UD Business Report – Financial Statements & Report with Spreadsheets

Onceastart-upand/orsmall business gets off the ground, one of the most important challenges it faces is to record, manage and interpret the financial aspects of business. Alpha and Omega is a local Chartered Accountancy firm, specializing in start-up and small/family businesses. You are working with the firm as a trainee assistant accountant, and you are required to Produce a Report that will be attractive to small business, while showing purpose and scope of accounts and its importance to their business.

Businesses are required to produce a variety of financial information for both internal and external purposes.

Alpha and Omega Chartered Accountancy firm has many local family-run small businesses as its clients. You, as an accounting assistant, have been assigned to a local firm named Happy Flowers Bouquet to prepare two financial reports and associated tasks as provided below:

1. Income Statement and Balance Sheet:

a) Prepare an income statement and balance sheet for the Year Ending 5th April 2023 based on a trial balance attached to ‘appendix A’. Make sure it meets relevant accounting principles, conventions, and standards. Show appropriate adjustments, such as accruals, prepayments and depreciation to the income statement.

Financial ratios: You are required to critically evaluate financial statements to assess business performance interpreting the financial ratios which you have calculated and compare with the relevant benchmarks. Apply a range of financial ratios to evaluate the client’s performance and financial position over two years in ‘appendix B’. Emphasis the limitation of using ratios as a performance measurement tool. justify your conclusions. Cash Budget: Prepare a 12-month cash budget for the client using Excel spreadsheet based on the data attached to ‘appendix C’. Discuss the benefits and limitations of the cash budget and budgetary planning and control of the client. Use your completed cash budget to identify problems of budgetary planning and control and provide justified solutions to ensure efficient and effective deployment of resources. Identify problems (e.g., sudden increase / decrease in cash position due to different scenarios etc.) revealed by budgetary planning and control (Cash Budget) prepared for the client. Provide solutions to such problems with justification on the impact of such solutions on the client’s business operations and the decision making.

