Solution 1 Accounting Questions 19th August 2012 Please review related information below before attempting answering the questions Thanks As an accountant
Solution Accounting Questions th August Please review related information below before attempting answering the questions Thanks
Solution Accounting Questions th August Please review related information below before attempting
August Please review related information below before attempting answering the questions Thanks As an accountant
Solution Accounting Questions th August Please review related information below
before attempting answering the questions Thanks As an accountant
Solution Accounting Questions th August Please review related
Solution Accounting Questions th
(Solution) 1 Accounting Questions - 19th August 2012 Please review related information below before attempting answering the questions. Thanks! As an accountant...

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Accounting Questions – 19th August 2012 Please review related information below before attempting answering the questions. Thanks! Q1. As an accountant you have different clients that all have different long and short term business objectives. They are asking you to explain how they might manage their business to achieve these objectives. In ‘plain English’ write a brief explanation to your clients the role which the creation and analysis of budgets plays in both short term business management planning and as a basis for long term strategic review. Answer: Q2. As an accountant you describe to your clients examples of different budgets and budget objectives and the expenditure and revenue items for which data will need to be inputted. To do this you complete the following table: Answer: Budget Type Primary Budget Objective Expenditure items required as input Revenue items required as input Cash budgets Labour budgets Production budgets Purchase budgets Sales budgets Financial budgets – Profit and Loss Financial budgets – Balance Sheet Q3. You are the accountant for Cyber Up Pty Ltd. Complete the following income statement budget for Cyber Up for the year ended 30 June 2011 by filling in the cells with the question marks (?) below. a) The total sales in the annual sales budget for 2011 are $700 000. b) The purchases are expected to be 60% of the sales. c) Depreciation – Office equip. – the amount of depreciation for the year is based on a cost price of $10 000 and a depreciation rate of 15% using straight-line depreciation. d) Rent – expected to be $4 000 per month. e) Wages and salaries (administrative) – the amount paid in the previous year was $34 000 but this is expected to increase by 4% in 2011. f) Motor vehicle expenses – these were $22 000 in the previous year but are also expected to increase by 4% in 2011. g) Bank fees – these were $1200 in the previous year but are expected to increase by 8% in 2011. h) The calculations for any data can be to the nearest whole dollar and GST can be ignored in this question. Question 3 (Answered)– Income statement budget (trading) (cont.) Cyber Up Income Statement Budget for the year ended 30 June 2011 $ $ $ Sales 700,000 Less Cost of goods sold Stock at 1 July 2010 45, 000 Purchases 420,000 465,000? Less Stock at 30 June 2011 40 000 425,000 Gross profit 275,000 Less Operating expenses Administrative Depreciation – Office equip. 1,500 General 9 000 Rent 4,000 Wages and salaries – office 35,360 49,860 Marketing Motor vehicle expenses 22880 Wages and salaries – sales 90 000 112,880 Financial Bank fees 1,296 1,296 164,036 Net profit 110,964 Q4. Analyse the budget that you have completed in question 3 and describe the financial information which is provided: Answer: Q5. Your client is Abbott Pty Ltd. The vast majority of the company's business is coming from working on databases for other businesses and from designing Web sites. The CEO is aware of the growing annual revenue coming from designing e-commerce solutions and has briefed you to prepare a 5 year forecast for the production budget as a basis for deciding whether it is profitable for Abbott to move into e-commerce products. The CEO is aware that this will involve increased capital and labour investments. The Marketing Manager is aware that there is a great possibility of substantial commissions if this product is produced. The Marketing Manager has provided the current sales figure and estimates of sales for the new e-commerce products. As the accountant for Abbott what are your ethical responsibilities in: a) Accepting figures as supplied and why? Answer: b) Accepting assumptions made as to product, market and industry trends and why? Answer: c.) Accepting forecast reliabilities based on estimates as supplied and why: Answer: d.) Undertaking discussions with company stakeholders i.e. what stakeholders, discussions over