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(Billy 3) Introduction to Financial Accounting ACCT1021 Exam Replacement Assessment – Supplemental 2019/20 Course: DT6522, DT6524, DT6525 Examiner: Anne Hurley Format: Individual written...

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(Billy 3) Introduction to Financial Accounting


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 ( XXXXXXXXXX), copying (cc) XXXXXXXXXX by the 18th 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 31st December 2019 and 31st December 2018.


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.


Answered Same Day Jul 14, 2021


Akash answered on Jul 23 2021
123 Votes
Table of Contents
Q1. Financial Accounting    3
(a)    3
(b)    3
(c)    3
(d)    3
(e)    3
(f)    3
(g)    4
(h)    4
Q2. Financial Statements    4
(a)    4
(c)    4
(d)    5
(e)    5
(f)    5
(g)    5
(h)    5
(i)    5
References    6
Q1. Financial Accounting
Accounting refers to the process of recording transaction, classifying it, summarising and analysing it. It starts from recording the transactions, preparing ledger accounts, trial balance, financial statement and then analysing it using accounting tools such as accounting ratios, comparative statements and others to give reliable and meaningful information to the users of the accounts such as investors, management and others.
As noted by Loughran and McDonald (2016), the two major fields of accounting are Management accounting and Tax accounting. The purpose of management accounting is to provide reliable and meaningful information about the performance and position of the entity to the management. On the other hand, the purpose of tax accounting is to compute the tax payable by the company to the government.
There are various users of accounting information such as investors, management, government, employees, public, creditors and others. The purpose of each one of the users is different. For example, the purpose of investors is to growth potential in the company to take decisions about return and investment in company. The purpose of management is to analyse the performance and position of the company.
According to Easton and Sommers (2018), there are different types of business entities such as sole proprietorship, partnership and company. In sole proprietorship and partnership, the liability is unlimited but in the company, liability is limited to the extent of unpaid amount of shares held by them. In the case of partnership and company, both are that owned by a group of individuals and in case of sole proprietorship, there is single owner.
In the going concern concept, it is assumed that the business shall continue for infinite span of time. The entity shall have sufficient resources and liquidity to pay its obligation and keep up float. The entity shall not be liquidated or wound up by the owners in the near future. It is one of the basis accounting concept.

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