ACTIVITY 1 Assessment – Business Report
The submission format is in the form of a Report. You are required to make use of headings,
paragraphs, subsections, images as appropriate. All work must be supported with research
and referenced using the Harvard referencing system. You will need to provide a bibliography
using the Harvard referencing system. Inaccurate use of referencing may lead to issues of
plagiarism if not applied correctly. The recommended word limit is 1500 words for the report.
You will not be penalized for going under or exceeding the total word limit.
Unit Learning Outcomes for Assessment activity 1.
LO1 Examine the context and purpose of accounting
Transferable skills and competencies developed for Assessment activity 1.
• Reasoning and analytical skills
• Written communication.
• Intra-personal skills: plan priorities, self-management, independent learning
/ analysis
Vocational scenario for Assessment activity 1.
Critical thinking
Once a start-up and/or small business gets off the ground, one of the most important challenges it
faces is to record, manage and interpret the financial aspects of business.
Alpha and Omega is a local Chartered Accountancy firm, specializing in start-up and small/family
businesses. You are working with the firm as a trainee assistant accountant, and you are required to
Produce a Report that will be attractive to small business, while showing purpose and scope of
accounts and its importance to their business.
Assignment activity 1 and guidance
You have been instructed to prepare a business report that guides small business the purpose
of accounting functions which should cover the following areas:
i) You are required to Critically Evaluate the role of accounting in decision making
on meeting organizational, stakeholders and wider societal needs by Examining
and assessing the purpose of the accounting function including its ethical and
regulatory constraints.
Submission Format for Assessment Activity 2: Financial Statements & Report with
Spreadsheets
This submission is in the form of an Excel spreadsheet with accompanying written report.
Prepare an income statement, balance sheet, financial ratios and the
cash budget. The
budget should be prepared using an excel spreadsheet which will then be pasted as a picture
onto a word file and uploaded to Turnitin with your final report. All work must be supported
with research and referenced using the Harvard referencing system. You will also need to
provide a bibliography using the Harvard referencing system.
Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly. The
recommended word limit is 1,500 – 2000 words, although you will not be penalized for going
under or exceeding the total word limit within 10%.
Unit Learning Outcomes for Assessment activity 2.
LO2 Prepare basic financial statements for unincorporated and small business organizations in
accordance with accounting principles, conventions, and standards.
LO3 Interpret financial statements.
LO4 Prepare budgets for planning, control and decision-making using spreadsheets.
Transferable skills and competencies developed for Assessment activity 2.
Managing financial data.
Manipulating and interpreting data using spreadsheets.
Effective communication of relevant information across the organization and to appropriate
stakeholders.
Critical thinking, decision-making, creation, and interpretation of information showing how that
information can be used most effectively to add value to the organization.
Problem solving ability to use quantitative skills to manipulate data, evaluate, estimate, and
model business problems.
Application of accounting knowledge to consistently deliver high-quality, accurate data and
information in a timely fashion.
Vocational scenario and guidance for Assessment activity 2.
Businesses are required to produce a variety of financial information for both internal and
external purposes.
Alpha and Omega Chartered Accountancy firm has many local family-run small businesses
as its clients. You, as an accounting assistant, have been assigned to a local firm named Happy
Flowers Bouquet to prepare two financial reports and associated tasks as provided below:
1. Income Statement and Balance Sheet:
a) Prepare an income statement and balance sheet for the Year Ending 5th April 2023
based on a trial balance attached to ‘appendix A’. Make sure it meets relevant
accounting principles, conventions, and standards. Show appropriate adjustments,
such as accruals, prepayments and depreciation to the income statement.
2. Financial ratios:
a) You are required to critically evaluate financial statements to assess business
performance interpreting the financial ratios which you have calculated and compare
with the relevant benchmarks. Apply a range of financial ratios to evaluate the client’s
performance and financial position over two years in ‘appendix B’. Emphasis the limitation
of using ratios as a performance measurement tool. justify your conclusions.
3. Cash Budget:
a) Prepare a 12-month cash budget for the client using Excel spreadsheet based on the
data attached to ‘appendix C’. Discuss the benefits and limitations of the cash budget
and budgetary planning and control of the client. Use your completed cash budget to
identify problems of budgetary planning and control and provide justified solutions to
ensure efficient and effective deployment of resources.
b) Identify problems (e.g., sudden increase / decrease in cash position due to different
scenarios etc.) revealed by budgetary planning and control (Cash Budget) prepared for
the client. Provide solutions to such problems with justification on the impact of such
solutions on the client’s business operations and the decision making.
Recommended Resources
Please note that the resources listed are examples for you to use as a starting point in
