Task 1 – Presentation with supporting notes
You are to produce a presentation for the introductory session with the trainees. These materials will be inserted into the reference file.
Your presentation must provide:
- an explanation of the role of accounting concepts and standards in financial accounting
- an explanation of the characteristics of a public limited company’s Income statement, statement of financial position and cash flow statement.
In addition you need to produce some pages for the reference file which:
- evaluate the usefulness of a public limited company’s annual report
- assess the roles and responsibilities of Directors and Auditors with regard to published company accounts
- analyse the usefulness of the elements of a public limited company’s annual report to company stakeholders.
LO1 AC 1.1, 1.2, 1.3, 1.4, 1.5
Extension activities:
To gain a merit grade you must prepare an information sheet to support your presentation. This sheet must:
- assess how legislation affects business organisations accounting processes.
1M1
To gain a distinction grade you must include additional section for the reference file. This must provide a:
-
- critical review of the impact on limited companies of the International Accounting Standards.
1D1
Task 2 – Exemplar Financial Reports
You are to prepare a set of exemplar financial reports, which the trainee accountants can place in the file and use for reference.
You must:
-
- use appropriate books of original entry and double entry accounts to extract a trial balance from the details contained in Appendix 1.
- prepare a set of sole trader financial statements from the information contained in Appendix 2.
- prepare a set of financial statements for a business organisation of your choice.
- prepare and analyse break-even data from the costing information in Appendix 3.
- prepare a cash budget from the information in Appendix 4.
LO2 AC 2.1, 2.2
LO3 AC 3.2, 3.3
Task 3 – Case Study Paper
In preparation for a trainee workshop, you are to prepare a case study paper.
The paper must:
- evaluate the importance of consolidated financial statements used by groups of companies.
- explain types of costs incurred and pricing methods used by different business organisations.
LO2 AC 2.3
LO3 AC 3.1
Extension activities:
To gain a merit grade you are required to provide additional information in your case study paper that:
-
- assesses the importance of accuracy in the double entry accounting process for accurate financial control.
- assesses the implications of changes in costs and revenue on break-even and budget preparation.
2M1
3M1
To gain a distinction grade you are required to provide additional information in your case study paper that:
- critically evaluates the usefulness of financial statements to stakeholders of business organisations.
- critically reviews the usefulness of management accounting principles and procedures to ensure corporate success.
2D1
3D1
Appendix 1
Use appropriate books of original entry and double entry account to extract a Trial Balance from the following details for the month of January:
-
-
- January 1 – Started business with £20 000 in the bank
- January 2 – Bought goods on credit from the following:
- K Smith £75
- M Zainab £22
- T Doggart £58
-
- January 5 Cash sales £187
- January 6 Paid wages in cash £254.
- January 7 Sold goods on credit to:
- H Maclean £35
- L Rory £42
- J Gardener £72
- January 9 Bought goods for cash £259
- January 10 Bought goods on credit from:
- M Zainab £57
- T Doggart £98.
- January 12 Paid wages in cash £314
- January 13 Sold goods on credit to:
- L Rory £32
- J Gardener £23
- January 15 Bought shop fixtures on credit from Store Ltd £2 550
- January 17 Paid M Zainab by cheque £67
- January 18 We returned goods to T Doggart £20
- January 21 Paid Store Ltd a cheque for £550
- January 27 We returned goods to K Smith £12
- January 30 Kettle and Co Ltd lent us £6 000 in cash
- January 31 Bought a motor van paying by cheque £4 000
Appendix 2
Alpha Stores
Trial Balance as at 31st March
Dr | Cr | |
£ | £ | |
Inventory | 2 000 | |
Sales | 248 783 | |
Purchases | 68.975 | |
Sales Returns | 1 206 | |
Purchase Returns | 780 | |
Carriage Inwards | 220 | |
Discounts Received | 3 135 | |
Discounts Allowed | 2 474 | |
Wages | 111 220 | |
Insurance | 7 500 | |
General Expenses | 39 590 | |
Heat and Light | 3 880 | |
Bad Debts | 965 | |
Non-current (fixed) assets | 277 200 | |
Trade Receivables | 6 700 | |
Trade Payables | 2 100 | |
Bank | 37 750 | |
Cash | 1 500 | |
Capital | 185 082 | |
Short-term Loan | 50 000 | |
______
525 530 |
______
525 530 |
Additional Information:
- Alpha Stores had an opening inventory of £32 000.
- Depreciation is not charged on non-current (fixed) assets.
Appendix 3
ABC Production Ltd produces a single product.
