ACT507 S2 2017 Assignment 1 Task: This is an individual assignment in which each student is required...

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ACT507 S2 2017 Assignment 1 Task: This is an individual assignment in which each student is required to form a business and answer some accounting related questions. Value: 40 marks (40% of total assessment) Due date: Week 8 (Sunday the 17th of September 2017 at 23.59pm Darwin time) Length: Maximum of 2000 words. Preparation: Topics 1-7. Presentation: Online submission through Learnline. Assessment Criteria: This task will generally be assessed in terms of the following criteria: 1. Effectiveness of communication: readability, grammar, spelling, neatness, completeness and presentation. 2. Demonstrated competency and understanding: This will be evidenced by the student's ability to be dialectical in the discussion of contentious issues. The marker will pay attention to the accuracy of the content, coverage of relevant issues, structure of argument, English expressions, absence of plagiarism, concise writing style, and referencing style. 3. Evidence of research - This will be evidenced by the references used and the inclusion of a bibliography. Assignment Requirements: 1. The assignment requires you to form a new business and to write a brief introduction about it (name, services or products, legal form, merchandising or manufacturing, retail or wholesale, size, industry, etc…) (4 marks) 2. In deciding on the legal form for your business, discuss the reasons for your choice. (4 marks) 3. There are different financing options that are available to you to finance your business. Provide a list of at least 3 financing options that are suitable and relevant to your business. (4 marks) 4. One of your financing options is to take a loan from the bank. Prepare a projected Balance Sheet and a projected Income Statement that you will be required to lodge with your loan application to the bank. (Use arbitrary numbers that correspond with your business plan). (12 marks) 5. Briefly define the role of accounting as it relates to your business (your answer should include accounting information, users of information, accounting process, financial accounting and management accounting, etc XXXXXXXXXXmarks) 6. Discuss whether financial statement analysis would be useful for the managers of the business (include in your answer the types of analysis that can be used and how they are useful). (4 marks) 7. Discuss the considerations that the management of your business would take into account in deciding on whether to distribute profits or to retain them in the business. (4 marks) Please note that you will need to address these questions in a way that is specific, appropriate, and directly relevant to the business chosen. (I am not after general information. You will need to be specific and your answers should be relevant and suitable to the characteristics of the business you have chosen). Please note that the allocated marks above total 36 marks as there are additional 4 marks towards presentation, references, language expressions and critical thinking. Submission of Assignments • Assignments must be submitted by the due date. • Failure to submit an assignment on or before the due date will result in an academic penalty of 5 % of the marks allocated for the assignment each day the assignment is overdue. • All assignments must be submitted online. • Students should include their names and students’ numbers, campus name, and lecturer name clearly and without errors on the first page of the assignment. • Assignment should be typed and submission file should be either word or pdf. The name of the file should include the following: ACT507AssignmentOneStudentnumberCampus Example: ACT507AssignmentOneS123456WFD Use WFD for Waterfront Students Use EXT for External students Use MELB for Melbourne students Use SYDN for Sydney students Assignment Extensions All requests for extensions must be in writing and received seven days before the due assignment submission date. All requests for extensions must be submitted to the Head of School. (Refer to Learnline for more details)

David · Accepted Answer

ACT507 S2 2017 
Assignment One
Name of student: 
Students’ numbers: 
Campus name 
Lecturer name
BUSINESS PLAN: 
A. Introduction: 
Name: Dawn Clothing 
Address: Adelaide, Australia 
Constitution: Proprietorship 
Proprietor: Mr. J.K Dawn 
Industry: Retail trading of wearing apparels / garments 
Products: Branded garments of major brands such as AND, Madame and Mango etc.  
After evaluating various business options, models and scenarios in line with the market trend, we 
have finalized to go for retail market of clothing for men and women.  
Dawn Clothing is a proprietorship firm engaged in retail trading of branded garments through its 4 
retail stores located in different parts of Adelaide, Australia. The stores shall cater to the needs of 
all generations’ men and women clothing needs with brands such as Mango, Madame, and Levis 
etc.  
Accordingly, agency agreements have been made with the respective companies and terms of 
payment, tax liability issues, insurance liability etc have been finalized. 
All the retail stores have been taken on rent which is paid on monthly basis. Each store has 7 
employees including temporary staff such as accounts department. All the administration and 
marketing activities are undertaken by the proprietor. 
The firm has a working capital cycle of around 45-60 days (inventory holding 3- 4months, 
creditor 45days and debtor 1.5 days) which is in accordance to the agreement made. 
B. Rationale towards business constitution: 
We underwent analysis of different legal forms of entity structure such as partnership, 
proprietorship, private limited company and also LLP. We chose proprietorship firm considering 
the following factors: 
1. Low Cost: For starting up any proprietorship business, proprietor is simply required to name 
the firm, obtain the require licenses and capital investment in nature of fixed assets. No major 
compliance such as registration of partnership / company, formation of deed /MOA /AOA and 
other obligatory provisions of related laws is required. 
2. Ease of maintenance: Proprietorships are much simpler to be handled and maintained. Due to 
sole interest of promoter debt obligations are also easy to be defined. Further, accounting records 
and related paperwork is also easy to manage. 
3. Taxation compliance: One of the most important factors that make proprietorship firms 
lucrative is the ease of compliance with taxation laws. A person can file the tax returns of the firm 
using individual file numbers and dissolution of such firm is comparatively much simpler and 
easier.  
Apart from the above, various other benefits such as no requirement towards bank account in 
name of firm, less reporting requirements, ease in split of business profits etc. 
Thus, with such basic and low capital structure, we opted for sole trader / proprietorship form of 
business of retail trading. 
C: Financing Options: 
Looking to the ongoing needs of the business and fresh start- up, we evaluated various financing 
options that were available. The three major financing options that can be considered and suit the 
financial requirements of the business are: 
1. Working capital limit from banks / financial institutions: 
 Overdraft Limit  
 Bank Guarantee Limit 
 Term Loan 
2. Unsecured Loans in form of quasi capital from friends and relatives 
3. Unsecured EMI based business loans 
All these three options are relevant to the retailing business. 
Overdraft limit is required to finance the daily working capital needs of the firm such as payment 
of expenses of rent, electricity etc. Bank guarantee limit is required to support the agreed clauses 
of the agreements made with the companies of the clothing brands being sold. Also, term loan is 
required to re-finance the capital expenditure made towards furniture/ fixtures, equipments etc. to 
fabricate its four stores. 
Similarly, obtaining unsecured loans from friends and relatives can fulfill the needs of the entity 
without exposing the firm to the interest burden in initial years of the business. This also increases 
the capital base of the company by qualifying for quasi capital and makes the entity stronger. 
Business loans or personal loans are simply EMI based financial aids which are easy to get 
sanctioned but bear heavy interest cost. 
D. Projected Statements for June 2018: 
From the above evaluated three financing options,

ACT507 S2 2017 Assignment 1 Task: This is an individual assignment in which each student is required to form a business and answer some accounting related questions. Value: 40 marks (40% of total...

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