# Financial Accounting Principles and Analysis Name Subject Name Subject Name Subject N Trimester 3,..

Financial Accounting Principles and
Analysis Name
Subject Name Subject Name Subject N
Trimester 3, 2014
Assessment Information – Case Study 2
GB518 Financial Accounting Principles and Analysis – Case Study 2
Total Marks 60 marks……………………………………………………………………………………………………………………………..
Weight 40%…………………………………………………………………………………………………………………………………….
Due Date 16 February 2015 by 5 PM (AEDT)
The assignment will need to be submitted electronically through the student portal – use the link under
“Assessments overview and submission” to submit the information (The portal will close at 5 pm AEDT –
You are required to answer the following five questions. The assignment must be completed individually and
submitted before the above due to avoid any late penalties. Please make sure you follow the guidelines noted in
your subject outline especially those relating to presentation of written work, late policy and academic
Rachel Green, the owner-manager of a small business, had carefully monitored her cash position over the past
financial year, and was pleased to note at the end of the year that the cash position was strong and had shown
a healthy 50% increase over the year. When presented with the income statement for the year, she was
dismayed to note that the profit earned in the last year had deteriorated significantly and had become a loss for
the current financial year. In her anger, she accuses you of having made errors in the accounting records since
“such a silly situation could not possible exist”.
After calculating the current ratio of an entity and finding that the ratio’s value was 5:1, a student analyst
decided that the company was in a sound position for paying all its liabilities including all non-current liabilities.
Discuss the shortcomings of making such a conclusion. Also outline some of the disadvantages of using ratio
analysis only to evaluate a company's performance.
In analysing the financial statements of an entity, the following ratios were calculated:
2017 2016
Current ratio 1.1:1 1.3:1
Quick ratio 0.5:1 0.7:1
Receivables turnover 30 days 45 days
Inventory turnover 3 times 4 times
Profit margin 10% 7%
What conclusion(s) can be made about the entity based on the above ratios?
Kaplan Business School Australia Assessment Information
Below are the comparative statements of financial position of Soccer ltd:
Soccer Ltd.
Comparative Statement of Financial Position
as at 30 June
Yr 2016 Yr 2017
Petty cash \$200 \$400
Cash at bank \$24,200 \$30,600
Bank bills \$10,000 \$12,000
Accounts receivables \$102,960 \$127,400
Allowance for doubtful debts -\$6,960 \$96,000 -\$11,400 \$116,000
Inventory \$74,600 \$70,800
Motor vehicles \$42,000 \$50,400
Acc. Depn. – motor vehicles -\$10,000 \$32,000 -\$12,800 \$37,600
Office furniture \$16,000 \$18,400
Acc. Depn. – office furniture -\$7,600 \$8,400 -\$8,400 \$10,000
Total assets \$245,400 \$277,400
LIABILITIES AND EQUITY
Accounts payable \$45,000 \$47,200
Tax payable \$3,200 \$4,200
Share capital \$165,000 \$196,000
Retained earnings \$32,200 \$30,000
Total liabilities and equity \$245,400 \$277,400
1. Income statement details are: sales revenue \$750,000, cost of sales \$603,000, expenses \$116,360
(excludes depreciation and carrying amount of vehicle sold), bad debt expense \$14,440 and tax expense
2. A dividend was paid using the year
3. A vehicle that cost \$5,600 originally was sold during the year for \$3,000. The vehicle had been
depreciated by \$3,200 at date of sale.
4. The company pays income tax in one instalment. The single instalment of \$3,200 due by 21 Oct 2016
Prepare a statement of cash flows for the year ended 30 June 2017 in accordance with the direct method.
Kaplan Business School Australia Assessment Information
The following information has been extracted from the financial statement and notes of Reef Ltd: