Write a memo to your manager giving your thoughts on how this should be handled by the client.

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You are an intern in a CPA firm. Your manager walks into your cubicle and says, “One of our clients is thinking about investing in a company. He wants to know how he should account for this investment. Be prepared to discuss it with the client tomorrow.”

Write a memo to your manager giving your thoughts on how this should be handled by the client.

The situation is the following:

Company F purchased 40% of the outstanding stock of company K on June 30, 20XX.
Both of the companies have a December 31st, year end.
Company K is a publicly traded company and reports its net income to company F.
Company K also pays a hefty dividend to the shareholders of company F.
How should company F report the above facts on its December 31, 20XX balance sheet and income statementWrite a memo to your manager giving your thoughts on how this should be handled by the client.?
Support your answer.

How should Mr. Wrong have recorded the transaction? What are the ethical aspects of Mr. Wrong’s action?

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Mr. Right and Mr. Wrong own an antique store in a partnership. They share profits and losses equally and receive an annual salary of $50,000, as per the partnership agreement. Mr. Right travels the country buying antiques. Mr. Wrong manages the store. From time to time, they use some of the small items from the store merchandise for personal use. Mr. Wrong’s daughter is getting married, and she loves an antique piece that costs $5,000. Mr. Wrong makes the following entry on the books to record the transaction:

Debit Credit

Cost of goods sold$5,000

Inventory$5,000

How should Mr. Wrong have recorded the transaction?
What are the ethical aspects of Mr. Wrong’s action?

Mr. White (invested $20,000) and Mr. Black (invested $10,000) are in a partnership to run a marketing firm. They share profits and losses in the ratio of 2:1, which is also the ratio of their initial investment in the business. Mr. White manages the office but Mr. Black gets all of the contracts for the firm. It is his high profile that gets the contracts for the firm. At the end of the year, the firm has reported net income of $300,000, which was allocated in the ratio of 2:1, ($200,000 for Mr. White, and $100,000 for Mr. Black). On Dec 31, 20XX, Mr. White’s capital balance was $150,000 and Mr. Black’s capital balance was $100,000. Mr. White has withdrawn more cash from the business than his partner Mr. Black.

On Jan 15th, Mr. White discovered that the net income for the previous year was understated by $60,000. Mr. Black tells Mr. White that this net income of $60,000 should be shared in the proportion of their current capital balances. (Mr. White = 150,000/$250,000 = 60% = $36,000; Mr. Black = $100,000/$250,000 = 40% = $24,000). But Mr. White feels that the additional income should be shared in the ratio of 2:1 ($60,000 x 2/3 = $40,000 Mr. White; $60,000 x 1/3 = $20,000 Mr. Black). Who is correct? Why?

GAAP rules are clear about when a company needs to consolidate or not, but companies tend to find loopholes to circumvent this rule. GAAP clearly indicates that consolidated financial statements are “usually necessary for a fair presentation when one of the companies in the group directly or indirectly has a controlling financial interest in other companies: the usual condition for a controlling financial interest is ownership of a majority voting interest.”

Controlling financial interest means to own more/greater than 50% of the voting stock of another company.

Because of this “greater than 50% of the voting stock,” some of the companies have taken advantage of the criterion, causing serious problems in the business world. Companies were destroyed and with it, employees lost their jobs, their pensions, and 401Ks. So FASB had to make changes to GAAP for consolidations and issued new guidelines.

As a student of accounting, you must know these rules.Research and discuss the new guidelines issued by GAAP for consolidating entities.
Give an example of a company that was involved in this kind of unethical behavior.

Explain what the IASB or FASB roadmap for convergence to International Financial Reporting Standards (IFRS) was set up to accomplish.

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Explore the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) Web sites, and complete the following:

Explain what the IASB/FASB roadmap for convergence to International Financial Reporting Standards (IFRS) was set up to accomplish.
Describe at least 1 project that is being explored with regard to the roadmap, and provide details about the objective and status of the project at this time.

Review the project summary for the conceptual framework project, and respond to the following:

What do you view as the key differences in this project?
Provide your opinion on whether you believe that a single set of standards should be the goal of a global economy.
What do you see as the benefits and barriers to the process?

What is the importance of SOX section 404 to help with preventing fraud and fraudulent financial reporting?

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Discuss the misrepresentation of financial information to the public, and answer the following questions:

What statements are key targets for this manipulation, and what accounts found in the statements are the main focus?
How can this fraudulent information be detected? What are the steps to prevent these actions?
What is the importance of SOX section 404 to help with preventing fraud and fraudulent financial reporting?

Produce a budget report, complete with analysis and commentary, on a given scenario.

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Assessment Task

You are required to produce a budget report, complete with analysis and commentary, on a given scenario. The report consists of THREE compulsory parts.

