Pages: 6 (1124 words) Published: December 28, 2012
May 14, 2012

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Awarded by the Asia e University

Assignment

Submission due date : 23rd June 2012 by or before 5.30pm

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Assignment Question

Scenario You have been recruited to help your uncle’s family to set up and run a supermarket called ‘BeliMurah Mart’ in Petaling Jaya. In the past, they had set up and managed smaller scale businesses, but have mixed up their finances that resulted in some losses. Since you have the knowledge of accounting, they would like to seek your guidance to understand some financial aspects that will help them build the new business into a successful venture.

Task 1 Prepare a short report (400 words) for your uncle and aunt explaining the purpose of accounting. Explain why it is important to record transactions and how it should be recorded. You may make reference to the accounting standards, if necessary. (10 Marks)

Task 2 Write a note to your uncle explaining the differences between capital and revenue items of expenditure and income. Use examples related to a supermarket so that your uncle and aunt will understand better. (10 Marks)

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Business A and B are both engaged in retailing, but seem to take a different approach to this trade according to the information available. This information consists of a table of ratios, show below: Ratio Current ratio Quick assets (acid test) ratio Return on capital employed (ROCE) Return on shareholders’ funds (ROSF) Accounts receivable turnover Accounts payable turnover Gross profit percentage Net profit percentage Inventory turnover Business A 2:1 1.7 : 1 20% 30% 63 days 50 days 40% 10% 52 days Business B 1.5 : 1 0.7 : 1 17% 18% 21 days 45 days 15% 10% 25 days

Required: (a) Explain briefly how each ratio is calculated. (b) Describe what this information indicates about the differences in approach between the two businesses. If one of them prides itself on personal service and one of them on competitive prices, which do you think is which and why?

(10 Marks)

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Task 4 The statements of financial position of A. Vantuira, a sole trader, for two successive years are shown below. You are required to draw up a statement of cash flows for the year ending 31 December 2012 using the IAS 7 layout. Statement of Financial Position as at 31 December 2011 RM Non-current assets Land and premises (cost RM160,000) Plant and equipment (cost RM 24,000) (cost RM 30,000) Current assets Inventory Trade account receivable Bank Total assets Current Liabilities Trade accounts payable Bank overdraft Non-current liabilities Loan (repayable December 2014) Total liabilities Net assets Capital account: Balance at 1 January Add Net profit for the year RM 140,000 22,000 162,000 9,000 18,000 27,000 189,000 21,000 17,000 38,000 (38,000) 151,000 14,000 14,000 25,000 (39,000) 153,000 7,000 13,000 8,000 28,000 192,000 RM

2012
RM 138,000 26,000 164,000

137,000 42,000 179,000 (28,000)

151,000 26,000 177,000 (24,000) 153,000

Less Drawings

151,000

(20 Marks)

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Task 5 From the following trial balance of G. Still, draw up an income statement for the year ending 30 September 2013, and a statement of financial position as at that date. Dr RM 41,600 2,100 3,700 1,540 188,430 380,400 61,400 3,700 1,356 1,910 412 894 245 92,000 13,400 1,900 42,560 31,600 5,106 22,000 68,843 484,253 Inventory at 30 September 2013 was RM 44,780. 484,253 Cr RM

Inventory: 1 October 2012 Carriage outwards Carriage inwards Return inwards Return outwards Purchases Sales Salaries and wages Warehouse rent Insurance Motor expenses Office expenses Lighting and heating expenses General expenses Premises Motor vehicles Fixtures and fitting Account receivable Account payable Cash at...