af100_ia_12014final 18-11
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AF100: Introduction toAccounting and Financial
Management for the Non-Specialist
Introduction and
Assignments Semester 1,
2014
School of Accounting and Finance
Faculty of Business and EconomicsThe University of the South Pacific
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Produced by the University of the South Pacific, Suva, Fiji, 2!"#
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First $roduced %uly !&&&This revision February 2!"
'oursecoordinator
(irmala Singh
)nstructionaldesigner
%ane *anas
Educationaltechnologist
*erishma Seth
Electronic$ublisher
+etila Fong
Introduction & Assignments team for semester 1, 2014
his material has !een prepared !" the #ni$ersit" of the South %aci&cfor use !" students enrolled in the course for 'hich it 'as de$eloped(
It ma" contain cop"right material copied under the pro$isions of the Fi)i*op"right Act 1+++ or under license from rightsholders or their agents(
*op"right in material prepared !" #S% is o'ned !" #S%(
his material cannot !e sold or copied for further distri!ution 'ithout the#ni$ersit"s permission( here pro$ided in electronic format, it can onl" !eprinted !" or for the use of the student enrolled in the course(
AF100 .IA/ 12014
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Content
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'alendar for semester !, 2!"######################################################################i
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v
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our course coordinator###############################################################################
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!
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'ourse introduction######################################################################################
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2
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our learning su$$ort###################################################################################
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.o/ to login to 0oodle ###############################################################################
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1
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Study schedule##############################################################################################
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Assessment overvie/###################################################################################
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4rading Systems ##########################################################################################
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Submission of assignments ##########################################################################!
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!
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Plagiarism#####################################################################################################!
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Assignment !################################################################################################!
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Assignment 2################################################################################################!
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Past test $a$er###############################################################################################!
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Past e6amination $a$er#################################################################################2
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*alendar for semester 1, 201
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4
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Beginning of semester 1
+aucala, Emalus and Alafua
cam$us students 7Final day
for /ithdra/al /ith
remission of tuition fees for
semester ! courses is 23
February 2!"
8ther USP 'am$uses
students9 Final day for
official /ithdra/al /ith
remission of tuition fees for
semester ! courses: 23
0arch 2!"
Mid-semester break
Final day for official/ithdra/al withoutremission of tuition fees for
semester ! courses is 25A$ril 2!"
Study break
Examinations
Examinations
;ee< !
;ee< 2
;ee< -
;ee< "
;ee< 5
;ee< 1
;ee<
;ee< 3;ee< &;ee< !;ee< !!
;ee< !2;ee< !-;ee< !";ee< !5;ee< !1;ee< !
!=2! February2"=23 February
March
1014 March
121 March
2423 March
1 March4
April 1 April
1413 April21 2 April23 April2Ma" + Ma"
1215 Ma"1+2 Ma"25 0 Ma"1 Ma"3
6une +16une 15206une
7 If "ou are considering 'ithdra'al from "our course, contact "ourlecturer, local #S% *ampus or *entre &rst to see if the" can help(
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8our course coordinato
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r
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>ear student,
;elcome toAF100: Introduction to Accounting and Financial Management For the
Non-Specialist.
The name and the email address of the course coordinator for this unit /ill be
announced at the beginning of the semester#
Please note that all im$ortant notices and information /ill be $ut on the AF!
>F+ 0oodle and sent to your centres as /ell# 'hec< AF!! 0oodle regularly and
your centre for any information# )f you encounter any $roblems /ith this course
you can contact your local tutors first# )f you do not have a tutor, contact the
course coordinator via AF!! >F+ 0oodle or through email#
8ther contact details of the coordinator are as follo/s9
AF ! 'ourse 'oordinator School of Accounting and Finance, Faculty of
Business and Economics, University of the south Pacific, Private 0ail bag,
Suva, Fiji#
Tele$hone9 ? 1& -2-725! or ? 1& -2-7-5! @School 8ffice
Fa69 ?1& --7!"3
All the best in your studies
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*ourse introductio
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;elcome to AF!9 )ntroduction to Accounting and Financial 0anagement for the
(on7S$ecialist by >istance and Fle6ible +earning @>F+ mode# This course is
designed to $rovide basic
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8our learning material
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s
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ou should have already received the follo/ing materials a /ee< before semester
starts9
!# The )ntroduction and Assignments boo
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8our learning suppor
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t
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Local tutorials
To assist you /ith your studies, regular face7to7face sessions may be held /ith a
tutor# ou should chec< /ith your 'am$us or 'entre at the start of semester to see if
face7to7face tutorials /ill be held for your course#
Study groups
0ost $eo$le find it easier to study in a grou$ or /ith a friend, at least for $art of the
time# ;or
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1. )f you have Dues stions or comments to communicate during yo ourtutorial session you can ddo so by s$ea
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o' to login t
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to Moodle
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)f your course has a 0ooodle com$onent, the instructions belo/ /ill hhel$ you
access the system#
ou /ill need a com$uteer connected to the )nternet# The com$uter m must have a
;eb bro/ser such as )ntternet E6$lorer or Firefo6# Such a com$uter s should beavailable at your USP ' 'am$us @if you donCt already have one at hom me or
/or
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Stud" schedul
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e
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'lanning your $or
eeno* +date
#nitC,apter
sAssignmentsand tutorials
)ee 1 !=2!February
!#)ntroductionto Accounting
!