what? Answer: Q.6. What benchmark does the discounted cash flow method provide to judge project selection? Answer: Q.8. If as an accountant you are estimating future project costs, what evidence/information would you require to accurately estimate costs? Answer: Q.9. As an accountant when making realistic and reliable estimates of future revenue you need to take into account factors that are internal to your client and hence controllable and factors that are external to your client and hence uncontrollable. Provide 4 examples of each: a) Internal to your client and hence controllable Answer: b) External to your client and hence uncontrollable Answer: Q.10 As an accountant when you prepare and document budgets and forecasting estimates and periodically monitor budget outcomes, what financial risks are you attempting to identify? Answer: Q.11. Where in the calculation of NPV would you factor in risk and what effect might this have on the decision as to which project to undertake? Answer: Q.12. While estimating future costs and revenue for a client’s business, you identify a future period in which the business will not be able to cover its costs. What protection (risk management) strategy will you suggest? Answer: Q.13.Your client intends to implement a new budgeting system. They ask you, as their accountant, to identify the problems that this may cause them and strategies that they might use to avoid these problems. Briefly write out your advice to your client. Answer: Q.14. List 5 benefits that a business may obtain from effective budgeting, Answer: Q.15. List 5 limitations inherent in the budgeting process: Answer: Q. 16. What is the responsibility of company managers and officers such as company directors and boards of management with regards to the information that they provide you as their accountant in the budgeting process? Answer: Q.17. What is the responsibility of accountants to company managers and officers such as company directors and boards of management with regards to the budgeting process? Answer: Q. 18. Your client has 2 sales managers. As part of the sales forecasting process both managers have provided their forecasted monthly sales figures for the next 24 months for the same product for the same market. a) Sales Manager 1: forecasts a mean sales figure of $10,000 per month with a standard deviation of $2,000 over the forecast period b) Sales Manager 2: forecasts a median sales figure of $10,000 per month with an inter-quartile range of $4,000 Explain what both forecasts are telling you as the accountant and identify which sales forecast indicates a more stable monthly sales result. Answers: Q .19 Maria Enterprises has made the following estimates of its possible net profit next year if it follows 2 growth scenarios: Scenario 1 Scenario 2 Possible net profit $ Probability of occurrence Probability of occurrence 215,000 0.1 0.4 185,000 0.3 0.1 150,000 0.4 0.3 135,000 0.2 0.2 By calculating the mean (average) expected net profit identify which growth scenario Maria Enterprises should go with. Answer: Q.20 Since becoming the accountant for XYZ Enterprises and KLM Products you have calculated the following: XYZ Enterprises KLM Products Mean project cost $1,000,000 $950,000 Standard deviation $ 25,000 $8,400 Given that the mean project costs for both clients is virtually the same, which client would you identify is in more need of reviewing the integrity of their costing system, and why? Answer:1 Accounting Questions – 19th August 2012 Please review related information below before attempting answering the questions. Thanks! Q1. As an accountant you have different clients that all have different long and short term business objectives. They are asking you to explain how they might manage their business to achieve these objectives. In ‘plain English’ write a brief explanation to your clients the role which the creation and analysis of budgets plays in both short term business management planning and as a basis for long term strategic review. Answer: Q2. As an accountant you describe to your clients examples of different budgets and budget objectives and the expenditure and revenue items for which data will need to be inputted. To do this you complete the following table: Answer: Budget Type Primary Budget Objective Expenditure items required as input Revenue items required as input Cash budgets Labour budgets Production budgets Purchase budgets Sales budgets Financial budgets – Profit and Loss Financial budgets – Balance Sheet Q3. You are the accountant for Cyber Up Pty Ltd. Complete the following income statement budget for Cyber Up for the year ended 30 June 2011 by filling in the cells with the question marks (?) below. a) The total sales in the annual sales budget for 2011 are $700 000.

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