HAMBLE LTD

Assessment Scenario

Hamble Ltd is an established food packaging and distribution business operating across London and the south east of England. The Directors of Hamble Ltd are considering expanding the business over the next 12 months by purchasing an existing established business which operates in the east of England and the midlands.

PART A (35% weighting)                                       

The directors of Hamble Ltd have asked you, as a recently employed assistant management accountant, to prepare and review their cash budget. The bookkeeper started the cash budget but was unable to complete it due to ill health.

In addition, Hamble Ltd requires you to evaluate the different funding options for its expansion plans.

Estimated sales and purchases for each of the nine months to September are given below:

  Jan

£,000

 Feb

£,000

 Mar

£,000

 April

£,000

 May

£,000

 June

£,000

 July

£,000

 Aug

£,000

 Sept

£,000
Credit sales 9,500 8,000 6,000 11,000 12,350 14,000 13,250 4,500 12,500
Cash sales 250 350 800 600 620 900 500 350 800
Credit purchases 6,000 5,200 5,800 8,000 8,700 6,300 5,200 5,000 5,100

 

Trade Receivables: Credit sales are to be collected two months after the date they have been sold.

Trade Payables: Credit purchases are to be paid one month after the date they have been purchased.

Borrowings: The terms of a 5-year loan are coming to an end and Hamble Ltd are due to repay the capital of £1,000,000 on 31st July.

Current Liabilities: Corporation tax of £100,000 is due to be paid to HMRC in the month of May.

Delivery vehicles: Hamble Ltd has a policy of replacing delivery vehicles every 2 years. A number of delivery vehicles are due to be replaced under this policy in June at a cost of £1,250,000, but existing delivery vehicles will be traded in for £310,000 as part of the deal.

Other overheads: Other overheads will be £2,200,000 per month settled on a monthly basis in the month incurred.

Cash: Hamble Ltd expects to have £90,000 in cash at the beginning of April.

You are required to:

  1. Using Excel, prepare a cash budget for the business for the 6-month period from April to September.

NOTE:  To achieve full marks you MUST show your working out, i.e. by using Excel cell referencing and formula.

  1. Examine the cash budget you have prepared and advise the directors of Hamble Ltd of any possible solutions to cash flow problems that might be evident. Marks will be awarded depending on the depth of discussion.
  2. Identify five sources of finance available to Hamble Ltd and evaluate the advantages and disadvantages of each. You should then make a recommendation to the directors of Hamble Ltd of the most appropriate source of finance for the proposed expansion plans. Marks will be awarded depending on the depth of discussion.
  3. Within the next 3-5 years Hamble Ltd intend to expand their business throughout the UK following which their aim is to list the business on the London Stock Exchange. The Directors of Hamble Ltd have asked you to briefly explain the advantages and disadvantages of raising finance through the issue of shares.

PART B (40% weighting)

The Directors of Hamble Ltd have identified two existing established businesses that may be suitable to purchase to fulfil their expansion plans and have asked you to calculate and compare ratios for both companies before making a recommendation on which company to purchase.

Income Statements for the Year Ended 31st Dec 2020
Norwich Ltd Salford Ltd
£’000 £’000
Sales revenue 8,320 11,250
Cost of sales (6,020) (9,030)
Gross profit 2,300 2,220
Operating expenses (1,048) (1,535)
Operating profit 1,252 685
Finance charges (20) (70)
Profit before tax 1,232 615
Taxation (62) (30)
Profit for the year 1,170 585

 

SOFP (Balance Sheet) as at 31st Dec 2020
Norwich Ltd Salford Ltd
£’000 £’000 £’000 £’000
Non-current assets 502 198
Current assets
 Inventory 1,290 2,437
 Trade receivables     730 1,990
2,020 4,427
Total assets 2,522 4,625
Equity
Share capital   1,350      800
Reserves 580   1,145
       1,930     1,945
Current liabilities
 Trade payables 430      850
 Taxation        62        30
 Bank overdraft       35      350
         527       1,230
Non-current liabilities
Loans            65 1,450
Total equity and liabilities  2,522       4,625

You are required to:

  1. Use your Excel skills to calculate the following ratios for both companies.

You should then present your calculated ratios within your report in a simple table format for ease of comparison.

NOTE:  To achieve full marks you MUST show your working out, i.e. by using Excel cell referencing and formula.

  1. Gross profit margin
  2. Operating profit margin
  3. Return on capital employed
  4. Asset turnover
  5. Current ratio
  6. Acid test
  7. Inventory days
  8. Trade receivable days
  9. Trade payable days
  10. Working capital cycle/operating cycle
  11. Gearing
  12. Interest cover
  13. Compare the performance of the two companies in the 4 key areas of profitability, efficiency, liquidity and gearing using the ratios calculated in part 1 and make a recommendation as to which of the two companies Hamble Ltd should consider purchasing. Marks will be awarded depending on the depth of discussion.