)ee * 2"=23February
2# BusinessSustainability
2 Satellite &utorialTuesday 25
February 2!" #= 3#$m
)ee + -=0arch
-# BusinessStructures
-
)ee , !=
!" 0arch
"# BusinessTransactions
"Satellite &utorial
Tuesday !! 0arch2!" # = 3#$m
)ee !=2! 0arch
5# BalanceSheet
5 and -@$ages 3&
7&"
)ee 2"=23 0arch
1# )ncomeStatement
1 and -@$ages 3&7
!3
'ssignment 1 due
Friday 23 0arch2!" Satellite
&utorial Tuesday25 0arch 2!" #
= 3#$m
)ee / -!0arch="A$ril
# Statementof cash Flo/s
Mid-Semester &est
5=!- A$ril M()-SEMES&E* B*E'+
)ee !"=!3 A$ril
3# Analysisand)nter$retation
3Satellite &utorial
Tuesday !5 A$ril2!" # = 3#$m
)ee 2!=25 A$ril
Budgeting &
)ee 10 23A$ril=20ay
!# 'ost7Lolume ProfitAnalysis
!Satellite &utorial
0onday 23 A$ril2!" # = 3#$m
)ee 11 5=& 0ay
!!# 'ostingand Pricing in
an Entity
!! 'ssignment due0onday 5 0ay
2!"
)ee 1*!2=!1 0ay
!2# 'a$ital)nvestment
!2Satellite &utorial
0onday !2 0ay2!" # = 3#$m
)ee 1+!&=2- 0ay
!-# Financingthe Business
!-
)ee 1,21=- 0ay
evie/ andevision
Satellite &utorial
0onday 21 0ay2!" # = 3#$m
)ee 1 -!0ay=3%une
S&U), B*E'+
)ees 1 21/ &=2%une
E'M(.'&(/.S Check 0ith your USP
Campus or Centre for the exact time and
date of your examination"
To hel$ you
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Assessment o$er$ie
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'ontinuousassessment
5M
Finale6amination5M
Total value !M
This course is assessed in 2 /ays9
Continuous assessment
'ontinuous assessment mauring the course you /ill be reDuired to submit t/o /ritten assignments# This hel$syou and your coordinator to see ho/ you are $rogressing /ith the course# )t /illallo/ you to demonstrate that you are actively studying and learning# The feedbacistinction
B? ! = Pass /ith 'redit
B 1" = Pass /ith 'redit
'? 5 = 1- Pass
' 5 = 51 Pass
a The follo/ing grading system /ill be used by all faculties in a/arding final
grades for academic $erformance in a course9
Ot,er 'ass 0rades
estricted Pass
Aeg Aegrotat Pass
'om$ 'om$assionate
Pas Pass or 'om$etent
S Satisfactory
.ote5 Pas and S are used in circumstances /here graded $asses are ina$$ro$riate
such as in $ostgraduate thesis and Professional >i$loma in +egal Practice#
.ail 0radesrade Percentage 234 )escription
> " 7"& ;or< belo/ the standard reDuired for a $ass
E " @+ess than Lery /ea< $erformance or failure to com$lete to thesatisfaction of the e6aminer such $ractical, field or other /or< as may be $rescribed
(' (ot com$leted (L (ull and Loid9 This is a/arded for
$lagiarism or dishonest $ractice U Unsatisfactory Fail
(ot 'om$etent
.ote5 Fail and U corres$ond /ith Pass and S above res$ectively#
'rovisional Results:
)ncom$lete )P )n $rogress
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b
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Students shall be a/arded an Aegrotat or 'om$assionate Pass if they satisfy theconditions $rescribed in 'lauses 5#- or 5#" of these egulations res$ectively#
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c Students may be a/arded a estricted Pass if they satisfy the
conditions $rescribed in egulation #
d Students /ho have been granted an e6tension of time $ast the last day of
lectures to com$lete /or< reDuired for the final assessment of their course shall be
a/arded the $rovisional grade of ) @)ncom$lete for an undergraduate or $ostgraduate
course assessed by course/or degree# At the end of the $eriod
of e6tension the School or >e$artment Assessment 0eeting shall determine a final
grade#
e Students /ho have not submitted their masterCs or Ph> thesis or Su$ervised
esearch Project by the end of the ma6imum $eriod of candidature $rescribed in the
regulations shall be a/arded the grade of (' @(ot com$leted#
NE6tracted from 2!- .andboo< 'alendar, $$ ""&7"5O
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Su!mission of assignment
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s
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ou should submit all your assignments by the dates given in your study schedule or
on your course 0oodle $age# Please u$load them in the correct assignment dro$ bo6#
1ard copy
ou should submit all assignments by the dates given on your study schedule#
Please submit them in the correct order and address the envelo$e to the 'ourse
'oordinator# For each assignment, you should fill out a yello/ assignment cover
form /hich you collect from Student Academic Services @SAS# )f you do not have
assignment covers, contact your USP 'am$us#
For Su!a based students, all assignments are to be $osted or dro$$ed off at the
allocated bo6es in your Faculty at +aucala 'am$us# Foundation and
Preliminary students are to $ost or dro$ off their assignments at the 'ollege ofFoundation Studies Building#
The only assignment@s that are to be $osted or dro$$ed off at Student
Academic Services at +aucala 'am$us are for the Agriculture courses#
For all other students, $lease confirm /ith your 'ourse 'oordinator about
your assignment submission#
