ACCT6002 Accounting Finance Fundamentals

1. Explain the accounting cycle and apply double entry accounting principles to process transactions.
2. Differentiate between periodic and perpetual inventory systems and apply appropriate accounting procedures.
3. Prepare an accounting worksheet, Income Statement, Statement of Changes in Equity and Balance Sheet for sole proprietors and partnerships.
4. Interpret, understand and analyse financial statements for decision making, and communicate their significance to accounting and non-accounting professionals.

The purpose of this assessment is to apply the conceptual and technical aspects of accounting and prepare relevant business financial statements. Students are expected to contenxtualise and evaluate accounting information presented in statements for decision making purposes. Each question uses realistic data and the professional practices similarto that found in workplaces.

Please aim to complete this assignment a few days prior to the due date to allow for any unforeseen circumstances such as illness, holidays, family issues, work commitments etc. You may submit the assignment early if you have other commitments around the due date.

All times listed are local (Sydney) times. Please ensure you factor in any time difference between Sydney and your location when submitting your assignment, to avoid incurring any late submission penalties.

Please note the following important instructions relating to the assignment format and submission:

• Note that this is an individual piece of assessment. You will need to work individually to prepare a response to ALL of the questions listed in the assessment.
• You must submit your assessment in one Excel file. Any submissions in any other file formats will not be accepted.
• Each question (including all sub-questions) should be presented in a single worksheet. As there are 5 questions in this assessment, your Excel file should contain 5 worksheets in total.
• You cannot scan handwritten responses and submit. All answers must be typed in Excel.
• Your assessment needs to be submitted though the submission link available on the Blackboard. Assignments submitted via e-mail (or any other method) will NOT be accepted.
• Make sure that you upload the correct file. If you discover (after the due date) that you have uploaded a draft version or the wrong file completely, you will not be allowed to submit a second file.

Accounting Concepts

Ms Sue Newberry is the sole proprietor of ‘Life Boracay’, a beach shade sale and hire business specialising in beach tents. Many of the customers who purchase or hire beach shades from ‘Life Boracay’ have seen the ‘Life Boracay’ shades set up on the beach in front of the shop. The local lifeguards use these shades to rest under between their shifts in the tower.

Ms Newberry has had a meeting with the Managing Partner of Accountia Pty Ltd and you were invited to attend.

During the meeting Ms Newberry explained that she felt there was an omission in ‘Life Boracay’ financial statements prepared by Accountia Pty Ltd. Ms Newberry considered that the small area of beach in front of the shop should be recorded as an asset in ‘Life Boracay’ Balance Sheet. Ms Newberry argued that it was due to the beach in front of the business she was able to set up a beach shade daily advertising the beach shades she hires out and sells.

After the meeting, the Managing Partner tells you she is extremely busy with a number of clients at the moment and asks you to prepare a letter to Ms Newberry.

Please write a letter in your own words, addressed to Ms Newberry explaining whether or not the beach directly in front of ‘Life Boracay’ can be recorded as an asset in ‘Life Boracay’ financial statements.

• Any formal business letter format is acceptable (a template has not been provided – students are expected to research business letter formats themselves).
• Consider an appropriate way to sign off your letter
• Set out your letter with subheadings to separate each part of your letter as you address the criteria required
• No specific word count is prescribed. However, given the nature of the questions, it would be expected that the entire letter (including address and sign-off) should require no more than

Financial Statement Analysis

Joseph works at a public company called Abridge Manufacturing Ltd. He has observed that the company is trying to expand its operation in the market over the past one year. The management has heavily invested in plant and equipment over this period. Considering the high growth potential of the business, Joseph is planning to invest in this company by purchasing shares.

Joseph consulted with his friend Rob regarding this plan. After reviewing Abridge Manufacturing’s balance sheet for past two years, Rob commented, “While I understand that this company is focusing on growth, it has taken a risky approach to achieve the growth. There are few other alarming signs I see here”. Before Rob could elaborate his points, he had to leave as he received an emergency phone call from his office.

• Refer the comparative balance sheet provided over the page to answer this question.
• You will not be penalized if you do not use financial statement analyses ratios to answer this question. You need to provide explanation of why you agree or not-agree with Rob’s comments.