustments

1.3
1.4

LO2

LO3

Be able to
prepare
financial
statement
s from
complete
or
incomplet
e records

2.1

Be able to
present
financial
informatio
n in
accepted
formats

3.1

2.2

2.3

1,2,3

prepare financial statements

from incomplete records
prepare a consolidated balance
sheet and profit and
loss account for a simple group
of companies

explain how the information

needs of different user groups
vary
3.2

1,2,3

prepare financial statements in a

form suitable for publication by a

Evidence
(Page
no.)

for
publication
L04

Be able to
interpret
financial
statemen
ts

sole trader, partnership and

limited
company
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

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

Date:

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

Contextualization

M1: identify and apply

strategies to find
appropriate solutions

Effective judgment has been

made.

M2: Select/design and apply

appropriate
methods/techniques

A range of sources of
information has been used.

In task 5, effective judgment

regarding companys
performance over the past 3
years has been made.
In task 7, different sources of
information have been used
when comparing SSAPs, FRSs

M3: Present and

communicate appropriate
findings

The appropriate structure and

approach has been used.

D1: Use critical reflection to

evaluate own work and
justify valid conclusions

Conclusions have been arrived

at through synthesis of ideas
have been justified.

D2: Take responsibility for

managing and organizing
activities

Activities have been managed

D3: Demonstrate
convergent/lateral/creative
thinking

Ideas have been generated and

decisions taken.

and ASB.
In task 1, 2, 3 and 4
appropriate structure should be
used when preparing
organizations financial
statements.
In task 5, conclusions have been
justified correctly about the
companys performance and
how it can be improved in the
future.
To achieve D2, you will have
managed all activities associated
with this assignment and
submitted your work within the
deadline.
In task 6, all possible users of
financial statements have been
identified and how their needs
differ have been thoroughly
discussed.

Assignment Brief
Unit number and title

10. Financial Accounting and Reporting

Qualification

Pearson BTEC Level 5 HND Diploma in Business

Start Date
Deadline/hand in

2nd Dec 2015

15th Jan 2016

Assessor

Assignment Title

Financial Statements interpretations and analysis.

Purpose of this assignment

The purpose of this assignment is for students to learn how to prepare, analyze and report the
financial statements as required by accounting laws and standard and to understand how the
preparation of financial statements differ for different business organization.

SCENARIO 1

You work as the accountant for a client named Sehwag, and have just taken out the trial
balance as at 31 May 2012:
dr
cr
Purchases
1,470,000
Capital
239,000
Long-term loan
50,000
Sales
2,330,000
Advertising expenses
14,000
Inventory (stock) 01 06 11 74,000
Accounts receivable (debtors)83,000
Prov. for doubtful debts
1,000
Accounts payable (creditors)
64,000
Business rates
52,000
Insurances
56,000
Energy costs
67,000
Motor expenses
34,000
Staff salaries
125,000
Loan interest
3,000
Buildings at cost
450,000
Vehicles at cost
80,000
Vehicle depreciation 01 06 11
40,000
Wages
185,000
Bank
2,000
Cash
1,000
Drawings
28,000
----------------------2,724,000 2,724,000
======= =======
Notes at 31 May 2012:
Inventory (stock) was valued at 79,000.
Energy cost prepaid amounted to 3,000.
Wages owing amounted to 5,000.
Advertising expenses owing amounted to 8,000.
The accountant has reviewed the debtors outstanding and advises Sehwag to
write off 3,000.
After writing off the bad debt it is suggested that the provision for doubtful debts
should be increased to 3,000.
The vehicles are to be depreciated by 25% on cost.

SCENARIO 2

You work as the accountant of a company called Ceesey Ltd, and have just taken out the
trial balance as at
30 November 2011:
dr
cr
1 Ordinary share capital
100,000
6% Debentures
200,000
Profit and loss account (1/12/10)
285,000
Long-term bank loan
20,000
Sales
1,690,000
Purchases
1,130,000
Inventory (stock 1/12/10)
46,000
Accounts receivable (debtors) 97,000
Prov. for doubtful debts (1/12/10)
4,000
Accounts payable (creditors)
94,000
Business rates
45,000
Insurances
48,000
Energy costs
69,000
Marketing expenses
55,000
Debenture interest
12,000
Motor expenses
42,000
Loan interest paid
1,000
Buildings at cost
500,000
Equipment at cost
200,000
Equipment depreciation (1/12/10)
50,000
Wages
195,000
Bank
2,000
Cash
1,000
----------------------2,443,000
2,443,000
=======
=======
Notes at 30 November 2011:
Inventory (stock) was valued at 50,000.
Energy costs prepaid amounted to 3,000.
Wages owing amounted to 4,000.
The directors have decided to write off bad debts amounting to 1,000.
The directors have also decided to increase the provision for doubtful debts to
6,000.
The equipment is to be depreciated by 25% on cost.
The directors wish to provide 11,000 for taxation.