Its costs and sales for the year ended 31 December were as follows:
Units sold | 20 000 |
£ | |
Sales revenue | 900 000 |
Direct wages | 200 000 |
Direct materials | 300 000 |
Variable overheads | 120 000 |
Fixed costs | 205 000 |
The selling price and all costs were at a constant rate throughout the year.
To improve profit for the next year, the following changes are planned:
- Units to be sold to increase by 10%.
- Selling price to be maintained at the current price.
- Wages to be increased by 3% per unit.
- Material costs to be reduced by 5% per unit, this being achieved by changing from a local supplier to an overseas supplier.
- Variable overheads to be reduced by £0.45 per unit.
- Fixed costs to increase by £7 500 per annum.
Appendix 4
Prepare a three month Cash Budget for Active Sport Gym and Leisure Shop to estimate the cash balance at the end of April from the following information.
The projected Bank Account balance on 1 January is £32 180.
Projected Shop Sales Figures:
December | January | February | March | April | |
Credit Sales (£) | 4 350 | 3 150 | 3 600 | 3 825 | 3 900 |
Cash Sales (£) | 1 450 | 1 050 | 1 200 | 1 275 | 1 300 |
Credit customers pay one month after the month of sale.
Projected Gym Takings:
- January – £22 400
- February – £22 400
- March – 10% increase on February
- April – £500 increase on March
Estimated Purchases:
All purchases are on credit and suppliers are paid one month after goods are bought.
- December – £3 000
- January – £500 less than December
- February – 10% increase on January
- March – Same as February
- April – 12% increase on March
Expenses:
- Wages are £11 000 per month. A 5% wage increase is expected from 1 April.
- Light and Heat is £550 per month. An 8% increase is expected from 1 March.
- Maintenance is carried out three times a year – February, June and October. This costs £55 500 per year.
General expenses are estimated at £30 000 per year, paid every 2 months starting in February.
Guidelines for assessors
The assignment submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment criteria for the unit. To achieve a merit or distinction grade, the learners must demonstrate that they have achieved all the criteria set for these grades. Where work for the pass standard is marginal, assessors can take account of any extension work completed by the learners. The suggested evidence listed below is how learners can demonstrate that they have met the required standards.
Task
number |
LOs and AC | Suggested evidence PASS |
Suggested additional evidence MERIT | Suggested additional evidence DISTINCTION |
1. | LO1 AC 1.1, 1.2, 1.3, 1.4, 1.5
1M1 1D1 |
The presentation should be appropriate for the stated audience. The learner will clearly explain the role of accounting concepts and standards in financial accounting. The learner will consider both UK and International Accounting Standards. Reference should be made to a variety of IAS’s and their key objectives.
The learner should download a range of PLC accounts and annual reports. To enhance the response the learner would be advised to consider businesses of different structures and from contrasting sectors. The learner should ensure that the role and responsibilities of Directors and Auditors is considered in relation to the published annual statements of companies. The learner should analyse the usefulness of the elements of an annual report. This should include the various sections of the annual report and a variety of different stakeholders. |
The learner is required to assess how legislation affects business organisations accounting processes. Learners should consider a range of pieces of legislation. | The learner will need to review the impact on limited companies of the International Accounting Standards. The review should identify the positive and negative effects. It would be advisable for the learners to consider a minimum of two major institutions involved in the international financial environment. |
2. | LO2 AC 2.1, 2.2
LO3 AC 3.2, 3.3 |
The learner will be required to use the data provided in the four appendices to produce financial reports.
For AC 2.2, the learner will be required to use data from an organisation of their choice. This could be a sole trader, partnership, private limited company, public limited company or third sector organisation. The centre could provide a case study, if data from an organisation is not available to the learner. Manual or computerised accounting methods are acceptable. |
||
LO2 AC 2.3
LO3 AC 3.1 2M1 3M1 2D1 3D1 |
The learner is required to evaluate the importance of consolidated financial statements. The evaluation should examine the strengths and weaknesses and lead to judgements. The learner should have access to a number of sets of consolidated group accounts that are freely available to download.
Use of a range of contrasting businesses would enhance the learner response. The learner will continue with a detailed explanation of cost types and pricing methods. A generic explanation should be enhanced with a number of practical examples for different business organisations. |
The learner should consider the importance of accuracy and the implications of changes in costs and revenues. The use of appropriate business examples will help to demonstrate application of the assessment. | For 2D1 and 3D1, the learner should evaluate / review the usefulness of financial statements and management accounting principles. For 2D1, the learner should consider a wide range of stakeholders to ensure a balanced and in-depth evaluation. |
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