Accounting and Finance Assignment (Doc)

Accounting and
Finance
Table of Contents

INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
A) Prepare an Income Statement and Statement of Financial Position for organisation.......3
TASK 2............................................................................................................................................5
b) Calculation of various types of cost...................................................................................5
a) Calculation of fixed cost.....................................................................................................5
b). Calculation of Marginal Safety.........................................................................................6
c) Calculation of profit...........................................................................................................7
d) Calculations fir selling price..............................................................................................7
e) Identify and explain the underpinning assumptions to break even model.........................8
TASK 3............................................................................................................................................9
C) Calculation of payback period, accounting rate of return and net present value..............9
a)Calculations of different methods.......................................................................................9
b) Key merits and limitations of investment appraisal techniques.......................................10
C) Identifies and explains the key benefits and limitations of using budgets as a tool for
strategic planning..................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
Accounting and finance are the tools and techniques which is used by an organisation to
summarise, record and interpretation of data and financial information. It helps the company to
know the financial position of it through which it can take future investment decision. In this
report financial statements are prepared such as balance sheet and profit & loss account. Payback
period, accounting rare of return and net present value are also analysed. Apart from this various
types of costs are calculated that are break even & margin of safety.
TASK 1
A) Prepare an Income Statement and Statement of Financial Position for organisation
Income statement is a part of financial statement which shows that a company is
earning profits or not. Profit and loss account is the part of this statement and it is essential to
prepare because it reflects the profitability of organisation during a particular time period. It can
varies form corporation to corporation and it can prepare on the basis of monthly, quarterly and
early basis. In debit side of profit and loss account all expenses are recorded and in credit side
Income statement of Gravepals for the year ended 2017
Statement of profit and loss
Continuing operations £
Sales
Credit 504000.00
Cash 129000.00 633000.00
Cost of sales of goods 297000.00
Gross Profit 336000.00
Operating Expenses
Wages 117000.00
Operating Profits 219000.00
Other Expenses

Rent 90000.00
Rates 5775.00
Van running expenses 33600.00
Electricity 7725.00
Depreciation 9600.00
Bad debt 1500.00
Profit before income tax 70800.00
Interpretation: Gross profit is 336000 and from it indirect expenses are deducted such as rent,
rates, electricity, depreciation etc. After that profit before income tax is calculated which is
70800. As a result organisation can know its profits through it.
Financial statement: It records the financial activities and conditions of a business entity of an
organisation. It represents the financial information of the organisation. It involves cash flow,
balance sheet etc. and these are audited by accounting firms or government agencies. In debit
side of balance sheet all liabilities are recorded and credit side all assets are recorded (Financial
statements. 2018).
Financial Statement of Gravepals for the year ended 2017
Financial Statement
Assets £
Van 60000.00
Less: Depreciation 9600.00 50400.00
Total non-current assets 50400.00
Inventories 525000
Accounts receivable 66000
Prepaid Expenses 23625.00
Short-term investments
Cash and cash equivalents
(Balancing Figure) 168300.00
Total current assets 782925.00