(Billy 3) Introduction to Financial Accounting

ACCT1021

Exam Replacement Assessment – Supplemental 2019/20

Course:
DT6522, DT6524, DT6525

Examiner:
Anne Hurley

Format:
Individual written assignment

Please prepare a financial accounting assignment on any
two
of the following:
financial accounting (question 1), financial statements (question 2) and interpretation of financial statements (question 3). Full sentences are required (no bullet points/listing).

Submission Date: Assessments must be submitted via Brightspace (Assessment_Assignment) AND email your assessment to your lecturer ([email protected]), copying (cc)
[email protected]
by the
18^th
August 2020.

Marks:
This paper will be marked out of 200

(70% of the total allocated marks for the module)

Answer any TWO questions

Question 1

Financial Accounting

a) What is accounting?

b) Briefly describe the two major fields of accounting.

c) Describe the various types of individuals who use accounting information and how they use that information to make important decisions.

d) Describe the similarities and differences among the three different types of business entities discussed in this module.

e) What does the going concern concept mean for a business?

f) What concept states that accounting information should be complete, neutral, and free from material error?

g) Describe the organizations and rules that govern accounting.

h) Under the matching/accruals concept, when are expenses recorded?

(100 Marks)

Question 2

Financial Statements

a) What is the accounting equation? Briefly explain each of the three parts.

b)
How is net profit calculated? Define
revenues
and
expenses.

c) What are the steps used when analysing a business transaction?

d) List two financial statements. Briefly describe each statement.

e) When are adjusting entries completed, and what is their purpose?

f) What is the process of allocating the cost of a plant asset over its useful life called?

g) What is Cost of Goods Sold/Cost of Sales, and where is it reported?

h) Explain clearly why the balance on a bank statement may not agree with the bank balance from a business’s own accountancy system.

i) What is the difference between a capital expenditure and a revenue expenditure? Give an example of each.

(100 Marks)

Question 3

Interpretation of Financial Statement

The following financial information has been extracted from the books of Europe Ltd for the years ended 31^st
December 2019 and 31^st
December 2018.

Required:

a)

Calculate the following ratios for Europe Ltd for 2019 and 2018:

(50 Marks)

i. Gross Profit Ratio

ii. Net Profit Ratio (using PBIT)

iii. Return on Capital Employed (using PBIT)

iv. Return on Owners Equity (using PAT)

v. Current Ratio

vi. Acid Test Ratio

vii. Inventory Turnover Ratio

viii. Accounts Receivable Days

ix. Accounts Payable Days

x. Debt/Equity Ratio (Gearing)

b)

Using the ratios calculated in part (a) comment on the performance of the Company over the two years.

(50