Project #91261 - FINANCE IN THE HOSPITALITY 4

FINANCE IN THE HOSPITALITY INDUSTRY

 

DEFINE, COMPARE, EXPLAIN, DISCUS ADVANTAGES & DISADVANTAGES, AND ANALYSE WITH DIAGRAMS. TABLE OF CONTENTS, ASNWERS TO BE NUMBERED AS IT IS IN THE QUESTION TASK ONE IS REPORT ESSAY TASK TWO IS REPORT ESSAY

 

NOTES:

1.      TABLE OF CONTENTS

2.      GOOD INTRODUCTION

3.      EXCELLENT BODY REPORT WITH DIAGRAMS

4.      GOOD CONCLUSION

5.      REFERENCES

 

ALSO NOTE THAT ALL QUESTIONS MUST BE ANSWERED AND EXPLAIN, DEFINE AND DISCUSS, ACCESS AND EVALUATE ALL QUESTIONS WHERE NECESSARY AND WITH DIAGRAMS WHERE NECESSARY.

…………………………………………………………………………………………………………………..

 

 

 

 

 

Task 4

AC3.1 assess  and explain the source and structure of the trial balance with sample of trial balance

AC3.2 evaluate business accounts, adjustments and notes

AC4.1 calculate and analyse all ratios to offer a consistent interpretation of historical business performance

AC4.2 recommend appropriate future management strategies

for a given business and services operation

 

 

 

 

 

 

 

 

 

PART A:

 

 

 

"The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions" (International Accounting Standards Board, 2007).

Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting, and who are willing to study the information diligently". They may be used by different users for different purposes.

You are required to

1.      Assess the source and structure of the trial balance and to make adjustments to the profit and loss accounts and balance sheet of R. Riggs on discovery of the following mistakes in recording various transactions during the financial year. (AC3.1, AC3.2)

                           i.          Additional furniture worth £525 were purchased on credit on 3 March 2012 but were not recorded

                          ii.          The business receive interest of £50 on their deposit from the bank on 30 December 2012 but this transaction was not recorded

                         iii.          Accrued expenses of £200 were paid on 4 June 2012 but were not recorded.

2.      Calculate the following ratio for R. Riggs and write a brief memorandum report to recommend appropriate strategies to improve the performance of the business. (AC4.1, AC4.2)

                           i.          Gross profit and Net profit margin

                          ii.          Current and acid test ratio

                         iii.          Debtors and creditors payment periods and stock turnover

 

 

R Riggs

Profit and Loss Account for the year ended 31 December 2012

                                                                                                                                            £                           £

Sales                                                                                                                                                          157,165

Less Cost of goods sold:                                                                                                                          94,520

Gross profit                                                                                                                                                62,645

Discounts received                                                                                                                                         160

                                                                                                                                                                      62,805

Less Expenses:

     Wages and salaries                                                                                         31,740

     Rent                                                                                                                     3,170

     Discounts allowed                                                                                               820

     Van running costs                                                                                                     687

     Bad debts                                                                                                                    730

     Doubtful debt provision                                                                                            91

     Depreciation                                                                                                             1,630                   38,868

Net Profit                                                                                                                                       23,937

 

R Riggs

Balance Sheet as at 31 December 2012

                                                                                                     £                        £                         £

Fixed assets

     Office furniture & Van                                                                                             6,650

Less depreciation                                                                                                      1,630                  5,020

Current Assets

     Stock                                                                                                                       2,400

     Debtors                                                                                         12,316

Less provision for doubtful debts                                                  496           11,820

     Prepaid expenses                                                                                                     230

     Cash at bank & hand                                                                                            4,424                     18,874

       Total Assets                                                                                                                                         23,894

 

Current liabilities

     Creditors                                                                                                                    5,245

     Accruals                                                                                                                         412                 

                                                                                                                                                     5,657

Financed by

     Capital                                                                                                                                                         11,400

     Add net profit                                                                                                                                      23,937

Less drawings                                                                                                                                       17,100

                                                                                                                                                                    23,894

 

 

 

AC3.1 Assess and explain the source and structure of the trial balance with sample of trial balance

AC3.2 evaluate business accounts, adjustments and notes

AC4.1 calculate and analyse all ratios to offer a consistent interpretation of historical business performance

 

AC4.2 recommend appropriate future management strategies

Subject Business
Due By (Pacific Time) 11/05/2015 12:00 am
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