Accounting in Context & Budgetary Control

This appears to be a project brief for a student in Unit 5: Accounting Principles. The project is titled "Accounting in Context and Budgetary Control" and the submission format is a report compiled from evidence produced for three parts. The recommended word limit is 3000-3500 words and all work must be supported with research and referenced correctly using the Harvard referencing system. The report should cover relevant academic theory and include an examination of the purpose and scope of accounting, main branches of accounting, the role of technology in modern-day accounting, issues of ethics, regulation, and compliance, and a critical evaluation of the accounting function in informing decision making and meeting stakeholder needs. Is there anything else you would like to know?

Higher Nationals
Project Brief
Student Name/
ID Number
Unit Number
and Title
Unit 5: Accounting Principles
Unit Code:
Type:
Level:
Credit Value:
Unit Tutor
Project Title Accounting in Context and Budgetary Control
Submission
Instruction
You must submit the three parts into one file on
Turnitin
Learner Declaration:
I certify that the work submitted for this project is my own and research
sources are fully acknowledged.
Student signature: Date:
PART ONE
Submission format
The submission is in the form of a report compiled from the evidence
produced for the three parts.
All work must be supported with research and referenced correctly 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 for this project is 3000–3,500 words, although
you will not be penalised for exceeding the total word limit.
Unit Learning Outcomes
LO1 Examine the context and purpose of accounting.

Transferable skills and competencies developed
● Reasoning and analytical skills
● Written communication using a range of media
● Manipulation and interpretation of data using spreadsheets
● Effective communication of relevant information across the
organisation and to appropriate stakeholders
● Creation and interpretation of information, showing how that
information can be used most effectively to add value to an
organisation.
Vocational scenario
Organisation:
A large accountancy firm that undertakes extensive business
consultancy work for their client base. They have a central London
head office and regional offices in the UK in Birmingham and
Southampton. Last year, the group turnover was £200 m with 25 per
cent deriving from non-UK markets, principally in Southeast Asia.
They have a small regional office in Singapore. The firm also has a
policy of taking on smaller niche clients, where they feel there is
potential for fast growth.
Role
You have recently joined the firm as a Graduate Trainee attached to
their UK SME (Small and Medium Enterprises) Unit, offering
accountancy and 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.

Project activity and guidance
Your supervisor, one of the firm’s Key Account Managers, has asked you to
prepare a report as part of marketing and promotion of its accounting
services to new and existing clients. The working title you have been given
for report is ‘The role of accounting in an organisation’. The report must
cover relevant academic theory, making use of, for example, headings,
images and illustrations. Your report should include the following, but is not
limited to:
● An examination of the purpose and scope of accounting in complex
operating environments
● What are main branches of accounting and job skillsets and
competencies
● Examine accounting systems and the role of technology in modern-
day accounting.
● Assessment of the issues of ethics, regulation and compliance and
the extent to which they are a constraints or threats to the
organization.
● A critical evaluation of the accounting function in informing
decision making and
meeting stakeholder and societal needs and expectations.

PART TWO
Submission format
The submission of this part is in the form of a report compiled using the
evidence produced . It will contain the appropriately constructed financial
statements (income statement and statement of financial position) for the
organisations.
Unit Learning Outcomes
LO2 Prepare basic financial statements for unincorporated and small
business
organisations in accordance with accounting principles, conventions
and standards.
LO3 Interpret financial statements.
Transferable skills and competencies developed
● Managing financial data
● Written communication using a range of media
● Manipulating and interpreting data using spreadsheets
● Effective communication of relevant information across the
organisation and to appropriate stakeholders
● Creation and interpretation of information and showing how that
information can be used most effectively to add value to the
organisation
● 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
Having successfully completed your six-month probation as a Graduate Trainee
at the
accountancy firm, you have now been attached to a unit in the firm that deals
with the
provision of accountancy and consultancy services to small businesses that are
typically set up as sole traders, not for profit and partnerships. The firm is
careful about which small and emerging businesses it works with as it seeks to
spot growth potential and identify and work with clients that have scalable
business models.
Project activity and guidance
You are initially working with a selection of organisations that have been in
operations for a number of years and which now need annual trading
statements to be compiled and submitted in line with government requirements.
You have been given below:
An extended trial balance for each business, including accruals, prepayments
and figures for bad debts and depreciation
Your supervisor, one of the firm’s Key Account Managers, has asked you to
compile the year- end financial statements ready for submission and provide,
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 the balance sheet.

Abc enterprise
Trial Balance as at 31st October 2021
The following additional information is also available, for which closing adjustments
are required.
a. Inventory as at 31st October 2021 was valued at £16,540
b. All non-current assets are depreciated at 20% of the net book value.
c. Wages of £7800 for the month of October 2021 were paid on 4th November
2021.
d. The rent of £60000 for the quarter ending 31st December 2021 was paid
on 1st October 2021.
e. Corporation tax liability for the year is estimated to be £43,870.
You are required to prepare the following for Abc enterprise making
appropriate adjustments:
 Income Statement
 Balance Sheet
DR (£) CR (£)
Capital 10,000
Inventory as at 1st November 2020 7660
Purchases 245,130
Sales 725,240
Bank loan to be repaid by 31st July 2024 65,000
Purchase returns 21,990
Sundry expenses 7640
Rent & rates 168,000
Sales returns 26530
Utility expenses 54,330
Profit & loss account balance as at 1st November 2020
(profit)
41,100
Property, plant & equipment at cost 216,500
Accumulated depreciation as at 1st November 2020 75,400
Trade receivables 76,500
Bank (overdraft) 14,150
Interest paid on bank loan 1,290
Trade payable 26,560
Irrecoverable debt 860
Wages paid 139,000
Drawings 36,000
979,440 979,440