SCENARIO 3
Jones, Smith and Brown are partners in wholesaling enterprise. They have a warehouse and a small
section of offices. The accounts extracted for the trail balance as at the year ended 31 December
were:
Premises at cost
Fixtures at cost
Motor vans at cost
Bank
Cash
Equipment at cost
Stock at 1 January
Debtors
Creditors
Purchases/Sales
Returns
Provisions for bad debts
Rates
Wages
General expenses
Insurance
5 year loan
Capital accounts:
Jones
Smith
Brown
Current accounts:
Jones
Smith
Brown
Drawings for the year:
Jones
Smith
Brown

dr
35,000
18,500
12,750

cr

2460

100
11,000
77,450
18,142
86,257
4150

64,800
142,000
4400
180

840
16424
1764
283
27,000
25,000
20, 000
5,000
1242
1615
37
6,000
4,000
1,000
293,697

293,697

The following additional information is to be taken into account as at 31 December:

Unsold stock valued 82,427

Rates unpaid 120

Invoice due on stationary 125

Depreciation: motor vans were re-valued to 11,250; equipment and fixtures were
depreciated 10% on cost

Insurance pre-paid 37

Smith was awarded salary of 2,750

Drawings by partners to be charged 5% interest

Interest on capital to be paid 6%

Profits are shared according to their capital accounts ratio on 1 January (25:20:5)

SCENARIO 4
The assets and liabilities of Jeanie Patel, a retailer, as at the start of business on 1st November 2012
are summarized as follows:

Motor Vehicles:
At cost
Provision for depreciation

9,000
1,800

Fixtures & Fittings:

At cost
Provision for depreciation

10,000
6,000

7,200

4,000
Stock
Trade debtors
Cash

16,100
19,630
160
47,090

Capital Jeanie Patel

Bank overdraft
Trade Creditors

30,910
6,740
9,440
47,090

All receipts from credit customers are paid intact into the business bank account, whilst cash sales
receipts are banked after deduction of cash drawings and providing for the shop till cash float. The
cash float was increased from 160 to 200 during September 2013.
The following is a summary of the transactions in the business bank account for the year ended 31 st
October 2013.
Receipts

Payments

Credit sales

181,370

Drawings

8,500

Cash sales

61,190

Bought motor van

1st May 2013

11,200

Proceeds of sale of
Land owned privately
By J. Patel

16,000

Administration
expenses

33,300

Selling and Distribution

Expenses

29,100

Purchases

163,100

Additional information for the year ended 31 st October 2013 is as follows:

A gross profit of 33.33% has been achieved on all sales

Bad debts of 530 have been written off during the year
Trade debtors as at 31st October 2013 reduced by 8,130 as compared to last year
Trade creditors as at 31st October 2013 amounted to 12,700
Motor vehicles are depreciated 20% on cost while fixtures and fittings are depreciated 10% on
cost
Stock as at 31st October 2013 has been valued as 23,700.

SCENARIO 5
The following trading results refer to P. Jackson & Co during the last 3 years, year ending 31
December.

Trading , Profit & Loss

(extract)
Sales:
Cash
Credit
Cost of sales
Distribution costs
Administration expenses
Stock:
1st January
31st December
Balance sheet (extract)
Debtors
Capital invested (1st Jan)

Year 1

Year 2

Year 3

5,000
25,000
20,000
3,000
3,150

6,000
30,000
24,000
3,200
3,750

8,000
37,000
31,950
4,100
4,275

1,950
2,050

2,050
2,950

2,950
5,050

5,000
26,500

6,000
30,000

9,000
31,750

SCENARIO 6
The following data relates to two companies, Company A and Company B.
Company A ()

Company B ()

60,000
40,000

40,000
-

8,000
10,000
2,000
3,000
123,000

3,000
4,000
3,000
1,000
51,000

Capital & Liabilities

Share capital
Share premium
Retained earnings

80,000
10,000
10,000

35,000

Currents Liabilities
Payables

10,000

11,000

13,000
123,000

51,000

Non-Current Assets
Property, Plant & Equipment
Investment in Company B
Current Assets
inventory
receivables
Bank
Cash

Non- Current Liabilities

Loan

5000

On 1st January 2013, Company A acquired 60% Company B for 30,000. At this date the retained
earnings of Company B were 10,000 and NCI was 29,000.

