Is an online 24hrs exams holding on the 10th and 12th of January, 2022(next week)
. The modules are Operation Management and Managing Financial Resources. 2500 words for each module. INDEX CITATION APA 7TH EDITION. All working should be done on an excel sheet and later transfer to word. Please i have more files to attach
Tips for answering questions on TB, SPL, SOCIE & SFP Abbreviations: SPL – Statement of Profit or Loss COS - cost of sales CL - current liability SOCIE - Statement of changes of equity NCA - non-current asset NCL – non-current liability SFP – Statement of financial position CA - current asset 1. Look at the list of transactions in the question, decide whether SPL, SOCIE or SFP. 2. Remember items on the trial balance have already been posted though the accounts, you are looking at the end of year balances – so should only go into your SPL, SOCIE or SFP once. 3. Items that you add after the trial balance have not yet been through the accounts, so need to be added twice. Once in the SPL and once in the SFP like closing inventory, tax & accruals or prepayments. Tip: write the figures on your question paper twice, so that you can tick them off. e.g. The closing inventory must go at the bottom of your trial balance answer twice, i.e. once as a Dr and once as a Cr, otherwise it creates an imbalance in the trial balance. It must go into your answer twice a. Once in the working for cost of sales, as it reduces the cost of sales b. Once on the balance sheet as a current asset. 4. You need to use the template in the questions section of Canvas. Learn & write out the SPL, SOCIE & SFP before you start trying to fill in any of the numbers. a. If you find there is no figure when you look at the trial balance, just leave it as zero. b. Practice writing out the title in full i.e. Statement of Profit or Loss for XXX Ltd for the year ended XXXX. 5. Do the workings before completing the SPL or SFP, try to use this order (Canvas has a template for workings): a. Cost of sales. Marks are deducted if COS working is on face of SPL rather than a working. b. Expenses (add them all up in a working and just put the total on the SPL). c. Accruals & prepayments. d. Non-current assets (add them all up in a working and just put the total on the SFP). *Students who have previously studied financial statements are allowed to produce SPL and SFP in full proper form. 6. Cost of sales working is: Opening inventoryX PurchasesX Less closing inventory (X) Cost of sales for SPL X Opening inventory & purchases are now used up & therefore do not appear anywhere else on the SPL, SOCIE or SFP once used in the COS working. The COS figure is then taken to the SPL. 7. Interest is a special expense and appears in its own line on SPL – Finance cost 8. Movement of figures a. The figure at the bottom of the SPL (profit) is the figure that you put in the “retained profit” part of the SOCIE. b. The figures at the bottom of the SOCIE are the figures that you put in the Equity section of the SFP. 1/1 Capital is the amount the owner has invested in a business. The business owes the capital to the owner - it is a type of liability Drawings are the amount taken out of the business for the owner’s personal use. SOLETRADER ONLY Sales is the income earned from selling goods or services. Purchases are the costs incurred by the business or organisation in buying the goods it plans to sell to its customers. Expenses are costs incurred by the business or organisation in order to enable the business to trade. Cash sales are made when the cash is received at the same time as the goods or services are delivered. Credit sales are made when the payment is received after the goods or services have been delivered. Lecture 1 Cash Budget Why are cash budgets produced - why are they important? 1. Avoid solvency problems i.e. to be able to pay for normal business requirements as they need to be paid e.g. Purchases of raw materials, Expenses , Salaries etc 2. Ensure create enough cash to be able to take up new business opportunities 3. Ensure business funded in the most effective way i.e. a. Predict when needs additional cash needed so have time to research best rates/terms of new cash b. Ensure spare cash is invested, even for a short time 4. Sudden unexpected cash needs can signal poor overall cash management A cash budget is a forecast of all the cash receipts and payments that the organisation expects to make Limitations of cash budgeting Does not measure how efficiently or effectively the resources are being used Cash can be generated in a way that does not lead to increase shareholder wealth. Ie by disposal of assets or raising of finance (loan) -may not benefit the company long term. Gross profit in £: Sale price £100 Less cost of sale £80 Gross profit £20 i.e. Gross profit % = 20% Be able to work backwards if told sales £ & GP% to work out COS Manage working capital and improve cash balance by: 1. Improve collection period i.e. get money in faster from customers 2. Reduce levels of inventory to just what you will sell in near future 3. Delay large expenditure e.g. purchase of non-current assets 4. Delay non-essential payments Could also avoid going over overdraft limit by actions below but this is not the same as improving cash flows by managing working capital : 5. Take out additional finance i.e. loan – lenders may not lend ifcash mgmt weak 6. Renegotiate the overdraft limit with the bank – bank may not agree 7. Selling non-current assets – but how would you operate if sell company NCA Use lecture slides AND post lecture slides · Contribution to sales ratio is defined as contribution per unit divided by the selling price per unit. Contribution per unit/selling price per unit = Contribution to sales ratio · Contribution per unit is defined as the difference between the selling price of a product and the variable costs incurred in producing that product. Selling price Less variable cost = Contribution to fixed costs · Direct costs relate to a particular unit of production. · Indirect costs (overheads) are not attributable to a particular unit of production. · A relevant cost is a cost that differs between alternatives. Lecture 6 Costs & contribution · Semi-variable costs remain constant up-to certain activity level and then increases with further increase in activity level and continue to vary in the same direction