Aaron and Burton are in a partnership, and they share their Profits in the ratio 3:2.
Below is their trial balance for the year ending 28th February, 2023
Item DR (£) CR (£)
Premises at cost 800,000
Fixtures at cost 142,000
Vehicle at cost 87000
Purchases 2,116,400
Sales 4,088,30
0
Stock at 1st March,
2022
264,800
Wages 1,526,100
Light 84,200
Motor expenses 31,700
Drawings 185,000
Advertising 8,600
Insurance 15,400
General Expenses 39,500
Debtors 13,400
Creditors 71,400
Partner’s Salary 9,000
Bank Balance 18,900
Capital 1,182,30
0
5,342,000 5,342,00
0
Additional Information
1. Stock as at 28th February 2023 was £245,600
2. Partner’s salaries:
Aaron: £5,000
Burton: £4,000
4. Drawings
Aaron : 111,000
Burton : 74,000
3. At the beginning of the Year they had the following balances
Capital Current
Aaron £709,380
cr
0.00 cr
Burto
n
£472,920
cr
0.00 cr
Required
 Income statement
 prepare the partnership appropriation account.
 calculate each partner’s share of the residual profit and total profit
share; and

 prepare the partners’ current accounts.
 Balance sheet for the Partnership.
The Following is the receipt and payment a/c of Apex
foundation a non- for profit
organisation.
Additional information
Fixed assets as at 1st January, 2022
 Land and Building- £800,000
 Furniture- £210,000
 Van at cost £500,000
Membership strength as at 1st January, 2022 is 300 and annual subscription fee
of £ 2000 per
person.
 Subscription due 31st December, 2021-£68,000
 Subscription due 31st December, 2022- £40,000
Accrued Interest on investment
 1st January, 2022-£16,000
 31st January, 2022- £20,000
Prepare Income and Expenditure Account and statement of affairs for the year
ending 31st
December, 2022.
Receipts Amount
(£)
Payments Amoun
t (£)
Cash in Hand 1st Jan 2022 98,000 Salaries 402,00
0
Subscription-
(Including £8,000 for the year ending
Dec 2023)
1,042,000 Travelling 172,00
0
Donation 120,000 Printing and
stationery
34,400
Proceeds from Charity 324,000 Rent 332,00
0
Sale proceeds of furniture at book value 32,000 Repairs 9000
Life membership fee 180,000 Building Purchased 600,00
0
Investment Interest 96,000 Government bonds 100,00
0
Sale proceeds of old Van 400,000 Balance c/d 642,60
0
2,292,000 2,292,0
00

1. Write an accompanying letter to the Owner of Abc enterprise containing
their completed financial statements. The letter needs to also include:
calculation of the following ratios
 Gross profit ratio
 Operating profit ratio
 Current ratio
 Acid test ratio
 Asset Turnover ratio
 Inventory turnover
2. A Comparison and critical evaluation of the performance of Abc
enterprise over a period of two years (making reference to data you have
calculated and data provided from the previous year), with reference to
relevant benchmarks and make justified conclusions.
Previous year’s data
Ratio 2020
Gross Profit 53%
Operating Profit 29%
Asset Turnover 1.3 times
Inventory turnover 43 days
Current ratio 1.7:1
Acid test ratio 1.0:1

PART THREE
Submission format
The submission is in the form of a report compiled using the evidence
produced.
The word count for this part should be 1,000, although you will not be
penalised for going under or exceeding the total word limit. A bibliography
should be provided using the Harvard referencing system (or an alternative
system). Inaccurate use of referencing may lead to issues of plagiarism if
not applied correctly.
Unit Learning Outcomes
LO4 Prepare budgets for planning, control and decision making using
spreadsheets
Transferable skills and competencies developed
● Reasoning and analytical skills
● Written communication using a range of media
● Manipulation and interpretation of data using spreadsheets
● Effective communication of relevant information across the
organisation and to appropriate stakeholders
● Creation and interpretation of information, showing how that
information can be used most effectively to add value to an
organisation.
Vocational scenario
Having completed the first and second activity, you have now been
asked to work with a hospitality and catering start-up business that
your firm has just taken on as a client. The business is particularly 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 a business loan of
£50,000.
You have been asked to prepare a memorandum that includes the

following.
● A production of a 6-months cash budget using the data below
July August Sept Oct Nov Dec
£ £ £ £ £ £
Cash Sales 10,000
10,000 12,000
12,000 10,000 10,000
Cash received from
debtors
26,000
28,000 27,000
25,000 20,000 12,000
Payment made to
creditors
9,000
11,000 12,000
13,000 10,000 11,000
Cash Purchases 6,000 6,000 7,000 6,000 6,000 7,000
Payment for rent
21,000
21,000 21,000
Payment for rates 1,200 1,200
Payment for wages 8,000 8,000 8,000 8,000 8,000 8,000
Payment for other
expenses
2,750 3,750 2,800 - - -
It is expected that cash in Hand as at 30th June £2,000
● 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
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/accounting- basics/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/career- advice/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/learning- zone/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: Pears
Learning Outcomes and Assessment Criteria