TOPIC Preparing final accounts for a sole trader Financial Accounting and Management Accounting
OPTION
MARKS
Section A
Compulsory
40
Section B
B)
(3)
C)
Assignment
Case Study Victoria decided to start a business selling cakes in a small shop situated in Bournemouth. The business commenced on 1 November 2011 with the money she saved amounting to 10,000 and a bank loan of 5,000 with a 6% per annum interest payable monthly. All monies were paid into her business bank account on that day. On the first day of her trading she paid 2,000 rent by cheque consisting of one months rent in advance and one months deposit. On the same day she baked 200 cakes costing 30 pence each which she sold for 1.20 each paying the proceeds into her business bank account. On 3 November 2011, she received her business insurance premium invoice amounting to 240 per annum for the period 1 November 2011 to 31 October 2012, which she paid by cheque. Due to the fact that the business was so busy she hired temporary staff from that day at a rate of 30 per day for 7 days a week until the end of November. The temporary member of the staff was paid cash in hand at the end of each day. By the end of November, Victoria and her assistant had baked a further 300 cakes costing 30 pence each of which 150 were sold for cash at the usual price. Victorias other monthly overheads consisted of: (i) (ii) (iii) (iv) (v) Telephone 100 paid by direct debit Electricity 150 unpaid Gas 300 paid by direct debit Rates 100 unpaid Water 50 unpaid
Required: As Victorias accountant she has asked you: (a) (b) To prepare a cash statement (incorporating both cash and bank transactions) for the month of November. (15 marks) To prepare an Income Statement for the month of November. (Justify your figures and make relevant assumptions where appropriate) (25 marks) After reviewing the above statement, Victoria is confused as to why she has a healthy bank balance and at the same time has a net loss for the month of November. Write a letter to Victoria explaining why this has occurred. (60 marks)
(c)
D)
Feedback policy
You will normally receive your marked assignments back within three teaching weeks of the hand-in date. Each assignments marks with comments will be broken down under the following headings: a) b) c) d) e) Cash Statement Income Statement Letter - Relevance and Quality Letter - Clarity of discussion Letter - Presentation - marked out of 15 marks - marked out of 25 marks - marked out of 50 marks - marked out of 5 marks - marked out of 5 marks Total possible marks 100 Markers comments on last years assignment Last year students spent more time and effort in trying to answer the numerical aspect of the assignment. Remember the theoretical aspect of the assignment does have a higher weighting compared to the numerical aspect of it. It is therefore important that a lot of thought and evidence of research be given to this.