Introduction to Accounting and Finance Assessment

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Added on 2021-02-22

Introduction to Accounting and Finance Assessment

Added on 2021-02-22

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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

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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 2018 Profit and loss account for the year ended 31 December 2018 for Dexter plc ParticularsAmountTotal Sales633000less: cost of sales 297000gross profit 336000less: Operating expenses:rent 112500wages 117000depreciation9600van running expenses 33600bad debts 1500Electricity bill 5700279900Profit56100Statement of Financial Position as at 31 December 2018Balance sheet for the year ended31 December 2018 for Dexter PlcParticularsAmountTotal Liabilities capital 1800001

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Add: profits 56100Net capital 236100trade payable 393000Total liabilities629100Assets Fixed assetsVan60000Less: depreciation 960050400Current assets Inventory525000Prepaid asset525cash -178800bank180000closing stock 51975578700Total assets629100PART B – PHILLY LtdA. Calculation of Contribution per unitParticularsAmount (in £)Sales910000lessVariable cost703500Contribution (in revenue)206500lessFixed costProduction59000Selling47600106600Operating profit / EBIT99900ParticularsAmount (in £)Sales Price per unit13Variable cost per unit10.05Contribution perunit 2.95B. Calculation of Break-even point and Margin of safety in units and revenue termsBreak-even point -2

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