Introduction to Accounting and Finance

Introduction to
Accounting and Finance

Table of Contents
INTRODUCTION...........................................................................................................................1
Part A – Terry Joe Plc......................................................................................................................1
Part B – Kokolet Limited.................................................................................................................6
Contribution towards covering fixed costs:.................................................................................6
Break-even point and margin of safety :......................................................................................7
Profit of company:.......................................................................................................................7
Explaining the underpinning assumptions attached to the break-even model:............................8
Part C – Smith Howe Limited..........................................................................................................8
Payback Period, Accounting Rate of Return and Net Present Value of the machine:................8
Explains and analyses the key merits and limitations of the differing investment appraisal
techniques..................................................................................................................................10
Key benefits and limitations of using various budgets for strategic planning...........................12
A rigorous budget implementation reduces ambition and creativeness, making it hard for
executives to arrange money for new/potential projects so they migrate to another alternative that
increases overall costs....................................................................................................................13
CONCLUSION .............................................................................................................................13
REFERENCERS ...........................................................................................................................14

INTRODUCTION
Accounting and Finance are two major business terms which covers all most all key
operations of an entity. Term accounting relates to entering and recording of corporation's fiscal
transactions and financial events. It contains activities which contributes in finalisation and
preparation of company's books and accounts. While finance covers all operations which are
dedicated towards management of different funds and arrangement of funds for business
operations. These both terms are interrelated because accounting processes provides details and
information for finance tasks. This assessment contains comprehensive information about
accounting as well as business finance (Paul, Maurice Obstfeld, Marc, 2014).
In this study contains statement showing financial position of Terry Joe Plc along with
income statement and computation related to break-even analyse in respect of Kokolet Limited.
Further this study involves assessment of Accounting Rate of Return (ARR), Payback Period,
and NPV or Net Present Value to provide assistance to Smith Howe Ltd in decision making.
Different sort of budgets and related details are thoroughly discussed in study with aim to aid in
strategic planning.
Part A – Terry Joe Plc
Particulars Amount Total
Sales 759600
less: cost of sales 356400
gross profit 403200
less: Operating expenses:
rent 108000
wages 143010
depreciation 1100
van running expenses 40320
bad debts 1800
Electricity bill 9270 303500
1