Accounting principles

P3 Prepare financial statements from a given trial balance for sole traders, partnerships and notforprofit organisations, to meet accounting principles, conventions and standards P4 Calculate and present financial ratios from a set of final accounts. P5 Compare the performance of an organisation over time using financial ratios. P6 Prepare a cash budget from given data for an organisation using a spreadsheet. P7 Discuss the benefits and limitations of budgets and budgetary planning, and control for an organisation.

ASSIGNMENT 2 FRONT SHEET Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Accounting Principles (5038)

Submission date December 5th 2023 Date Received 1st submission December 5th 2023

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Table of Contents

Task 1: Producing Financial Statements (P3) 4

Task 2 Analysing and Interpreting Financial Statements (P4) 7

Introduction 7

Conclusion (P5) 9

Task 3: Budgets (P6) 10

Learn about the benefits and limitations of budgeting (P7) 12

References 13

Task 1: Producing Financial Statements (P3)

Financial statements at the beginning of the period

Income statement

Depreciation expense, Professional library 0

Balance Sheet

Prepaid insurance

Professional library

Accumulated depreciation, professional

library

Equipment

Accumulated depreciation, equipment

Total Liabilities and

Transaction 1: December 15th 2022: ABC company owes its emlpoyees $7000

Transaction 2: December 15th 2020: ABC agrees to provide training services

Provides 30 days of service for a fee of $6000: 6000/30=$200

December 15th 2020 to December 31th 2020 is 17 days: 200*17=$3400

December 1st 2020 : ABC purchased equipment for $16,900 by cash

Calculate depreciation expense: (16,900-7,000)/36= 275

Depreciation expense 275

Financial statements at the beginning of the period

Icome statement

Depreciation expense, Professional

Depreciation expense, Equipment 275

Teaching supplies expense -

Balance Sheet

Accumulated depreciation,

Accumulated depreciation,

Task 2 Analysing and Interpreting Financial Statements (P4)

Introduction

FPT Digital Retail Joint Stock Company (FPT Retail) was established in 2012 in Vietnam, is a

company under FPT Group, owns 2 retail chains: FPT Shop, F.Studio By FPT and 1 company The

subsidiary is FPT Long Chau Pharmaceutical Joint Stock Company In 2012, Digital Retail Joint Stock

Company was established, as one of 07 companies under FPT Joint Stock Company In 2013, FPT

Shop officially reached the milestone of 100 stores In 2014, FPT Shop reached the milestone of 200

stores in 63 provinces and cities Become a direct importer of genuine iPhone

After that, in 2015 FPT Shop achieved the fastest growth compared to other affiliated companies of

FPT Joint Stock Company with revenue increasing by 50% compared to 2014, pre-tax profit increased

by 338.7% With that success, FPT has had strong development (FPT Retail, 2023)

Raw data 2021 2022

Average Accounts

Profitability

FPT Retail's Gross Profit Margin increased by about 1.58% compared to 2021 This is a good point for the business However, Operating Profit Margin in 2022 will decrease by about 0.86% Net Profit Margin also decreased by 0.65% Return On Assets also decreased by 0.33% and Return On Equity decreased by 7.01% compared to 2021 These numbers are not down much, but all three items are down, showing that the company is having problems in its business operations In summary, FPT Retail's ability to generate profits in 2022 has been negatively affected

Liquidity Ratio

The current ratio decreased by 0.02 compared to 2021 and the quick ratio also decreased slightly by about 0.25 This is not good for the company because it is having difficulty raising capital to pay short-term debts In summary of 2022, FPT Retail has lower debt repayment ability than 2021

Efficiency Ratios

Accounts Receivable Turnover Ratio 11,33 56,03

Inventory Turnover Ratio in 2022 increased slightly by about 0.38 but not significantly and Day's Sales Inventory did not change much so this is stable for FPT Retail Accounts Receivable Turnover Ratio increased by 394% and Accounts Payable Turnover Ratio increased by 49% in 2022, which shows that the business's ability to collect receivables effectively and that the company can also repay debt and manage cash flow well Assets Turnover Ratio in 2022 also increased by about 37% compared to 2021, proving that the company's use of assets in production and business activities is effective and good for the company

Solvency Ratios

FPT Retail's 2022 Interest Coverage Ratio decreases by 2.08 compared to 2021 Solvency Ratio in

2022 also decreases by 0.04 compared to 2021 However, the decrease is not much so it does not have too much negative impact on FPT Retail

Conclusion (P5)

FPT Retail's financial situation is generally stable Regarding Profitability, there is a decrease but not significantly Liquidity Ratio is also somewhat reduced Efficiency Ratios has increased somewhat Finally, the Solvency Ratio decreases The reason for the decline in financial revenue is due to increased costs The reason for this decline is that FPT Retail in 2022 will face disadvantages such as supply chain disruption during the launch of new Apple products, and the purchasing power of information technology and communications products will decrease sharply due to influence of macro

net revenue grew 34% compared to 2021 Despite this, FPT Retail's financial situation in 2022 is

stable This is good for business

Task 3: Budgets (P6)

Income Statement Budget

Interest

Loan Payment

Cash Budget

Ending Cash

Jul Aug Sep Oct Nov Dec

Learn about the benefits and limitations of budgeting (P7)

Benefit: Budgets are often used to establish planning and control of key accounts within an organization Budgeting also has benefits that can be mentioned such as helping to compile statistics

on business income and expenditure accounts, budgeting helps organizations have a broader view of the total amount of money available, thereby helping to balance the budget using revenue and expenditure accounts and using them more effectively Using a budget list also helps predict future risks because making a project list reports in advance whether the business's performance will be good

or not bad situations help managers prepare plans to handle bad situations that may occur Another benefit is helping businesses control spending, helping businesses analyze and supplement reasonable spending for different goals, thereby helping businesses control spending and avoid waste In addition, budgeting also helps businesses make better decisions (HM Hub, 2023)

Limitation: Budgeting also has limitations in that it will lack flexibility in cases of unexpected changes from external factors such as changing market conditions and will cause loss of efficiency Budgeting

is also based only on predictions, so budgets can be inaccurate compared to reality In addition, when budgets are set too high, it can also cause employees to become exhausted and tired The final limitation is that this is a job that requires a lot of time and effort to budget, while that resource could

be used for more important things, so this is a time-consuming job (HM Hub, 2023)

FPT Retail (2023) Giới thiệu, [ONLINE] Available from: https://frt.vn/gioi-thieu [Accessed 22 November 2023]

HM Hub (2023) Advantages & Disadvantages of Budgeting, [ONLINE] Available from:

https://hmhub.in/advantages-disadvantages-of-budgeting/[Accessed 3 December 2023]