Introduction to Accounting and Finance Assessment

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Introduction to accountingand finance assessment
Table of ContentsINTRODUCTION...........................................................................................................................1PART A - DEXTER Plc..................................................................................................................1PART B – PHILLY Ltd...................................................................................................................2A. Calculation of Contribution per unit.......................................................................................2B. Calculation of Break-even point and Margin of safety in units and revenue terms................2C. Profit earns by company at 48000 shelves production at £13 per shelf..................................3D. Commenting on new strategy adopted by Philly Ltd..............................................................3E. Explaining viability of break-even model...............................................................................4PART C – SANKRUST Ltd............................................................................................................6A. Calculation of ARR, NPV and Payback period......................................................................6B. Advantages and disadvantages of different investment appraisal techniques.........................1C. The key benefits and limitations of using budgets as a toll for strategic planning.................3CONCLUSION...............................................................................................................................4REFERENCES...............................................................................................................................5
INTRODUCTIONFinancial accounting is a process of tracking transactions of the company by makingfinancial statements, balance sheets, income statements and reports(Schroeder, Clark andCathey, 2019). The main purpose of this report is to disclose the and reflect the current positionand performance of organisation. Financial accounting is beneficial for company to forecast thegrowth, revenue and expenditure of the company. Financial report is beneficial for both internaland external stakeholder such as investors, creditors, suppliers, vendors, employees, customersetc. Accounting and finance is one of the most vital element in every part of business. Companyshould have sound and effective accounting policies so that daily business activities can beperformed smoothly. In the present report there are 3 companies named Dexter Plc, Philly Ltdand Sankrust Ltd for which income statement, financial position, contribution, evaluation ofbreak-even model, pay back period, average rate of return and net present value are need to beidentified. Further report will also include merits and limitations of investment appraisaltechniques such as payback period, average rate of return, net present value and internal rate ofreturn and budgets as a tool for strategic planning.PART A - DEXTER PlcStatement of Income for the year ended 31st December 2018Profit and loss account for the year ended 31 December 2018 for Dexter plcParticularsAmountTotalSales633000less: cost of sales297000gross profit336000less: Operating expenses:rent112500wages117000depreciation9600van running expenses33600bad debts1500Electricity bill5700279900Profit56100Statement of Financial Position as at 31 December 2018Balance sheet for the year ended31 December 2018 for Dexter PlcParticularsAmountTotalLiabilitiescapital1800001
Add: profits56100Net capital236100trade payable393000Total liabilities629100AssetsFixed assetsVan60000Less: depreciation960050400Current assetsInventory525000Prepaid asset525cash-178800bank180000closing stock51975578700Total assets629100PART B – PHILLY LtdA. Calculation of Contribution per unitParticularsAmount (in £)Sales910000lessVariable cost703500Contribution (in revenue)206500lessFixed costProduction59000Selling47600106600Operating profit / EBIT99900ParticularsAmount (in £)Sales Price perunit13Variable cost perunit10.05Contribution perunit2.95B. Calculation of Break-even point and Margin of safety in units and revenue termsBreak-even point -2
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