Accounting

For: ATHE Level 6 Diploma in ManagementATHE Level 6 Extended Diploma in Management
Unit 6 Accounting Assignment
Assignment Scenario
You are employed as an operational manager with Jones Group. The group has a number of
different businesses in the sports and leisure sector. You have had recent training in
understanding financial and management accounting techniques which you are finding
useful in your role for better understanding the group’s different business interests.
Task 1
You have been asked to prepare an information booklet for other managers to support them
in increasing their financial and management accounting knowledge.
Your booklet must include:
•
•
•
•
•
•
An explanation of the role of accounting concepts and standards in financial
accounting
An explanation of the characteristics of a public limited company’s annual report
using examples of public limited company accounts
An analysis of the roles and responsibilities of Directors and Auditors with regard to
published company accounts
An explanation of the purpose of different financial statements (income, position and
cash flow statements)
An analysis of the importance of consolidated financial statements used by groups of
companies with examples
An analysis of the uses and limitations of financial statements and annual reports
Extension activity
To achieve a Merit, your booklet must also include an assessment of the importance of
legislation, concepts and standards for consistency and comparability of financial reporting.
To achieve a Distinction, your booklet must also include an evaluation of the usefulness of
financial statements and annual reports to stakeholders of business organisations .
Learning outcomes and assessment criteria
LO1 AC 1.1, 1.2, 1.3, 1M1
LO2 AC 2.1, 2.2, 2.3, 2D1
Unit 6 Accounting Assignment v1.0 13/03/23
Task 2
The group is considering taking over a new retail business Alpha Sports Stores Limited.
Financial accounts have not yet been prepared for the year but you have been provided with
the trial balance. You are asked to prepare a set of financial statements from the trial
balance information to support the board of directors’ decision about the potential takeover.
You must:
•
prepare a set of sole trader financial statements from the information contained in
Appendix 1
Learning outcomes and assessment criteria
LO3 AC 3.1
Task 3
You have been asked to carry out an analysis of next year’s figures for two of the group’s
businesses to support decision-making.
You are required to:
•
•
Analyse breakeven data from the information about ABC Production Limited provided
in Appendix 2. You should calculate breakeven and give an explanation of what this
means for the business
Analyse the cash position of Active Sport Gym and Leisure Shop from the information
in Appendix 3. You should prepare the cash budget and give an explanation of what
this means for the business
Extension activity
To achieve a Merit, your analysis must also include an assessment of the implications of
changes in costs and revenue on the breakeven and cash budget, using examples related to
the breakeven analysis and cash budget you have prepared.
To achieve a Distinction, your analysis must also include an evaluation of the usefulness of
management accounting techniques to support business success.
Learning outcomes and assessment criteria
LO3 AC 3.1, 3.2, 3.3, 3M1 3D1
Unit 6 Accounting Assignment v1.0 13/03/23
Appendix 1
Alpha Sports Stores
Trial Balance as at 31 st March
Inventory
Sales
Purchases
Sales Returns
Purchase Returns
Carriage Inwards
Discounts Received
Discounts Allowed
Wages
Insurance
General Expenses
Heat and Light
Bad Debts
Non-current (fixed) assets
Trade Receivables
Trade Payables
Bank
Cash
Capital
Short-term Loan
Dr
£
2 000
248 783
68.975
1 206
780
220
3 135
2 474
111 220
7 500
39 590
3 880
965
277 200
6 700
2 100
37 750
1 500
______
525 530
Additional Information:
1. Alpha Stores had an opening inventory of £32 000
2. Depreciation is not charged on non-current (fixed) assets
Unit 6 Accounting Assignment v1.0 13/03/23
Cr
£
185 082
50 000
______
525 530
Appendix 2
ABC Production Ltd produces sports bags.
Its costs and sales for the year ended 31 December were as follows:
Units sold
Sales revenue
Direct wages
Direct materials
Variable overheads
Fixed costs
20 000
£
900 000
200 000
300 000
120 000
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:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
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
Unit 6 Accounting Assignment v1.0 13/03/23
Appendix 3
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:
o January – £22 400
o February – £22 400
o March – 10% increase on February
o April – £500 increase on March
Estimated Purchases:
All purchases are on credit and suppliers are paid one month after goods are bought.
o December – £3 000
o January – £500 less than December
o February – 10% increase on January
o March – Same as February
o April – 12% increase on March
Expenses:
o Wages are £11 000 per month. A 5% wage increase is expected from 1 April.
o Light and Heat is £550 per month. An 8% increase is expected from 1 March.
o 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.
Unit 6 Accounting Assignment v1.0 13/03/23
Guidelines for assessors
The assignment submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment cr iteria 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 lear ners. The suggested evidence
listed below is how learners can demonstrate that they have met the required standards. The command verbs contained within the AC are
highlighted in bold in the suggested evidence boxes.
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,
1M1
The booklet should be appropriate for the
stated audience.
1M1 The learner is required
to assess how far
legislation, concepts and
standards lead to
consistency and
comparability of financial
reports from different
organisations.
2D1 The learner should
consider a wide range of
stakeholders to ensure a
balanced and in-depth
evaluation.
LO2
AC 2.1, 2.2, 2.3,
2D1
AC1.1 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.
AC1.2 The learner should download a
range of PLC accounts and annual reports
and explain the characteristics of annual
reports. To enhance the response the
learner would be advised to consider
businesses of different structures and from
contrasting sectors.
AC1.3 The learner must analyse the role
and responsibilities of Directors and
Auditors in relation to the published annual
statements of companies.
Unit 6 Accounting Assignment v1.0 13/03/23
AC2.2 The learner should analyse the
importance of consolidated financial
statements. The analysis 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.
AC2.1, 2,3 The learner should explain the
purpose of income, position and cash flow
statements and give an analysis of the
uses and limitations of financial statements
and annual reports. Information sheets
should clearly explain the purpose of
financial statements and annual reports for
tax purposes, to meet legal requirements
and to provide a snapshot of the business
and identify their limitations in providing
information for decision making and
operation of the business. They should
highlight issues of comparability of financial
statements.
2.
LO3
AC 3.1
AC3.1 The learner must prepare a set of
financial statements from the information
provided in Appendix 1. Accounting
principles and standards should be
appropriately applied, and appropriate
formats used.
Statement of income and expenditure (profit
and loss account) and statement of
Unit 6 Accounting Assignment v1.0 13/03/23
financial position (balance sheet) should be
prepared.
3
LO3
AC3.2 The learner should analyse
AC 3.2, 3.3, 3M1, breakeven by calculating the breakeven
3D1
point from the given in appendix 2. They
should explain how breakeven is used in
the business and what it indicates.
AC3.3 The learner must analyse the cash
position by preparing a cash budget from
the figures given in appendix 3. Cash
budgets should use an appropriate format
and show the final cash position after three
months. Learners need to explain what the
cash budget shows and how the business
can use it for operational decision-making.
Unit 6 Accounting Assignment v1.0 13/03/23
3M1 The learner should
assess the implications of
changes in costs and
revenues. The use of
appropriate business
examples will help to
demonstrate application of
the assessment. Examples
should be related to the
calculations carried out.
3D1 The learner should
evaluate the usefulness of the
management accounting
techniques explored –
breakeven and cash budgeting.
They should identify the
strengths and limitations of
each technique and how these
impact on use.