ACC1AMD-Accounting For Management Decisions – Accounting & Finance Assignment Help

Accounting For Management Decisions

Question 1                                         
a) Charlie Brown works in a local accounting firm as an auditor. He caught up with his friends Linus, Marcie and Franklin on the weekend. It turns out that Charlie is involved in the audit of the company Linus currently works for as their management accountant. Charlie was talking about how the company seems to be in desperate need of an injection of funds to remain in operation and that his boss, the audit partner, is considering whether he needs to include a “going concern” qualification in the audit report this year. Charlie said that to try and preserve Linus’ job he would attempt to convince the partner that the finance is coming. He encouraged Linus to amend the latest arrangement with the bank that finishes on 20/6/2022 to 2023.

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List 2 breaches of the fundamental principles of ethics APES110 Code of Ethics for Professional Accountants and explain why it has been breached.                      
b) For the four scenarios described below, indicate the business structure each one is likely to adopt — sole trader, partnership or company (public or proprietary) and why.   
(i) Ian has commenced a hairdressing business by himself.

(ii) Four industrial engineers with established careers wish to set up a business developing recycling techniques to reduce business waste to near zero. They want to be able to raise capital by issuing shares to the public.

(iii) Evonne and Ben wish to start a donut business. They are concerned about the legal issues (for example, their personal liabilities) for this business once they start trading.

(iv) Luke, John and Chelsea have been running separate agricultural businesses but are finding the costs and hours are very high for one person and are only just keeping their individual businesses operational. They have decided to combine their businesses so they can share resources and have more time off to spend with their families.

c) The owner of ‘Green Gardening Incorporated’, Ms Green, has breached a number of accounting concepts and principles and as their accountant you are trying to identify the issue and explain why Ms Green has not treated the situation correctly.                    

In the table below you are to complete the following:
(i) identify the concepts or principles that have been violated (one only for each scenario)
(ii) explain why it has been violated     

a. Ms Green used company funds to purchase a computer for personal use for $3,000. She recorded it as a decrease in Cash and an increase in Office Equipment.
b. Ms Green was keen to make her 2021 profit look better, so she added in plant sales that occurred on the first two days of 2022.
c. Merchandise inventory with a cost of $45 000 is reported at its net realisable value of $65 000 in the statement of financial position.
d. Green Gardening Incorporated is currently being sued by a customer as a tree fell on him as he was walking around the nursery. It is expected that the company will have to pay damages; however, the amount is currently uncertain and so Ms Green has decided not to include it anywhere in the financial statements.

d) Explain the difference between the allowance method to account for bad debts and the direct write-off method of bad debts? 

Question 2                                             
You are considering providing Garden City Ltd with supplies. 

(i) Complete the horizontal analysis below                            

All answers must be rounded to 2 decimal places.

Horizontal Analysis

(ii) Review Garden City Ltd’s performance over the last two years and, based on your findings, make a recommendation and justification as to whether you should provide them with garden supplies. 
Include 2 points from the data as evidence as to why you should, or should not, provide garden supplies to Garden City Ltd.     

Question 3                                              
Dash’s Basketball Supplies Ltd is a wholesaler of basketball supplies to many sporting stores around Australia. A new investor is considering buying into the company and is initially interested as to whether the business can meet its current liabilities and their ability to sell inventory and collect receivables. You have been provided with the data for 2019, 2020 and 2021 below to provide the investor with some insight into how Dash’s business is performing in this area.

You have been provided with the data for 2019, 2020 and 2021 below to provide the investor with some insight into how Dash’s business is performing in this area
(i) Calculate the ratios listed below for 2021 and 2020 ensuring you show all workings

(ii) Review each ratio and comment on what information it provides you about Dash’s Basketball Supplies Ltd’s business. Include a comment as to whether the ratio is reflecting positively or negatively the business operations.                              

(iii) Draw an overall conclusion as to whether Dash’s Basketball Supplies business is in a position to pay current liabilities as well as its ability to sell inventory and collect receivables.     

Question 4                                          
Gillian and Ginger’s Gourmet Goods Pty Ltd is a new business providing gourmet food hampers. Below is a list of transactions that occurred during their first month of operation. You need to enter them into the General Journal with narrations.

You need to enter them into the General Journal with narrations.

Question 5                                             
Bert and Ernie Accounting Services Pty Ltd have identified 5 adjusting entries that require posting to the General Journal on June 30. Narrations are required.
1. Unearned revenue that has been earned was $500
2. Bert and Ernie paid $12,000 for insurance for the year on the 1 April
3. Employees are paid weekly every Friday and cost Bert and Ernie $5,000. June 30 falls on a Wednesday.
4. Office supplies used during the month were $250
5. Depreciation on office equipment for the year is $3,000

Question 6                                                      
The following shows After Hours Plumbing Services Pty Ltd’s Statement of Cash Flows at the end of their third year of operations.

Hours Plumbing Services Pty Ltd’s Statement of Cash Flows at the end of their third year of operations.

(i) What is the purpose of a statement of cash flows?                     

(ii) How does the cash flow statement assist a user trying to determine whether to invest in the business?

(iii) Review each section of the Statement of cash flows above and discuss how the business is performing in each area.        
Operating section 
Investing section 
Financing sections 

(iv) Review the overall cash flow position of the company and then justify why you would, or would not, consider working for the company.    

Question 7                                                        
Jez’s Tutoring Services Pty Ltd has been running for a number of years assisting primary and secondary students with their learning by providing after school and weekend tutoring.
Their bookkeeper has provided you with their Adjusted Trial Balance and request that you compile the following financial statements:
(i) Income Statement                     
(ii) Statement of Changes in Equity and 
(iii) Classified Balance Sheet at the 30 June 2021.

Classified Balance Sheet at the 30 June 2021.

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