your research – the list is not definitive.
Weblinks
Accounting Coach courses. Available at: https://www.accountingcoach.com/accountingbasic/explanation
The Association of Chartered Certified Accountants ACCA). Available at:
https://www.accaglobal.com/gb/en.html
Chartered Institute of Management Accountants. Available at: https://www.cimaglobal.com/
Indeed
Career
Guide
to
Memo
Writing.
Available
at:
https://www.indeed.com/careeradvice/career-development/memo/writing-guide
HubSpot. How to write a memo: Templates & examples. Available at:
https://blog.hubspot.com/marketing/how-write-memo
HN Global HN Global
HN Global (2021) Reading Lists. Available at: https://hnglobal.highernationals.com/learningzone/reading-lists
HN Global (2021) Student Resource Library. Available at:
https://hnglobal.highernationals.com/subjects/resource-libraries
HN Global (2021) Textbooks. Available at: https://hnglobal.highernationals.com/textbook
Textbooks
Atrill, P. and McLaney, E. (2018) Accounting and Finance for Non-Specialists. 11th Ed.
Harlow: Pearson
Weetman, P. (2019). Financial and Management Accounting: An Introduction.Harlow:
Pearson
Submission Instruction: You must submit both sections of assignment into one file on
Turnitin via Moodle. Works done on spreadsheet must be embedded (pasted as picture)
within the assignment (word file). Additionally, you must fill in, sign, and attach the
declaration form below
Learning Outcomes and Assessment Criteria
Pass
Merit
LO1 Examine the context and purpose of accounting
Distinction
LO1
D1 Critically evaluate the role of
accounting in informing decision
making to meet organisational,
stakeholder and societal needs
within
complex
operating
environments
LO2 and LO3
LO2 Prepare basic financial statements for unincorporated
and small business organisations in accordance with
accounting principles, conventions, and standards.
P3
Prepare
financial
statements from a given trial
balance for sole traders,
partnerships and not-forprofit organisations, to meet
accounting
principles,
conventions and standards.
M2 Produce financial
statements from a given
trial balance, making
appropriate adjustments
D2 Critically evaluate financial
statements to assess organisational
performance using a range of
measures and benchmarks to make
justified conclusions.
LO2 and LO3
LO3 Interpret financial statements.
P4 Calculate and present financial
M3 Evaluate the
ratios from a set of final accounts.
performance of an
P5 Compare the performance of an
organisation over time,
organisation over time
using
using financial ratios
financial ratios
with reference to
relevant benchmarks.
D2 Critically evaluate financial
statements to assess organisational
performance using a range of
measures and benchmarks to make
justified conclusions.
LO4 Prepare budgets for planning, control and decision making using spreadsheets
P6 Prepare a cash budget
from given data for an
organisation using a
spreadsheet.
P7 Discuss the benefits and
limitations of budgets and
budgetary planning, and
control for an organisation.
M4 Identify corrective
actions to problems
revealed by budgetary
planning and control for
effective organisational
decision making.
LO4
D3 Justify budgetary control
solutions and their impact on
organisational decision making to
ensure efficient and effective
deployment of resources.
Appendix A – Trial Balance
Happy Flowers Bouquet in UK
Trial Balance
For the Year ending 5th April 2023
Debit
(£)
Credit
(£)
Owner’s capital
10960
Sales Revenue
22800
Opening stock
2050
Purchases
8200
Rent and Rates
2400
Wages & Salaries
7520
Utility Bills
800
Machinery & equipment
12000
Van
1500
Interest on Bank Loan
250
Bank loan
4500
Trade creditors
2070
Debtors
1690
Cash in hand & Bank
3570
Insurance premium
220
Petrol & Repairs
130
40,330
40,330
End of the year adjustment entries:
1.Closing stock £1250
2.Depreciate machinery & equipment by 10% using straight line Method scrap value of
machinery is 0 and life of machinery is 10yrs
3.Depreciate Van by 25% by using reducing balance method and scrap value of van is
£200 life of van is 3 yr . Van was Purchased in 2023.
4.Rent & Rates includes £1,000 which is prepaid.
5.Utility used, but bill amounting to £50 not paid yet.
Requirements:
Prepare the following from the Trial Balance and adjustments above
1) Statement of Profit & Loss and other comprehensive income (P & L)
2) Statement of Financial Position (Balance Sheet)
Appendix B – Performance Financial data
Happy Flowers Bouquet in UK
Year
2022
Current asset
4550
Current liability
1210
Fixed Assets
9000
Fixed/long term liabilities
6700
Owner’s equity
15,000
Gross Profit
12,500
Net profit
4000
Sales Revenue
Stock
2023
25,000
1800
Calculate the following performance financial ratios for both the years. Take
2023 figures from P& L and Balance Sheet prepared from Appendix A data.
Profitability Ratios -2 ratios
Liquidity Ratios-2 ratios
Debt to Equity Ratio-1 ratio
Investment Ratios-1 ratio
Appendix C: Cash Budget base financial data
Happy Flowers and Bouquet in UK
Start-up capital and Cash Budget of Company
£
Owner’s Capital
One off
10960
Bank Loan
One off
4500
Sales Revenue
Per month (March till
Dec)
22800
Marketing expenses
Per month
1200
Rent/property expenses
Per month
2400
Purchases
Per month
8200
Wages & salaries
Per month
7520
Machinery & Equipment
One off
12000
Utility expenses
Per month
800
Loan & interest payment
Per month
250
Requirements:
Prepare 12-month Cash Budget based on the data provided above. However, you can
also consider the following scenario to upgrade your work
1. Increase the marketing budget by 10% per month from 5th month.
2.No credit sales in the month of Jan, 20% of Sales revenue is through credit sales.
3. Increase rental expense by 15% from Jan.
4. No purchases were made in the 5th month
5. Tax paid £8000 in 2 equal instalments. One in the month of March and second one
in September.