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ASSIGNMENT 1 INSTRUCTIONS

 

How to Approach this Assignment
 

• Please read all instructions before starting the assignment.
• To complete the assignment you need access to a computer and a word processing package.
• You should first study the relevant material in the text and make sure you understand the concepts covered.
 

Backups
 

Make certain you keep backups of your work.

Once you have started working on the assignment you should make backups.
 

It pays to rename different versions of your work. A simple way to do this is to use the Save as file instruction and add a number or letter to the end of the file name. (This allows you to go back to an earlier version.)

However, when you upload the file, make sure that the file you upload follows the naming convention outlined below.
 

 
Submission of the Assignment (Uploading your file to Stream)

To access the submission points you must have completed the Honesty Declaration Quiz.
 

The submission point for Assignment 1 is under “Activities which are Assessed”
 

Use the following naming convention for the files that you are submitting: use
your Last Name Student ID number as the name of the file [Do not change the file extension or you (and the marker) will not be able to use the file]. For example, if your Last Name is Smith and your Student ID number is 88888888, your file will be smith88888888.doc.
 

a. In the “Activities which are Assessed’ section on Stream click on “Assignment 1 Submission Point”.
b. A box with Submission Draft and no files uploaded yet will appear with Upload a file at the bottom of the page. Click on Upload a file.
 

c. Depending on your version of internet software you may be able to drag and drop the file from your computer to stream. If not, click on Add, then Upload the file, then click Browse, click on the file you wish to upload, then on Open, then on Upload this file. You will now see your uploaded file showing on the left side of the page.
d. Click Save changes. The submission is shown as Submission draft.
 

e. When you are satisfied that the correct file has been uploaded, click on Send for Marking under the heading Final submission for assignment marking. The screen will then show the following message: Once the assignment is sent for marking, you will no longer be able to delete or attach file(s). Do you want to continue? You can then choose Cancel or Continue. If you click Continue you will then see the message: Congratulations your assignment file has been successfully submitted for marking.
 

f. Late submissions will be accepted by the system after the due date for a week only. For the purpose of determining if electronic assignments are handed in on time, STREAM records the submission date and time. See the Assessment Guide for policies re extensions and late submissions. Penalties will be applied to submissions received after the due date for which an extension has not been granted.
 

No assignments will be marked if received after the earlier time of
 

• When feedback and/or suggested solutions are posted on STREAM, and
• When assignments are returned to students.

  
You can read more about our case study assignment help services here.
  

  
Assignment Queries
 

Please feel free to keep in touch with the 115.102 team regarding this assignment, preferably through the forums. That way all students benefit and often we have found that the best way of learning is through discussion with your peers as well as teaching staff.
 

Please note that this assignment is at individual, not group level. Discussion is fine but do not post your answers to the assignment on STREAM through discussion forums, as that will lead to penalties. If you are uncertain, please contact the teaching staff.
 

There are a large number of students in this paper, but that does not mean that you are not each individually very important to us. We value each student and will try to provide appropriate guidance to the best of our ability.
 

Return of Marked Assignments
 

You will not receive hard copies of your marked Assignment 1 back by post. Instead a marking sheet will be available at the same point where you uploaded your assignment. Note that the normal turnaround of assignments is three working weeks. However we will be working to return the assignment sooner than that.
There will be feedback in the form of suggested solutions and overall comments by the marker.
 

All the best with your assignment!
 

The 115.102 Teaching Team
 
 

ASSIGNMENT ONE
 

Please note that this assignment is due before Tuesday 28 April 2015,
12 Noon (12.00 hours), New Zealand Time
Assignment one will be marked out of 30 and will contribute 15% to your final grade.

 

Preparation of Report [Total: 30 marks]
 

Babs Lee is a good friend who is surprised to learn that her Uncle has died and left her a wholesale business which sells ukuleles to music shops throughout New Zealand. The business is called Isaleh. The executor of the will, R. Senior, has provided Babs with the latest financial statements (Appendix A) and she brings these to you as she knows you have started studying accounting at Massey University.
 

Babs thinks it might be fun to run the business for a while but she has no idea how sensible that would be. Babs is puzzled as to why there is an Income Statement as well as a Cash Flow Statement. “Surely” she says “income is cash coming into the business and expenses are cash going out of the business. If so, why have they provided two statements and I can‘t see what one has got to do with the other. The figures don’t match up.”
 

Babs has heard of a Balance Sheet and she can see that this one balances. However, in the middle in bold are the words “Working Capital” and she has no idea what this relates to. “If anyone is going to be working” she says, “it will be the two assistants and me”.
 
An attached note says that 60% of the sales are on credit with terms that the invoice should be paid by the 20th of the following month. “Does that mean a credit card or what?” Babs asks.
 
