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Financial and Management Accounting

   

Added on  2020-10-22

17 Pages3811 Words287 Views
ACCOUNTING SKILLS

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................4QUESTION 1 ..................................................................................................................................4Prepare the income statement and balance sheet of the following..............................................4B) Differentiate between financial and management accounting...............................................5QUESTION 2(a)..............................................................................................................................6Calculate the following ..............................................................................................................6(B)Calculate the following with the help of make or buy decision process...............................7(2) make or buy decision.............................................................................................................8Interpretation...................................................................................................................................8Above calculation provides the analysis of unit cost of production. It shows the firm can go forthe new product. The organization has produced 15000 units of 3741 products. Moreover, firm isable to recover contribution of 15000 units by producing different commodities in a feasiblemanner. This criticizes that organization can decrease the direct expenses in effective way. Thereis nearly 74.36% of cost that will be incurred if an organization will go for differentcommodities. Therefore, it will be profitable for thunder company if it will do the production inplace of Buying. ..............................................................................................................................8QUESTION 3 ..................................................................................................................................8A) Calculate and interpret the financial ratios for 2016 corresponding to the industry normsprovided as follows: ...................................................................................................................8Presenting report to Gulf Banks PLC regarding recommendation for loan sanction...............10C) Interpretation of ratio regarding the investment in the company and recommendation toinvestors....................................................................................................................................11QUESTION 4 ................................................................................................................................11A) Preparing cash budget of ABACUS Inc..............................................................................11Benefits and limitation of budgeting ........................................................................................12QUESTION 5.................................................................................................................................131. A) Calculation of various variances......................................................................................13B) Calculation of variable overhead spending variance...........................................................14C) Computation of variable overhead efficiency variance.......................................................15Definition of Variance Analysis ...............................................................................................15

CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17

INTRODUCTIONAccounting is the major part of an organization. It plays an important role to assess thefinancial position of any company. Present report will provide an income statement and abalance sheet which are relevant with various accounting issues. The report will criticallyemphasize on the differences between financial and management accounting. The report deals with problems of cost volume analysis. This assignment provides deeperinsight of make or buy decision analysis. Report is also consisted of recommendations aboutsanction of bank loan and investment for company. It will present cash budget and analysisbenefits and limitation of budgeting. At last, report has come up with variance analysis whichshows position of company by estimating differences between standard and actual targets. QUESTION 1 Prepare the income statement and balance sheet of the following.Income StatementParticularsFiguresNet sales12,800Less: Cost of goods sold5,750Gross profit7,050Less: Operating expenses1,350Less: depreciation expense1,200Operating profit4,500Less: interest expense900Earnings after interest and beforetaxation3600Less: Taxes1440Earnings after taxation or netprofit2160Balance sheetParticularsFigures (In $)Inventory$6,500Common stock45,000

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