Accounting Homework: Analyzing Financial Statements and Ethical Issues

This accounting homework assignment provides solutions to a variety of accounting concepts. The assignment covers the definition of plagiarism and its impact on academic integrity, along with instructions on how to copy data from Excel to Word while showing formulas. The solutions encompass several key areas of accounting including financial statements such as balance sheets, cash flow statements, and profit and loss statements. The document also explores ethical issues, including a case study of the ABC Learning company collapse. It delves into the importance of sound corporate governance and proper accounting practices, and it also provides resources for accounting students and professionals. The assignment also covers practical applications such as the creation of adjusting entries, the calculation of the current ratio, and the creation of trial balances and crosswords, and also includes a discussion of current and non-current liabilities.

SOLUTIONS
Question 1
Plagiarism is defined as act of using someone else’s work as your own without acknowledging
them (Merriam-Webster, 2017). In academics, to eliminate plagiarism, proper referencing is
required when acknowledging ideas from other sources. Plagiarism is unfair to honest students
because sometimes those who cheat get rewarded for their work, which is unacceptable to the
honest student who has put in the energy and time to produce original results.
Question 2
In Excel, select data. On Page Layout tab, check Headings. Then go to Home tab, select Paste,
then as picture, and then select copy as picture. In the pop up, click ‘As shown when printed.”
In Word, paste the image using shortcut ctrl +v or paste under home tab
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B C
PMT 500
i 5%
t 5
Present Value 391.7631
To show formulas, go to Formulas tab in Excel then click Show Formulas. Then copy and
paste using above method.
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B C
PMT 500
i 0.05
t 5
Present Value =C2*(1+C3)^-C4

Question 3 Solutions
Websites relative to Accounting
1. CPA Australia- This website is a useful resource site for both students and professionals who
may use it for knowledge and online community
http://www.cpaaustralia.com.au
2. Accounting coach- If you are searching for accounting terms or require a refresher, this
website is a go to. It includes a lot of useful information from basic to complex accounting
http://www.accountingcoach.com
3. Investopedia- This is another useful resource, a bit similar to accounting coach in regards to
accounting terminology, however, they also have information on finance related issues.
http://www.investopedia.com
4. Australian Accounting Standards Board- For Australian professionals, this website has all
latest information on accounting standards and reporting.
http://www.aasb.gov.au
5. Australian Taxation Office- This website provides tools and information on applicable
taxation process in Australia.
http://www.ato.gov.au
Question 4 Solutions
Professional Body –Accounting Professional and Ethical Standards Board
Resource – Code of Ethics for Professional Accountants (APES 110)
I have chosen the APES 110 code of ethics because as professionals we are faced with ethical
dilemmas in our day to day work life. Thus these standards are useful as they guide professional
accountants on how they should perform and engage amongst themselves and with clients.

Question 5 Solutions
A work computing environment plays a huge role in the quality and output of work. My current
employer has invested in complex computing systems to ensure optimum information solutions
and output.
Each of the employees has been designated with a workplace to sit with their laptops open on a
docking station. The distance between two workplaces is pretty good and decent to avoid too
many interactions and keep the concentration of the employee in his own work. We have easy
access to internet connections all across the office, and we are provided with cables and
charging ports to make sure small technicalities do not interrupt our work. Other forms of
hardware include a copy machine which can print, scan, fax and copy.
The office also provides us with key applications and software that is needed for each of us to
complete our tasks such as MS-Office, PDF Readers, Editors, Adobe, and Win Zip etc. Moreover,
we are also given security by anti-virus purchased for each employee’s devices to keep our
product protected and safe. On top of this, we are provided with portable devices such as pen-
drives, memory cards, dongles etc to keep back up of our work and also for easy sharing.
Regular updates of our devices operating systems and software are also carried.
Almost each employee uses a Windows PC with the latest operating system- Windows 10. A
wireless local area network keeps all the devices well connected. The network also has various
access levels given as follows- the IT function can access every file and change all administrative
settings , most of the junior employees need permission and special passwords to access data,
while senior management have a bit more privileges than junior staff. With about 60-70
employees working in the office, a firewall is a must to keep trouble as far as possible. Our
laptops also go for routine scans and checks for virus, spyware or any other malware.

Question 6 Solutions
Business Report
1. Introduction
1.1 Background
Founded in 1988, ABC Learning Company in Australia started as a slow and stable company
until 2000. From 2001 to 2006, following a government directive on Childcare Rebate
Systems, it went through a growth phase which resulted in ABC acquiring many child care
centers across the country and overseas. However, in 2007 things changed drastically. ABC’s
assets were written down, its share price dropped, and in 2008 it was placed in the hands of
Administrators.
1.2 Purpose
The purpose of this report is to discuss ABC’s major financial reports, the key lessons learnt
from the collapse and the major ethical issues the company was facing.
2. The Major Financial Reports
The three major financial reports used were as follows:-
 Balance Sheet-Also known as the Statement of Financial position, the balance sheet
shows the current financial position of a company at a specific date (Koch, 2009).
 Cash Flow Statement- The cash flow statements shows the amount of cash that is
coming in and out of the business, from operating, investing and financing activities. A
healthy company will show more positive inflows (Koch, 2009).
 Profit and Loss statement- Also known as the statement of Financial Performance, this
report tells us how the business is using their assets to make profits over a defined
period. Furthermore, it explains the change in net assets a company owns between start
and end of reporting period (Koch, 2009).
3. Key Lessons from ABC Learning
The collapse of ABC learning was as a result of poor accounting practices and decision
making process. Some of the may key lessons learnt from this case study are as follows:-
 Always Recognize Revenue Properly
We note in ABC’s accounting books, they overstated their revenue figures. Based on
this information it appeared as though the company was making profits which was not
the case on the ground.
 Focus on Core Activities

