HC1010 Assignment Specifications Purpose: This assignment aims to reinforce and extend students’ knowledge and understanding of key topics in this course (HC1010) including: Overview of Accounting,...

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HC1010 Assignment Specifications Purpose: This assignment aims to reinforce and extend students’ knowledge and understanding of key topics in this course (HC1010) including: Overview of Accounting, Organisational Structure & the Reporting Environment, Statement of Financial Position, Statement of Financial Performance, Cash Flow Statement, Financial Statement Analysis, Accounting for Business Transactions, Cost Concepts & Behaviour, Preparation of Budgets, and Cost-Volume-Profit-Analysis through independent research and application of knowledge and skills. Assignment details: Your friend Rob is from WA and he wants to start a business of his own. He is thinking of buying a Bakery in Melbourne. The shop has been there for several years but has not been a great success. Rob does not have sufficient savings and he may have to borrow a large amount of money to finance the purchase. As you are an accounting student, you have been asked to advise the following: a. What are the options of the forms of organisation that Rob can adopt for the business? Analyse the advantages and disadvantages of each option for Rob. b. Will the choice of organisation affect the availability of finance for his business? Explain. c. How can he raise the required finance? What security do you think he will need to provide? d. How and what accounting information will assist Rob in making decisions in purchasing the business? What non-financial information should he be requesting? e. What skills and/or accounting knowledge will he need to manage the business? Please outline your responses to the above issues and provide your advice and recommendations to Rob in a report. Resources and links: 1. www.business.gov.au 2. www.business.nsw.gov.au 3. www.business.vic.gov.au 4. www.business.qld.gov.au 5. Textbook: Hancock, P., Robinson, P., and Bazley, M XXXXXXXXXXContemporary accounting: a strategic approach for users. Cengage Learning Group Formation and Group Assignment: Students are required to work on the assignment in groups of 2 - 4, produce and submit the following: • a group report, and • a short video presentation of approximately XXXXXXXXXXminutes.
Answered Same DayJan 08, 2021HC1010

Solution

Kushal answered on Jan 17 2021
56 Votes
For the bakery Rob can adopt any of the following forms of the organization -
1. Sole Proprietorship – If a business or the firm is owned by an individual and no partnership is formed as such then it is called the sole Proprietorship.
a. Advantages –
i. All profits belong to you.
ii. No need to divulge any information about the long term or the short term goals in any public domain
iii. More autonomy as far as the direction of the organization is concerned
. Disadvantages-
i. Not limited liability and the owner has the entire risk of the taxes, financial liabilities , operational and financial risks
ii. Responsible for all the taxes
2. Partnership – When a business is owned by more than one person then it is called the partnership and all the responsibilities, right and duties as well as the percentage of the ownership is mentioned.
a. Advantages –
i. Limited liability to the partners. Only one general partner has the unlimited liability in the firm.
ii. Strategic directions by multiple stakeholders and hence, better decision making
. Disadvantages-
i. Multiple opinions and hence, conflicts
ii. Taxes to the individuals as well the business
3. Corporation – Multiple stakeholders and shareholders own the business and hence, it will form a corporation.
a. Advantages-
i. Limited Liability
ii. More transparency in the business due to increased scrutiny of the shareholders
iii. Alignment of the short term as well as the long term objectives of the firm.
. Disadvantages-
i. Need to divulge the information to the all the shareholders and higher scrutiny
ii. Managers and directors might have the conflict of interests and that might lead to corporate governance issues
Effect on the choice of the organization on availability on the finance of the business1-
Due to the limited liability structure of the businesses with the corporation structure, they can raise the money with the more efficiently as compared to the other structures as far as the equity infusion is considered.
Organization structure mostly talks about the ownership of the firm and the future cash flows generation. Based on the different structure, the firms will be able to generate the
However, the banks need to have a look at the stable and sustainable revenue income for the loans and that has a very little impact on the fundraising from the bank debt is considered.
Choices of the fund raising2 –
Traditionally any business can raise the fund using the two mediums – 1. Debt, 2. Equity
1. Debt –
a. As far as the debt is considered, the firms can raise the loans from the banks. However, in order to that excessive due diligence goes into play. In order to restrict the non-performing assets, the banks will look at the detailed plan of the financial projections, operational aspects, and the...
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