FNSACC507 Provide Management Accounting Information Doc
Added on 2020-10-22
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AssessmentDetailsQualification Code/TitleAssessment TypeAssessment -01 -Written AssessmentTime allowedDue DateLocationAHICTerm / YearUnit of CompetencyNational Code/TitleFNSACC507 Provide management accounting informationAssessor DetailsAssessor’s NameRESULTS (Please Circle)SATISFACTORYNOT SATISFACTORYFeedback to student:............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................Student Declaration: I declare that I have been assessed in this unit, and I have been advised of my result. I am also aware of my appeal rights.Signature: _______________________________Date: ______/_______/___________Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback.Signature: ________________________________________Date: ______/_______/___________File Name:FNSACC507 Provide management accounting informationVersion 2.0/ August 2017Review Date: February 2018Page 1 of 12
Instructions to the CandidatesThis assessment is to be completed according to the instructions given below in this document.Should you not answer the tasks correctly, you will be given feedback on the results and gaps in knowledge. You will be entitled to one (1) resubmit in showing your competence with this unit.If you are not sure about any aspect of this assessment, please ask for clarification from your assessor. Please refer to the College re-submission and re-sit policy for more information. If you have questions and other concerns that may affect your performance in the Assessment, please inform the feedback readyassessor immediately.To be deemed competent for this unit you must achieve a satisfactory result with tasks of this assessment along with a satisfactory result for the other assessment (Project)This is an Open book assessment which you will do in your own time but complete in the time designated byyour assessor. Remember, that it must be your own work and if you use other sources then you must reference these appropriately.This is Individual Assessments. Once you have completed the assessment, please provide the Hard copy of the Assessments to your Trainer/ Assessor.Plagiarism is copying someone else’s work and submitting it as your own. Any Plagiarism will result in a markof Zero.
Question 1Identify and describe (120–150 words) cost behaviour characteristics for the different cost elements of a product or service.Answer:Cost element is the activity based costing which is associated with the manufacture of particularproduct. These cost can be direct on indirect. Elements of cost are categorised into three parts,i.e.,material, labour and expenses. 1)Material cost: It is a cost associated with manufacturing products or units. Material whichare of integral part in the production of a unit and are directly identifiable is known asdirect material cost (Schröder,Falk and Schmitt, 2015). Example of direct material areraw material, books in paper, bricks in construction.Indirect material are the cost which do not become part of finished goods and are not identifiable.Examples are consumables, oil, printing, etc.2)Labour cost: Employees of an organisation work together to transfer raw material intofinished goods against which salaries and wages are paid to them. Employees who aredirectly engaged in the activity of production, supervision and conversion of material intofinished goods are known as direct labour (Sangster, 2015). Any cost which is indirectlyassociated with the production of goods is called indirect labour cost.3)Expenses : Expenses which are necessary to be incurred for production of goods likemachinery is called direct expenses (Court of Appeal, 2018). Expense which are notdirectly associated with the production of business like factory rent, lighting, selling anddistribution is called indirect expenses.4)Overheads: These are indirect cost associated with production of goods.Question 2What is a double entry bookkeeping system and what are its advantages? Discuss in 150–180 words.Answer:Double entry book keeping system is an accounting concept to measure, record, classify andsummarize the financial transaction of business in a systematic manner. Double entry bookkeeping records dual aspect of every financial transaction that states that each transaction hastwo sides, i.e., for each debit entry there is a corresponding credit entry (Modugno and Di Carlo,2019).Advantages of double entry book keeping system:1)Complete balance sheet is prepared by recording all aspects of assets, liability, expense,revenue and capital. 2)It helps in evaluating financial position of the company effectively.File Name:FNSACC507 Provide management accounting informationVersion 2.0/ August 2017Review Date: February 2018Page 3 of 12
3)It reduces frauds and errors by tracing transaction through accurate audit trial.4)Financial statements can be easily prepared using double entry book keeping system.5)Necessary information regarding financial transaction can be obtained speedily and easily(Warren Jr, Moffitt and Byrnes, 2015).6)This also helps management in strategic decision-making for increasing operationalefficiency and profitability of business.7)The matching principle helps company ascertain profit and loss for particular financial yearand can also compare statements with previous year for effective decision-making(Crown Court procedure and process in the UK, 2018). Question 3What is accrual accounting and why is it the preferred method for accounting? Discuss in 150–180 words.Answer:Accrual accounting method records financial transaction in the books at the time of happening ofan event irrespective of whether cash received or not. Revenues and assets earned and expenses ,losses and liabilities incurred without any cash transaction has to be recorded in the books ofaccounts (Choi, 2016). It helps company in credit transaction and shows clear image of theprofitability of the company by recording actual transaction at the time of occurrence of an event.Accrual accounting method shows better picture of the overall financial position of the companyby recording transaction at the time of occurrence. This method is accepted by GAAP( Generallyaccepted accounting principles) and issued by Financial Accounting Standards board (FASB). Thismethod helps in effective analysis of business performance and efficient decision making whichincreases operational efficiency and productivity of business by analysing budget and predictingsales and expenses (Erlina and Muda, 2017). This method helps in matching revenues andexpenses for the particular period and keeps a track on inflow and outflow of cash (What is thedifference between a Magistrates’ Court and a Crown Court?, 2018). Accrual method ofaccounting is most preferred method of accounting as it reduces manipulation of cash flows andshow exact figure in financial statement at the time transaction was occurred.Question 4Discuss (150–180 words) the application of policies and procedures to managing accounting information.Answer:Accounting policies are specific set of standards which are implemented by management toprepare financial statements of the company. These accounting policies are in compliance with
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