PART C (25% weighting)

Hamble Ltd has a varied client base that includes schools, hospitals and the hospitality sector and has experienced fluctuating consumer demands since the beginning of the Covid-19 pandemic.

One of their products is a fresh produce box, consisting of local seasonal produce, and which is ordered in units. The following information is available for the year ending 30th September.

  • Due to these fluctuating demands, you have been asked to use Excel to prepare a flexible sales budget for quantities of 200,000 units and 300,000 units. Sales revenue is fully variable.

NOTE:  To achieve full marks you MUST show your working out, i.e. by using Excel cell referencing and formula.

 

Budget
Sales (units) 250,000
£/unit £000s
Sales revenue 3,250
Variable produce costs (875)
Variable production overheads (150)
Fixed production costs (700)
Fixed administration costs (1,160)
Profit 365

 

  1. Consider specific factors that may contribute to an increase or decrease in Hamble Ltd’s consumer demand. You should identify a minimum of 2 factors that may contribute to an increased demand and a minimum of 2 factors that may contribute to a decreased demand. Marks will be awarded depending on the depth of discussion.

What overall considerations do you think you would make in deciding whether or not to automate an organization?

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Employees in all businesses train for years on ways to obtain efficiency without sacrificing accuracy. “Best practices” and standardized procedures were once the human employees’ goals. With the increasing capabilities in business intelligence technology, organizations can turn human best practices into machine-driven processes. By doing so, it is possible to harness the massive quantities of information already contained within an accounting system in a more strategic manner.
As part of the initial process to automate accounting tasks, accounting staff knowledgeable about the organization’s operations and conventional methods needed to assess which tasks could be automated and how quickly. For this assignment, you will formulate a “mapping” plan as if you were beginning the process of accounting system automation for a governmental unit. Utilizing the required reading content on process automation, assess the following and provide support for your response.
1. What overall considerations do you think you would make in deciding whether or not to automate an organization?
2. How will you assess a particular task on its ability to be automated?
For the next 3 questions, please create a table in MS Word to summarize your responses with your written response and rationale to follow in the Word document.
3. Which of the accounting entries covered in this or previous modules would be suitable for process automation? Provide at least 5 along with your rationale.
4. Which entries could be automated but might require human interaction to review for accuracy? Provide at least 5 along with your rationale.
5. Which entries are nearly impossible to automate? Provide at least 5 along with your rationale.
Paper Requirements:
• Submit your responses to the questions in a 3-4-page document in MS Word as indicated. Label each question clearly.
• For written answers, please make sure your responses are well written.

Write an analysis to evaluate Total corporate performance, position and potential using the financial information

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Write an analysis (one-two pages) to evaluate Total corporate performance, position and potential using the financial information for the years of 2015 – 2019 in:

1- Investment (analysis to make investment decision).
2- Renewables and sustainability.
3- Size of Downstream vs Upstream (segment reporting).

Explain the Importance of Becoming a Global Citizen.

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Explain the Importance of Becoming a Global Citizen.

What is the business that you will be owning?

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. Provide information on the organization of a corporation.

You are starting a new business. Provide information for the following:

A. What is the business that you will be owning?

a. Explain why you have chosen that business.

B. Provide the form of business (Sole Proprietorship; Partnerships; Corporations and Limited Liability Company) that you have chosen for your company.

a. Explain why you have chosen that form of business.

C. How will your business provide a need in the economy?

2. Explain one item that you have learned in this accounting course that you did not know before?
– Stocks dividend

3. What was most helpful in this accounting course?

4. Explain one thing that you would change about this accounting course?

 

Discuss whether the tax treatment for each taxpayer is in line with the Adam Smith’s taxation cannons.

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Prepare a 3-4-page Word document answering the following case:
Rank the following three single taxpayers in order of magnitude of taxable income (from lowest to highest) and explain your results. (Note: Use standard deduction amounts provide under the Tax Cut Job Acts (TCJA) enacted in November 2017).
Alice: Gross Income = $80,000
Deductions for AGI = $15,000
Itemized deductions = 0
Brian: Gross Income = $80,000
Deductions for AGI = $5,000
Itemized deductions = $12,000
Craig: Gross Income = $80,000
Deductions for AGI = $0
Itemized deductions = $15,000
In your paper, you should consider the differences between the standard deductions vs. itemized deductions given the filing status. Additionally:
• Compare and contrast deductions for AGI and deductions from AGI (itemized deductions).
• Discuss whether the tax treatment for each taxpayer is in line with the Adam Smith’s taxation cannons.