Attached Documents (will help you with the task)
Appendix A: The financial statements for Isaleh for the year ended 31 December 2014
Appendix B: Guidelines for report writing.

 
 

Required
 
Prepare a report for Babs Lee
 
a) Explain why the Income Statement is prepared using the accrual basis of accounting and how this differs from cash accounting. (8 marks)
b) Explain what Working Capital is and why it is important to manage it.
(8 marks)
 
c) Explain what a credit sale is in a business context. Give reasons as to why a business sells goods on credit and the costs which are associated with doing so. (6 marks)
 
Separate marks are awarded for:
• Presentation of Report. (6 marks)
• Conclusions and recommendations. (2 marks)
 
Complete this report in a Word document file. (No template given.)
 
Answers should be well reasoned, comprehensive and include data from the financial reports. You are not required to complete a detailed analysis and interpretation of the financial statements but you may use the figures and the working capital ratios to highlight the points you are trying to make.
 
To answer this report you should look beyond the set readings and text. Looking outside your text will enhance your answers and earn extra marks.
 
The requirements a) to c) should be used as the headings in the main part of your report.
 
Your report should range from 700 to 1,000 words. The marker reserves the right to decline to mark answers over 1,200 words.
 

 
Appendix A – FINANCIAL STATEMENTS ISALEH
 
Isaleh
Income Statement
For the year ending 31 December 2014
$ $
Revenue
Sales 588,000
Less: Cost of Goods Sold (448,000)
Gross Profit 140,000
Less: Expenses
Advertising 7,200
General 9,600
Insurance 7,600
Rent 28,800
Wages 53,400
Depreciation 3,400
Total expenses (110,000)
Net Profit 30,000

Isaleh
Balance Sheet
As at 31 December 2014
2014 2013
$ $
Owner’s Equity 15,400 22,900
Represented by:
Current Assets
Cash at Bank 4,400 7,500
Accounts Receivable 144,900 83,400
Inventory 24,000 30,000
Prepaid Insurance 2,000 1,600
Total Current Assets 175,300 122,500
Current Liabilities
Accounts Payable 162,000 99,100
Total Current Liabilities 162,000 99,100
Working Capital 13,300 23,400

Non-Current Assets
Equipment 12,500 12,500
Accumulated depreciation on Equipment (4,900) (3,000)
7,600 9,500
Computers 6,000
Accumulated depreciation on Computers (1,500)
4,500
Total Non-Current Assets 12,100 9,500
Non-Current Liabilities
Loan BNZ Bank 10,000 10,000
Total Non-Current Liabilities 10,000 10,000
Net Non-Current Assets 2,100 (500)
Net Assets 15,400 22,900
 

Isaleh
Cash Flow Statement
For the year ending 31 December 2014
$ $
Cash Flow from Operating Activities
Inflow from:
Customers 526,500
Total Inflow 526,500
Outflow to:
Suppliers 379,100
Advertising 7,200
General 9,600
Insurance 8,000
Rent 28,800
Wages 53,400
Total outflow 486,100
Net Cash Inflow (Outflow) from Operations 40,400

Cash Flow Investing Activities
Inflow from: –
Total Inflow –
Outflow to:
Computer 6,000
Total outflow 6,000
Net Cash Inflow (Outflow) from Investing (6,000)

Cash Flow Financing Activities
Inflow from: –
Total Inflow –
Outflow to:
Drawings 37,500
Total Outflow 37,500
Net Cash Inflow (Outflow) from Financing (37,500)
Net Cash Inflow (Outflow) (3,100)

Beginning Cash balance 7,500
Ending Cash balance 4,400

  
Appendix B
 
Guidelines for Writing Reports
 
You are required to submit a short report to the owner of the business. Some guidelines are outlined below. Remember that these reports are necessarily short, and thus need to be focussed, concise and summarised. Bullet points in relevant areas will be acceptable.
 
The following extract may be of assistance
 
‘Writing reports gives practice applying theoretical concepts to a real-life context. If you are planning a career in an organisational context, it is likely that at various stages in your career writing reports will be required. Learning to write a report, therefore, is not just a method by which your lecturers evaluate you; it is also part of professional development, and a way of learning business principles, integrating them into your critical mind.
 
Organisations call for reports when they have difficult decisions to make. They therefore require the author to exhibit investigative skills, judgment and the ability to write persuasively. Writing persuasively for a report means that you need to appear to be objective. You are required to produce proof or evidence to support your ideas. It is not enough to recommend a course of action; you need to explain why this is the best solution, what its short and long term results will be, and explain the reasons.
 
Remember above all that a report is a practical project. A report assumes that someone has a problem and they want guidance on how to deal with the problem. If you are writing for a particular person, keep that person in mind. Focus on their needs and recommend a solution that can be implemented. Be specific: avoid generalisations…’
 
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