Unit 5 Accounting Principles, Pearson BTEC Level 4 Higher National Certificate in Business

Level - Level 4, Unit Credit - 15

Learning Outcome 1: Examine the context and purpose of accounting.

Learning Outcome 2: Prepare basic financial statements for unincorporated and small business organisations in accordance with accounting principles, conventions and standards.

Learning Outcome 3: Interpret financial statements

Learning Outcome 4: Prepare budgets for planning, control and decision making using spreadsheets

Assignment Part - 1

Assignment 1- Accounting in Context and Budgetary Control

Submission format:

The submission is in the form of a portfolio of evidence and include the following:

Select a business organisation and create a blog making use of headings, sub-sections, columns and appropriate business related images and illustrations, while presenting academic and theoretical information in practical, contextualised and creative writing.

The recommended word limit for the case study is 2000 words (+/-10%), although you will not be penalised for going under or exceeding the total word limit. Support your work with appropriate research, provide a bibliography and use Harvard referencing system accurately (or alternative referencing system). Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly.

Submit a memorandum with an accompanying Excel spreadsheet(raw data will be supplied by your tutor or please see Appendix A - Raw Data on LO4 (Cash Budget).

You will insert sections of your spreadsheet into the memorandum. The recommended word limit for the memorandum is 1000 (+/-10%)
words, although you will not be penalised for going under or exceeding the total word limit. Referencing for both submissions should use the Harvard system (or an alternative system).

Vocational scenario

Organisation

A large accountancy firm that undertakes extensive business consultancy work for their client base has a central London head office and regional office in the UK in Birmingham and Southampton. Last year, the group turnover was £200 m with 25% deriving from non-UK markets, principally in Southeast Asia. They have a small regional office in Singapore. The firm also has a policy of taking on smaller niche clients, where they feel there is potential for fast growth.

Role
Graduate Trainee

You have recently joined the firm as a Graduate Trainee attached to their UK SME (Small and Medium Enterprises) Unit, offering accountancy and financial services to businesses that typically have a turnover ranging from £0.5 m to £15 m. As part of your ongoing training, you have been asked to undertake some activities which are explained in the assignment activity and guidance below.

Assignment activity and guidance

1: Your supervisor, one of the firm's Key Account Managers, has asked you to prepare a blog that will be used to market and promote its accounting services to new and existing clients. The working title you have been given for the blog is ‘The role of accounting in an organisation'.

The blog must be presented as an online blog in an engaging and practical way, covering relevant academic theory, making use of, for example, headings, images and illustrations.

Your blog should include the following, but is not limited to:

• the purpose and scope of accounting in complex operating environments
• a critical evaluation of the accounting function in informing decision making and meeting stakeholder and societal needs and expectations
• the main branches of accounting and job skills sets and competencies
• accounting systems and the role of technology in modern-day accounting
• issues of ethics, regulation and compliance and the extent to which they are
constraints or threats to the organisation.

2: Having completed the first activity, you have now been asked to work with hospitality
and catering start-up business that your firm has just taken on as a client. The business is particularly in need of support and guidance with budgeting and how it can be used to inform efficient resource allocation and support effective control and decision making.

The founder of the business is investing £100,000 of their capital and has also secured a business loan of £50,000. (Note: students will be provided with raw budget data in spreadsheet format, which they will then manipulate and model, or please see Appendix A - Raw Data on LO4 (Cash Budget).

You have been asked to prepare a memorandum that includes the following.

Production of a 12-month cash budget that makes use of variance analysis to show the impact of the different individual scenarios below:

1. Discounting prices by 20%, which in turn increases sales volume per month by 10%
2. Increasing the marketing budget by 10% per month, which in turn generates an additional 20% in sales revenue
3. Offering suppliers one-month's trade credit
4. Reducing rental/property related costs by 15% per month.

• An evaluation of the role that budgets play in the effective planning and control of resources in an organisation such as your client's. This will include both benefits and any limitations of using budgets and the extent to which they can help identify problems and corrective actions.

• An outline of a range of budgetary control solutions, with justification, to support organisation decision making and ensure efficient and effective deployment of resources.

Assignment Part B

Assignment - Production and Interpretation of Financial Statements

Vocational Scenario

Having successfully completed your six-month probation as a Graduate Trainee at the accountancy firm, you have now been attached to a unit in the firm that deals with the provision of accountancy and consultancy services to small businesses that are typically set up as sole traders, not-for-profit or partnerships. The firm is careful about which small and emerging businesses it works with as it seeks to spot growth potential and identify and work with clients that have scalable business models.

Assignment Activity

You are initially working with a selection of these small businesses that have been trading for three years and which now need annual trading statements to be compiled and submitted in line with government requirements.

You have been given:
an extended trial balance for each business, including accruals, prepayments and figures for bad debts and depreciation a range of comparative key performance ratios from the previous year.

Note: this data will be given to students in spreadsheet format. Financial data must be realistic and in context to meet local needs. These local businesses do not make use of contemporary software to support its bookkeeping and accounting function. This is something which concerns you as you feel that it represents an opportunity for the business to save time and resource. Your supervisor, one of the firm's Key Account Managers, has asked you to compile the year-end financial statements ready for submission and provide, for each client, some detailed analysis of the figures produced, which will be presented in the form of an accompanying letter.

Specifically, you will undertake the following:

1. From the data provided, you are required to prepare the year-end financial statements, taking into consideration accounting principles, conventions and standards. You will need to make and show appropriate adjustments to both the Income statement and the Balance sheet. Please make use of the data provided in Appendix B - Raw Data on LO2 (Sole Trader, Partnership, NPO).

2. Write an accompanying letter to the client (LO3) that will be sent with the completed financial statements.

The letter needs to include:
calculation of relevant profitably, liquidity, asset usage and investment ratios

critical evaluation of the performance to the business year on year (making reference to data you have calculated and data provided from the previous year), with reference to relevant benchmarks as well as any limitations of using financial ratios as performance measures
an outline of the benefits of contemporary accounting software packages, with examples of products on the market
justified conclusions and recommendations for your client

Please make use of the data provided in Appendix B - Raw Data on LO3 (Financial Ratios).

Attachment:- Accounting Principles.rar