Task 1 SCENARIO 1 (L.0 2: 2.1, L.O 3: 3.2, M3)

Prepare Sehwags income statement (trading and profit and loss account) and position statement
(Balance sheet) as at 31 May 2012.
Also calculate the current ratio and quick ratio of Sehwags business organisation.
In order to achieve M3, appropriate structure should be used for Sehwags income statement and
position statement.
Task 2 SCENARIO 2 (L.0 2: 2.1, L.O 3: 3.2, M3)
Prepare Ceesey Ltds income statement and position statement for the year ended 30 th November
2011.
Explain and analyze what is the difference between a limited company and sole trader business
origination.
In order to achieve M3, appropriate structure should be used for the Ceeseys Ltds income statement
and position statement.
TASK 3 SCENARIO 3 (L.0 2: 2.1, L.O 3: 3.2, M3)
Prepare the partners trading, profit and loss account and appropriation account; the partners current
accounts as they would appear in the ledger and the partners balance sheet as at 31 December.
In order to achieve M3, appropriate structure should be used for partners income statement, current
accounts and position statement.
TASK 4 SCENARIO 4 (L.O 2: 2.2, M3)
Prepare a trading profit and loss account for the year ended 31 st October 2013 and a balance sheet as
at that date for Jeanie Patel using the incomplete records.
In order to achieve M3, appropriate structure should be used for Jeanie Patels income statement and
position statement.
TASK 5 SCENARIO 5 (L.0 4: 4.1, 4.2 M1, D1)
Prepare the trading, profit and loss account of P. Jackson & Co for each of the 3 years ending 31 st
December.
Calculate ratios (gross profit %, net profit %, expenses %, rate of stock turnover, debtors collection
period and return on capital employed) and briefly comment using the ratios to give some indication
of the firms performance over years and how can performance be improved.
What are the limitations of only using ratios to measure the performance of the organization?
In order to achieve M1, effective judgment should be made about the companys performance over
the past 3 years based upon the information provided.
In order to achieve D1, the analysis of companys performance and how it can be improved should be
justified, suggestions and ideas should be generated which can help to improve companys
performance in future.

TASK 6 (L.0 1: 1.1, 1.3, L.O 3: 3.1, D3)

Identify the different users of financial statements and describe how the needs and implications of
different users differ.
In order to achieve D3, all possible users of financial statements should be identified and how their
needs differ should be thoroughly explained with examples where appropriate.
Task 7 (L.0 1; 1.2, 1.4, M2 )
Explain the following; International Accounting Standards (IASs); International Financial

Reporting
Standards and the main differences from UK Statements of Standard Accounting Practice
(SSAPs) and Financial Reporting Standards (FRSs); The Accounting Standards Board (ASB).
How does legislation impact on financial statements?
In order to achieve M2, a range of sources of information should be used when discussing the
differences between SSAPs, FRSs and ASB.
Task 8 (L.O 2; 2.3)
Prepare the consolidated financial position of the company after the acquisition.

Evidence
checklist

Summary of evidence required by student

Task1-7

Prepare a report

Evidence presented
Yes

Achievement Summary
Qualification

Business

Assessor

Unit Number
and Title

10. Financial Accounting and

Reporting

Student Name

Criteria
Reference

To achieve the criteria the evidence must show that the

student is able to:

1.1

Describe the different users of financial statements and

their needs
Explain the legal and regulatory influences on financial
Statements
Assess the implications for users

1.2
1.3
1.4
2.1

Explain how different laws/regulations are dealt with by

accounting and reporting standards
Prepare financial statements for a variety of businesses
from a trial balance, making appropriate adjustments

2.2
2.3

Prepare financial statements from incomplete records

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

3.1

Explain how the information needs of different user

groups vary
Prepare financial statements in a form suitable for
publication by a sole trader, partnership and limited
company
Calculate accounting ratios to assess the performance
and position of a business
Prepare a report incorporating and interpreting
accounting ratios, including suitable comparisons

3.2

4.1
4.2

Achieved?
(tick)

Higher Grade Achievements (where applicable)

Grade descriptor
M1: Identify and apply
strategies to find appropriate
solutions
M2: Select/design and apply
appropriate
methods/techniques
M3: Present and
communicate appropriate
findings

Achieved?
(tick)
yes
Yes
yes

Grade descriptor

Achieved?
(tick)

D1: Use critical reflection to

evaluate own work and justify
valid conclusions
D2: Take responsibility for
managing and organizing activities

yes

D3: Demonstrate
convergent/lateral/creative
thinking

yes

yes

Assignment Feedback
Feedback: Assessor to Student

Action Plan

Summative Feedback

Feedback: Student to Assessor

Assessor Signature

Date

Student Signature

Date