Unit 05: Accounting Principles

Example Assessment Brief

Student Name/ID Number

Unit Number and Title Unit 05: Accounting Principles

Academic Year 2021/2022

Unit Tutor Nasuha Bishrul

Assignment Title Accounting in Context

Issue Date 05/07/2022

Submission Date Submission for Formative Feedback 18th August 2022

Final Submission 28th August 2022
IV Name & Date Nadeesha Thilakarathna

Submission Format
Part I
A detailed letter to a client. The letter must be clear worded, well-structured and should make use of
appropriate business language. The letter also include clearly- labelled tables and charts. It will
accompany the constructed financial statements for the business. The word count is 2000-2500
words, although you will not be penalized for going under or exceeding the total word limit.
Part II,III
A submission of a memorandum with an accompanying Excel spreadsheet (the data will be given).
You will insert sections of your spreadsheet to the memorandum. The word limit will be 1000-1500
words, although you will not be penalized for going under or exceeding the word limit. Referencing
should use the Harvard system

Unit Learning Outcomes

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

Reasoning and analytical skills

Interpreting a financial statement
Manipulation and interpretation of data using spreadsheets
Effective Communication skill
Assignment Brief and Guidance

The task for you is to make annual trading statements to be compiled and submitted in line with
government requirements. You have given a trial balance, including accruals, prepayments and
figures for bad debts and depreciation.
Your supervisor, asked you to compile the year-end financial statements ready for submissions and
provide the client some detailed analysis of the figures produced, which will be presented in the form
of an enclosed letter. Specifically you will undertake the following:
1. From the data provided, you are required to prepare the year-end financial statements, taking
into consideration accounting principles, conventions and standards. You will need to make
and show appropriate adjustments to both the income statement and balance sheet.
2. Write an accompanying letter to the client will be sent with the completed financial
statements. The letter needs to include:
 Critical evaluation of the performance to the business on the year ( making reference to
data you have calculated and data provided).
 An outline of the benefits of contemporary accounting software packages, with
examples of products on the market.
 Justified conclusions and recommendations for your client.

Following is the Trial Balance for the year ended 31st March, 2021
Prepare Trading and Profit and Loss Account for the period ending 31st March, 2021 and
a Balance Sheet as on that date after taking following information into consideration.
1. Closing stock Rs. 80,200 (including stationery stocks Rs. 200).
2. Office expenses include stationery purchased Rs.800.
3. Sundry Debtors include Rs.3,000 receivable from Reeta and Sundry Creditors include
Rs.1,000 payable to Reeta.
4. A sum of Rs.5,000 has been received from a debtor as deposit which has been credited
to his account
5. Rs.500 were written off as bad debts in previous year and this amount has been
received during the current year and has been credited to Debtors Account.
6. Some employees are residing in the premises of business due to their nature of
service, the rent of such portion is Rs.1,000 per month.
7. Salaries include a sum of Rs.500 which is advance salary.
8. On 1st April, 2020 books contain such furniture of Rs.600 which was sold for Rs.290 on
30th Sept., 2020 and in exchange of it a new furniture of Rs.520 was acquired, its net
invoice of Rs.230 was recorded in purchase books.
 9. Depreciate Buildings @ 5% p.a. and Furniture @ 10% p.a. 10. Goods worth Rs. 2,000
were in transit on the last day of the accounting yea
Task II
Role
You have recently joined the firm as a graduate trainee attached to their SME unit. This large
accountancy firm undertakes extensive business consultancy work for their client base. In addition,
the SME provides financial services to businesses that typically have a turnover ranging from $ 0.5 m
to $ 15 m. as part of your ongoing training; you have been asked to undertake some activities.
Assignment guidance
You are initially working with a selection of small businesses that have been trading for three years
and now they have made a trading statement which is to be compiled and submitted in line with
government requirements.
 An P & L statement is given for the business
 And the required list of ratios are also given
You are required to compile the income statement ready for submission and provide some detailed
analysis of the figures produced, which will be presented in the form of an enclosed letter. The letter
need to be include the calculations, critical evaluation of the performance to the business year on
year as well as limitations of using financial ratios as performance measures.
And a justified conclusions and recommendations for your client.
ABC company
Income statement for the year ended 31st December 2021
Additional information
1. Total owners equity for the years 2020, 2021 are $ 30,200 and $35,600 respectively.
2. Credit sales for the year 2021 is 50% of net sales

