Introduction to Accounting and Finance
Diploma in Business Administration
DIPLOMA IN ACCOUNTING AND FINANCE
Year: 2024/2025
Introduction to the Module
The module firstly aims to give students a sound grasp of the basics of financial accounting and reporting (context, purposes, and regulatory framework). It introduces the principal concepts of financial and management accounting. The preparation of principal financial statements will also be explored. This module is also designed to introduce students to key management accounting skills necessary to support decision-making. It will emphasise the acquisition and application of skills and knowledge necessary to inform managers responsible for planning, decision-making and control and will provide the underpinning skills and knowledge required for more advanced study. The key issues addressed will be the fundamentals of cost data collection, analysis and allocation of costs, costing of products and services using trading, profit & loss accounts and balance sheet, depreciation short term decision making - ratio analysis, budgeting and budgetary control. The key techniques and their theoretical underpinning will be explained in lecture sessions and students will be expected to work on practical examples and case studies for discussion and clarification in tutorials.
LEARNING OUTCOMES
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Type
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On successful completion of the module students will be able to:
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Knowledge
and
Understanding
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Identify the key roles of accountants, financial managers and other managers within the organisational context and recognise the integrative nature of modern business roles;
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Understand key rules, concepts and conventions underpinning the production of the major accounting statements and appreciate the form and content of the accounts and annual reports of various business forms;
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Describe the fundamental issues regarding the classification and behaviour of organisational costs, together with the rationale for and operation of, budgets and budgetary control systems;
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Subject -
specific Skills
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Record and present financial information in a prescribed format.
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Analyse and draw conclusions from financial information.
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Key Skills
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Communicate numerate information effectively, both orally and in writing, using appropriate information technology;
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1.0 Module Outline
01 Intro to Accounting
02 Accounting - a Systematic Approach
03 The Accounting equation
04 Ensuring the quality of Financial Statements
05 Accounting information for business
06 Recognition in the Financial Statement
07 Financial Statement Analysis
08 Functions of Management Accounting
09 Classification of Costs
10 Break-even Analysis
11 Preparing a budget.
12 Capital Investment Appraisal
2.0 Assessment
The assessment for this module consists of two forms of assessment. Submission and exam dates are as indicated.
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Part
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Type of assessment
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Word or time limit
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Mark
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Submission method
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Submission/ Exam dates
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1
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Multiple Choice Questions Test
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-
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50%
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Online Test on BLACKBOARD
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REFER TO
BLACKBOARD
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2
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Written Assignment II
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1500 words
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50%
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Upload as an attachment in PDF format on Blackboard
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REFER TO
BLACKBOARD
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Multiple Choice Questions AS1 Test - on Blackboard
Written Assignment AS2 - Answer all questions.
Question 1 (20 marks)
Jimmy Dog’s Designer manufactures a range of dog outfits but when the profit statement is produced there is concern that the product for (Summer coat’ is making a Ioss.
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Hoodcoat
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Summer coat
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Raincoat
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Winter coat
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Total
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$
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$
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$
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$
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$
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Sales
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90,000
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29,000
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80,000
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95,000
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294,000
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Total costs
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50,000
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35,000
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45,000
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50,000
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180,000
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Profit/(loss)
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40,000
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(6,000)
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35,000
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45,000
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114,000
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• Total costs include $35,000 which has been shared equally between the four products. Fixed cost.
Required:
a. Using your knowIedge of (MarginaI Costing’ re-arrange the profit statement to incIude (Contribution’.
b. Demonstrate the effect on profit if the production and sales of ‘Summer coat’ were stopped immediately.
c. From your results in a. and b. above, should the ‘Summer coat’ be dropped from production?
d. Other than the numeric conclusion, what other factors should be taken into consideration in the decision for the future of the ‘Summer coat’ production?
Question 2 (30 marks)
Naaz started up a business, and pays $80,000 into her business bank account on 1st July and budgets as follows:
• Fittings to be purchased on 1st July for $90,000, and this will have to be paid for by the end of the month. Depreciation is $10,000 a year.
• Wages: $10,000 per month.
• Rent of warehouse will be $84,000 per annum, payable in monthly instalments at the start of each month.
• Other costs incurred in the running of the business (excluding purchases) will be $40,000 per month, payable in the month in which the costs are incurred.
• Purchases will be supplied on one month’s credit (i.e. purchases in July will have to be paid for by the end of August).
• Half of the sales are expected to be for cash; the remaining half on credit. Naaz is budgeting to allow two months’ credit by her credit customers (i.e. credit sales in July will not be settled until September).
• For the purposes of the Profit & Loss and Balance Sheet closing stock is valued at $90,000. There is no opening inventory (stock) figure for the ‘Cost of Sales’ calculation.
• Naaz had drawn $500 a month.
• After careful market research, Naaz expects a steady but rapid expansion in her business. Her forecast for sales and purchases is as follows:
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Sales $
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Purchases $
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July
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90,000
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40,000
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August
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130,000
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50,000
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September
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170,000
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70,000
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October
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260,000
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90,000
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November
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250,000
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95,000
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December
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300,000
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120,000
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Required:
a. Prepare a monthly Cash Flow Statement for Naaz for six months forecast from July to December.
b. Prepare a budgeted trading and Profit and Loss Account for the six months to the end of December
c. Prepare the Balance Sheet for the same period.
d. From the results of your cash flow comment on the viability of Naaz’s proposed business. You should provide some recommendations within your discussion.
e. Analyse the Income Statement (Profit and Loss Account) and Statement of Financial Position (Balance Sheet) with reference to the Net Profit Margin and Current Ratio.
Question 3 (10 marks)
The following data are accumulated by Zadok Company in evaluating the purchase of $370,000 of equipment, having a four-year useful life:
Net Income Net Cash Flow
Year 1 $67,500 $160,000
Year 2 47,500 140,000
Year 3 (12,500) 80,000
Year 4 (12,500) 80,000
a. Assuming that the desired rate of return is 12%, determine the net present value for the proposal.
b. Would management be likely to look with favor on the proposal? Explain.
Question 4 (40 marks)
Download the article from the following weblink:
https://www.worldwidejournals.com/paripex/recent_issues_pdf/2015/May/May_2015_143134698 4__98.pdf
a. Write a summary of the article in about 200 words.
b. The author mentioned number of ways which accounting scandals can be
prevented. In addition to the methods mentioned in the article, think of two possible ways that future accounting frauds may happen and how you can prevent them from happening. (max.300 words)