with the same proportion as the activity level changes. For example, example, telephone charge may include a fixed rental cost, plus a charge linked to telephone usage. · Semi-fixed costs Semi-fixed costs are costs that remain fixed/constant up-to certain level of volume and then increase by a fixed amount after that level. Thus, such costs step up as the activity level increases. For example, salaried salesperson, this person earns a fixed amount of compensation (in the form of a salary), as well as as well as a variable amount (in the form of a commission). In total, the cost of the salesperson is semi-fixed. · Variable costs vary directly with the number of units produced. For example, the cost of materials in making a product would be a variable cost. · Fixed costs are those costs that remain the same whatever the level of output (over a limited range of output), for example, rent payable will be unchanged regardless of the number of units produced. · Margin of safety is how much the sales can fall before a profitable business becomes unprofitable · Difference between the units sold and the break even units Margin of safety (in units) = Expected sales (units) – break-even point (units) It can also be expressed as a percentage: Margin of safety (as a %) = Margin of safety in units × 100% Expected sales The margin of safety measures the riskiness of a project as it indicates by what amount you can have incorrectly judged your sales before you start suffering losses Lecture 7 BEP & MOS · Break-even point is where neither a profit nor a loss is made. · i.e. when we sell just enough units so that the contribution from all the units covers the fixed costs · Nos of units to cover all fixed costs are covered , any further contribution generated will be profit Break-even BE (in units) = Fixed costs Contribution per unit · Selling near the breakeven point is risky as if sales slightly less than expected – will make a loss Number of units to make a specified profit = (fixed costs + specified profit) contribution per unit Problems of budgeting · Time consuming · Soon out of date · Budgetary slack (building in slack over-estimate costs & under- estimate sales) · Tensions between departments · Constrains entrepreneurial activity (top down pressure / builds risk averse managers) · Need to question the assumptions made when budgeting i.e. budgets are based on estimates & forecasts A budget is a financial plan, prepared and approved by management, usually for the year ahead. Lecture 7 con’t Budgets Lecture 8 Pricing decisions What price shall the company sell at? 1. Should strategy by small margin but high sales or high margin small sales? 2. What are the competitors selling at? 3. What price will the market accept? 4. Should all customers have the same price? 5. If different price for different customers - what if other customers find out 6. How much profit does the company need/want to make? Examples of who else might need accounting information about Sam’s business, and why? 6 Concentrate on most profitable area’s/products, rewards etc Customers & suppliers :Will this business continue to trade so that my business can rely on it for products/money Is this business able to pay the interest & the initial sum lend back? What tax should be paid on this business Can salaries be paid, could a career be built here, what does it do? Is this company worth investing in? Short or long term? Does this company impact on the environment? Where does it trade? Is it involved in any contentions area’s 30/11/2011 15:23 6 Shareholders Managers Trade contacts Providers of finance Tax authorities Employees Financial analysts Public Cost based pricing methods Many businesses use their costs to calculate their selling price. This can be done in two ways:Cost-plus pricing: the product is priced to achieve a standard mark-up.Sales margin pricing: the product is priced to achieve a standard marginbased on the selling price.8 Cost based pricing methods Many businesses use their costs to calculate their selling price. This can be done in two ways: Cost-plus pricing: the product is priced to achieve a standard mark-up. Sales margin pricing: the product is priced to achieve a standard margin based on the selling price. 8 Cost based pricing methods Many businesses use their costs to calculate their selling price. This can be done in two ways: Cost-plus pricing: the product is priced to achieve a standard mark-up. Sales margin pricing: the product is priced to achieve a standard margin based on the selling price. 8 Examples of who else might need accounting information about Sam’s business, and why? Shareholders ManagersTrade contactsProviders of financeTax authoritiesEmployeesFinancial analystsPublic 6 Concentrate on most profitable area’s/products, rewards etcCustomers & suppliers :Will this business continue to trade so that my business can rely on it for products/moneyIs this business able to pay the interest & the initial sum lend back?What tax should be paid on this businessCan salaries be paid, could a career be built here, what does it do?Is this company worth investing in? Short or long term?Does this company impact on the environment? Where does it trade? Is it involved in any contentions area’s Examples of who else might need accounting information about Sam’s business, and why? 6 Concentrate on most profitable area’s/products, rewards etc Customers & suppliers :Will this business continue to trade so that my business can rely on it for products/money Is this business able to pay the interest & the initial sum lend back? What tax should be paid on this business Can salaries be paid, could a career be built here, what does it do? Is this company worth investing in? Short or long term? Does this company impact on the environment? Where does it trade? Is it involved in any contentions area’s 30/11/2011 15:23 6 Shareholders Managers Trade contacts Providers of finance Tax authorities Employees Financial analysts Public Statement of profit or loss SPL: Statement of profit or loss for a company shows the operating profit/loss generated as well as the profit for the year (profit after tax) arrived at after all expenses, interest, and taxation have been deducted. Statement of financial position SFP: for the business. Assets and liabilities in the business at a particular date. Also shows how the business