Profitability ratios 2020 2021 interpretation

Return on equity 18.5%

Net profit margin 6.7%

Gross profit 34%

margin

Selling Exp. Ratio 16.5%

Financial Exp. 8.8%
Ratio

ABC company
Balance sheet as at 31st December 2021
Additional information
1. Debtors balance for 2020: 5490; inventory balance for 2020: 3755

Stability ratios 2020 2021 interpretation

Working capital 1.03.1

Total debt 80.2%

Stock turnover 29.2 days

Debtor turnover 24.8 days

Interest coverage 2.5 times

And,
Task III
 You have been asked to work with a start- up business that your firm has just taken on as
client. The business is particular in need of support and guidance with budgeting and how it
can be used to inform efficient resource allocation and support effective control and decision-
making. The founder of the business is investing $100,000 of their own capital and has also
secured business loan of $50,000
(Note: student should prepare the budget in spreadsheet and the data will be given)
You have been asked to prepare a memorandum that includes the following.

From the information below, prepare a cash budget for a company for April, May, and June
2021 in a columnar form.

Month Sales Purchases Wages Exp.

Jan. (actual) 80,000 45,000 20,000 5,000

Feb. (actual) 80,000 40,000 18,000 6,000

Mar. (actual) 75,000 42,000 22,000 6,000

Apr. Budget 90,000 50,000 24,000 6,000

May Budget 85,000 45,000 20,000 6,000

Jun. Budget 80,000 35,000 18,000 5,000

You are further informed that:

 10% of purchases and 20% of sales are for cash.

 The average collection period of the company is half a month and credit purchases are
paid off regularly after one month.
 Wages are paid half monthly and the rent of $500, excluded in expense, is paid monthly.
 Cash and bank balance on April 1 was $15,000, and the company aims to keep it below
this figure at the end of every month. The excess cash is placed in fixed deposits.

● An evaluation of the role that budgets play in the effective planning and control of resources in an
organisation such as your client’s. This will include both benefits and any limitations of using budgets
and the extent to which they can help identify problems and corrective actions.
● An outline of a range of budgetary control solutions, with justification, to support organisation
decision making and ensure efficient and effective deployment of resources

Recommended resources
Weblinks:
Accounting Coach courses. Available at:
https://www.accountingcoach.com/accountingbasics/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 (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/textbooks
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

Pass Meri Distinction

t

LO2 prepare basic financial statements for unincorporated

and small business organizations in accordance with
accounting principles, conventions and standards.

P3 prepare financial M2 produce financial

statements from a given trial statements from a given
balance for sole traders, trial balance, making
partnerships and not for appropriate adjustments.
profit organizations to meet
accounting principles,
conventions and standards

LO3 Interpret the financial statements

P4 calculate and present M3 evaluate the performance

financial ratios from a set
of final accounts.
P5 compare the
performance of an
organization over time
using financial ratios
of an organization over time,
using financial ratios with
reference to relevant
benchmarks
D2 critically evaluate
financial statements to
assess organizational
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
organization using a
spreadsheet.
P7 discuss the benefits and
limitations of budgets and
budgetary planning, and
control for an organization.
M4 identify corrective actions
to problems revealed by
budgetary planning and
control for effective
organizational decision-
making.
D3 justify budgetary
control solutions and
their impact on
organizational decision
making to ensure
efficient and effective
deployment of
resources.

STUDENT ASSESSMENT SUBMISSION AND DECLARATION 

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