Accounting Essay

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Introductory Accounting Assignment
Introductory Accounting Assignment

Student: Vu Ngoc Quynh Anh
Student ID: s3373451
Course Code: ACCT2105
Lecturer: Lan Anh Nguyen Thi
Semester 1, 2012
Nick Scali Limited
Annual Report 2011

Student: Vu Ngoc Quynh Anh
Student ID: s3373451
Course Code: ACCT2105
Lecturer: Lan Anh Nguyen Thi
Semester 1, 2012
Nick Scali Limited
Annual Report 2011

Part A: The Financial Information of Nick Scali Limited Company Question 1: The Company’s principal operating activities.
The main operating activities of the Nick Scali Limited were finding the supplying source and retailing household furniture and related appliances, accessories. (Nick Scali Limited, Annual Report 2011, pp.12)

Question 2: The retailing brands controlled by the legal entity Three retailing brands belong to Nick Scali Limited are:
* Sofas2Go
* Chateau d’Ax
* Nick Scali Limited
(Nick Scali Limited, Annual Report 2011, pp.2)
Question 3: Depreciation method applied
The number of note deals with Statement of Significant Accounting Policies is Note 1. The specific depreciation method applied is Straight-line Method. Leasehold improvements are calculated at the shorter of the depreciation period or the term of the lease. (Nick Scali Limited, Annual Report 2011, pp.22)

Question 4: Depreciation expense and accumulated depreciation Total depreciation expense for the year ending 30 June 2011 is $1,064,000. (Nick Scali Limited, Annual Report 2011, note 3, pp.29)
Total accumulated depreciation as at 30 June 2011 is $7,122,000. (Nick Scali Limited, Annual Report 2011, note 12, pp.34)
Question 5: Right issue and the number of shares
Rights issue is the way to raise the capital from stockholders. Once a company offers rights issue, shareholders have the right to buy the amounts of shares which based on the percentage of the shares they have held. (Atrill et al 2009) The total quantities of rights granted by the firm in 2011 under this plan is 36,232 shares. (Nick Scali Limited, Annual Report 2011, note 25, pp.42)

Question 6: Amount of final fully franked dividends per share The Directors announced 4.5 cents per share which is the final fully franked dividends for 2011. (Nick Scali Limited, Annual Report 2011, pp.13)

The company paid 6.0 cents per share which is the final franked dividends in 2009. (Nick Scali Limited, Annual Report 2011, pp.13)
Question 7: Purchase of Land and Building
The Nick Scali Limited purchased $7,000,000 for Land and Buildings in Alexandra N.S.W (Nick Scali Limited, Annual Report 2011, pp.12)
Half of the fund as well as $3,500,000 was borrowed from external sources which is disclosed in Note 22 (Nick Scali Limited, Annual Report 2011, pp.40)
Question 8: The purpose of external auditor report:
* In order to appraise the Nick Scali Limited’s financial report which include the statement of finacial statement, income statement and comprehensive income statement, cash flows statement, other accompanying notes and the annoucement of directors * In order to guarantee directors offer the relevance and fair perspective and presentation in terms of the financial situation * In order to convey a point of view in regards to the financial report which comply with the Australian Accounting Standard * In order to analyse and audit the operation of the company through the report of the directors (Nick Scali Limited, Annual Report 2011, pp.48)

Part B: Analysis of financial information
Question 1: Calculating analytical ratio
1. Current ratio = Current AssetsCurrent Liabilities (Atrill 2009) Attributes| 2010 ($’000)| 2011 ($’000)|
Current Assets| 32,919| 30,865|
Current Liabilities| 19,359| 18,987|
Adapted from Nick Scali Limited 2011
For the year 2010:
Current ratio = 32,91919,359 = 1.7 times
For the year 2011:
Current ratio = 30,86518,987 = 1.62 times
2. Acid test ratio = Current assets (excluding inventoryand prepayments)Current...
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