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Introduction to Accounting and Finance

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Added on  2020-10-05

Introduction to Accounting and Finance

   Added on 2020-10-05

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INTRODUCTION TOACCOUNTING AND FINANCE
Introduction to Accounting and Finance_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1PART A...........................................................................................................................................1Preparing Income statement for year 2017 along with statement of Financial position..............1PART B............................................................................................................................................2A. Extracting contribution per unit..............................................................................................2B. Margin of safety and Break even point...................................................................................3C. Extracting margin on 48000 tables..........................................................................................3D. Clarkenpark Ltd's strategy......................................................................................................4E. Identifying and explaining assumptions on basis of break even model..................................4PART C............................................................................................................................................6A. Calculating payback period, accounting rate of return, net present value along with theirrecommendations.........................................................................................................................6B. Producing report with explanation and analysis of key merits and demerits for differinginvestment appraisal techniques..................................................................................................8C. Producing report with explanation of key benefits and limitations of using budget as toolfor strategic planning.................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
Introduction to Accounting and Finance_2
INTRODUCTIONAccounting is considered as comprehensive and systematic tracing of numerous financialtransactions related to business. It is also referred as process of classifying, summarizing andanalysing reports to transactions for over sighting agencies, tax collection entities and regulators.In the similar aspect, finance is business term on basis of creation, investments, study of moneyalong with other financial instruments. The present report will give brief discussion aboutappropriate understanding of fundamental concepts, techniques and models with application offinancial accounting along with management accounting. Further, it will reflect role of finance atglobal and local level with reference to financial statements, Break even and margin of safetyanalysis. In this similar aspect, there will be introduction of various investment appraisaltechniques with recommendation and analysis to purchase new machine or not.PART APreparing Income statement for year 2017 along with statement of Financial positionIncome statement of Gravepals Plc as on 31 December 2017Income statementParticularsDetailsFiguresRevenue (Credit sales) [A]504000Revenue (cash sales) [B]129000Total Revenue [A + B]633000Less: Cash Sales243000Less: Credit Sales54000Cost of Goods Sold297000[GP] Gross profit633000Operating expensesSalaries and wages117000Less: Payment of wages [last week]2175114825Electricity [first 3 quarters]5700Electricity bill [last quarter]20257725Rent received112500Payment of tax on business premises [1January]2400Payment of tax on business premises [1April]45006900Delivery van depreciation 16320Bad debts1500Sum of operating expenses259770Net profit3732301
Introduction to Accounting and Finance_3
Balance sheet of Gravepals Plc as on 31 December 2017ParticularsDetailsAmountCurrent assetsAccounts receivables438000Less: Bad debts1500436500Total stock525000Sum of current assets961500Fixed assetsDelivery van Cost 60000Add: costs of operating33600Less: Sales12000Total van cost81600Residual life5Depreciation expense16320Valuation of van6528065280Sum of fixed assets65280Total assets1026780LiabilitiesCurrent liabilitiesAccounts payables393000Total current liabilities393000Rent advance22500Non-current liabilities58050Total liabilities473550Shareholders fund180000Net Income373230Total equity and liabilities1026780PART BA. Extracting contribution per unitParticulars Figures (in £)Raw Materials5.25Labour2.95Variable o/h1.85TVC per unit10.05Particulars (per unit)Figures (in £)2
Introduction to Accounting and Finance_4

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