The entrepreneurial spirit in Eddie Groves coupled with pursuit for growth, led him to
make decisions that were not sustainable for the company’s well being. For example,
investing in the overseas centers was not worthwhile and it ended up costing the
company a lot following the closure of these centers.
 Importance of Sound Corporate Governance
ABC did not disclose their related third party transaction which should have been
subjected to scrutiny by the board. Furthermore, Eddie Groves did not disclose that his
shares were subject to margin calls.
 Complex financial structure and transaction
The way ABC valued the leases for the acquired child care centers were far too complex
which led to over exaggeration of asset values.
4. Identify and Discuss three Ethical Issues
 Lack of Professionalism
It appears that Eddie Groves was driven more by growth as opposed to managing his
company properly. Most of the actions he undertook were unprofessional, his accounts
were a mess and the company’s transactions were not at arm’s length.
 Integrity
By not disclosing the margin call to investors and the Board, Eddy Groves was not acting
honestly. Furthermore, the company appeared to be cooking their accounting books
through exaggeration of figures.
 Poor Corporate Governance
It appears that ABC was not compliant with accounting rules in regards to disclosures of
critical information, margin calls and working with related third parties.
Summary
The rise and fall of ABC learning has taught us the importance of good corporate governance
and sound accounting practices.
References
Koch, D. (2009, November). The ABC of a Corporate Collapse. CPA Australia. Retrieved from
https://www.youtube.com/watch?v=YYF6JW9vJKo&list=PL12C0ADD577F6B741Jjj

Question 7 Solutions
A. Manual solution- used Office Lens

B. Spreadsheet Solution
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A B C D
1 PALER
Loan Payable Liability
Rent Expense Expense
Cash Asset
Office Supplies Asset
Salary Expense Expense
Salaries Payabe Liability
Property Tax Expense Expense
Prepaid Expense Asset
Office Furniture Asset
Electricity and Gas Expense Expense
Accounts Payable Liability
Amy Capital Proprietorship
Service Revenue Revenue
Accounts Receivable Asset
Supplies Expense Expense
Investments Asset
2 Amy Design Studio
$
Service Revenue 155,800
Operating Expenses
Rent 33,000
Salary 49,000
Supplies 33,600
Property Tax 1,700
Electricity and Gas 6,500
Total 123,800
Operating Income 32,000
3 Amount of Owner Drawings 4,100.00$
Income Statement for year ended 31 December 2016

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A B C D
4 Amy Design Studio
Balance Sheet as at 31 Dec 2016
$
Assets
Cash 6,500
Accounts Receivable 9,200
Office Supplies 3,300
Prepaid Expenses 8,000
Office Furniture 28,000
Investments 5,000
Total Asset 60,000
Liabilities and Owner's Equity
Accounts Payable 2,400
Salaries Payable 2,400
Loan Payable 12,300
Total Liabilities 17,100
Total Owner's Equity 42,900
Total Liabilities and Owner's
Equity 60,000

Question 8 - Balance Sheet equation
A. Manual Solution- Office Lens

B. Spreadsheet Solution
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B C D E F G H I J
Data
Revenue 600 K 850 2040
Expenses 300 300 1480
Dividends declared 0 45 Q 350
Additional Investment by Stockholders 0 60 460
Net Income E 300 550 P 560
Retained Earnings
Beginning of year 110 650 2240
End of Year D 410 J 1155 2450
Paid in Capital
Beginning of year 155 172 N 2200
End of Year C 155 H 232 2660
Total Assets
Beginning of year 360 F 1072 L 5110
End of Year 700 1570 M 6000
Total Liabilities
Beginning of year A 95 250 670
End of Year B 135 G 183 890
Report
Revenue =D9 K =G33+G30 =J9
Expenses =D10 =G10 =J10
Dividends declared =D11 =G11 Q =J35+J33-J36
Additional Investment by Stockholders =D12 =G12 =J12
Net Income E =D29-D30 =G13 P =J29-J30
Retained Earnings
Beginning of year =D15 =G15 =J15
End of Year D =D33+D35-D31 J =G35+G33-G31 =J16
Paid in Capital
Beginning of year =D18 =G18 N =J39-J32
End of Year C =D38+D32 H =G38+G32 =J19
Total Assets
Beginning of year =D21 F =G44+G38+G35 L =J44+J38+J35
End of Year =D22 =G22 M =J45+J39+J36
Total Liabilities
Beginning of year A =D41-D38-D35 =G24 =J24
End of Year B =D42-D39-D36 G =G42-G39-G36 =J25
case 1 case 2 case 3
case 1 case 2 case 3