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acc00724 accounting for managers
ACC00724 (Accounting for Managers) S2, 2016
ASSIGNMENT 1 (20 MARKS)
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Question 1Total marks for Q1. (10 marks)
Financial statements of Nimbin Pty Ltd are presented below:
Nimbin P/L
Statement of Financial Position
As at 30 June 2015 and 2016
($000)
20162015
Current assets
Cash and cash equivalents$1,645$2,110
Accounts receivables (all trades) 4,100 3,675
Inventories 7,000 6,930
___________
Total current assets12,74512,715
____________
Non-current assets
Property, plant and equipment17,19015,330
_____________
Total non-current assets17,19015,330
______________
Total assets$29,935$28,045
=============
Current liabilities
Payables$5,780$5,990
_____________
Total current liabilities5,7805,990
_____________
Non-current liabilities
Interest-bearing liabilities9,9409,450
____________
Total non-current liabilities9,9409,450
______________
Total liabilities$15,720$15,440

============
Equity
Share capital$7,700$7,700
Retained earnings 6,515 4,905
______________
Total equity$14,215$12,605
============

Nimbin P/L
Income Statement
As at 30 June 2016
($000)
Revenues (net sales)$55,000
Less: cost of sales 35,100
_______
Gross profit 19,900
_______
Less: Expenses
Selling and distribution expenses 7,100
Administrative expenses 4,970
Finance costs 1,560
______
Total expenses 13,630
______
Profit before income tax 6,270
Income tax expense 1,908
______
Profit$4,362
=====
Nimbin P/L
Statement of changes in Equity
For the year ended 30 June 2016
($000)
Share capital
Ordinary (7,200.000 shares)
Balance at start of period$7,200
______
Balance at end of period7,200
_______

Preference (250,000 shares)
Balance at start of period500
______
Balance at end of period500
______
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Total share capital$7,700
======
Retained Earnings
Balance at start of period$4,905
Total income for the period 4,362
Dividends paid – ordinary (2,702)
Dividends paid – preference (50)
______
Balance at end of period$6,515
======
Additional information:
Payables include $5,620 (2016) and $5,730 (2015) trade accounts payable; the remainder is
accrued expenses. Market prices of issued shares at year-end (2016): Ordinary $12; Preference
$6.70.
Required:
A.Calculate the following ratios for 2016. The industry average for similar businesses is shown. (6
marks)
Industry average
1.Rate of return on total assets22
%2.Rate of return on ordinary equity20
%3.Profit margin4
%4.Earnings per share45c
5.Price-earnings ratio12.0
6.Dividend yield5
%7.Dividend payout70
%8.Current ratio2.5:1
9.Quick ratio (acid ratio)1.3:1
10.Receivables turnover13
11.Inventory turnover6
12.Debt ratio40
%13.Times interest earned6

14.Assets turnover1.8
B.Given the above industry averages, comment on the company's profitability, liquidity and use of
financial gearing. (4 marks)

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Question 2Total marks for Q5. (10 marks)

a)A local restaurant is noted for its fine food, as evidenced by the large number of customers. A
customer was heard to remark that the secret of the restaurant's success was its fine chef. Would
you regard the chef as an asset of the business? If so, would you include the chef on the balance
sheet of the business and at what value? Discuss. (2 MARKS)

b)Accounting provides much information to help managers make economic decisions in their
various workplaces. You are required to provide examples of economic decisions that the
following people would need to make with the use of accounting information: (3 MARKS)
A manager of human resources
A factory manager
The management team of an Australian Football League (AFL) club
The manager of a second-hand clothing charity

c) Indicate the effect of each of the following transactions on any or all of the three financial
statements of a business: (5 MARKS)
1. Statement of financial position
2. Statement of financial performance
3. Statement of cash flows
Apart from indicating the financial statements (s) involved, use appropriate phrases such as
‘increase total asset', ‘decrease equity', ‘increase income', ‘decrease cash flow' to describe the
transaction concerned.
1.Purchase equipment for cash.
2.Provide services to a client, with payment to be received within 40 days.
3.Pay a liability.
4.Invest additional cash into the business by the owner.
5.Collect an account receivable in cash.

6.Pay wages to employees.
7.Receive the electricity bill in the mail, to be paid within 30 days.
8.Sell a piece of equipment for cash.
9.Withdraw cash by the owner for private use.
10.Borrow money on a long-term basis from a bank.
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