)t is very im$ortant that you
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'orrect labelling /ill hel$ ensure that the mar
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Late assignments
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)f you e6$ect to be late in submitting an assignment, /rite to your course
coordinator# ou should e6$lain /hy you are late and suggest a revised schedule
that /ill allo/ you to com$lete the remaining assignments on time#
our course coordinator may mar< a late assignment if there is a good reason for its
delay# )n deciding /hether to mar< late assignments, your course coordinator /illgive greater consideration to students in remote areas /ith little or no access to their
USP 'am$us, 'entre or tutorial hel$#
USP reserves the right to decide /hether or not to mar< late assignments# )t is in
your interest to send in your assignments on time# The assignment schedule gives
your course coordinator time to $rovide you /ith regular feedbac< on your $rogress,
before it is too late for you to use this information constructively in your studies#
our course coordinator /ill not mar< any assignment received after the finale6amination#
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%lagiaris
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Plagiarism is the co$ying of another $ersonCs creative /or< and using it as oneCs
o/n = /ithout e6$licitly giving credit to the original creator# ;or< co$ied /ithout
ac
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e
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Soliciting a $erson to sit a test or final e6amination in $lace of the studentenrolled sitting a test or final e6amination in the $lace of another student
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f 0ani$ulation of scores in tests or e6amination or in any other formof assessment and
g Enabling another student in any or a combination of any of the above#
NE6tracted from 2!- .andboo< 'alendar, $$ "57"53O
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Assignment
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1
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)ue )ate5 Friday 23 0arch @/ee< 1
6alue5 !M
(his assignment co3ers units 1-.
Please .ote5
1. This is an individual assignment# )f you /or< in grou$s to discuss theassignment, ma
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'om$are and contrast the income ta6 issues associated /ith the$artnershi$ and com$any forms of business structure#
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>o you thin< their ban< /ould be ha$$ier to lend them finance to
e6$and, due to the fact that they are in $artnershi$ ;hy
4 mars each5
7uestion : 219 marks4
From the follo/ing information for sole trader 0 Sharma, soft/are designer, dra/u$ a balance sheet at the end of the financial year @- %une 2!- in vertical form#ou are also reDuired to determine the amount of o/nerCs ca$ital9 accounts $ayable3 land ! cash on hand ! $remises 2- ban< mortgage!" $rofit " accounts receivable 15 accounts $ayable !com$uter eDui$ment ! #
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Assignment
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2
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)ue )ate5 0onday 5 0ay @/ee< !!
6alue5 !5M
(his assignment co3ers units /-10.
Please .ote5
1. This is an individual assignment# )f you /or< in grou$s to discuss theassignment, ma
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*omment on the pro&ta!ilit" of ?anua @td in a!out half a page(.int: *omment on each of the ratios a!o$e to conclude a!outthe pro&ta!ilit"/(
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811 818 88;
atio
eturn onEDuityeturn onAssetsProfit
0argin8$eratinge6$enses
41* mars5
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4 mars5
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7uestion 219 marks4
Sunsui Enter$rises o$erates a single7$roduct entity# >ata relating to the
$roduct for 2!- /ere as follo/s"
'nnual !olume :8 888 units
Selling $rice $er unit " Lariable manufacturing cost $er unit !3
Annual fi6ed manufacturing costs 1 Lariable mar
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%ast test pape
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r
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&h
e Uni!ersity of the South
Pacific
ou are given the follo/ing $ast test $a$er to hel$ you to $re$are for your test#
.o/ever, remember that the test $a$er that you /ill ta
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SEC&(/. ' 19 Multiple Choice 7uestions 2:8 marks4
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'ircle the letter of the correct choice on the multi$le choice ans/er sheet $rovided#
!# Jualitative characteristic of reliability refers to9
A# information that is of value to users in decision ma# ta6able income#
-# The e6ternal user of accounting information is9
A# Purchasing manager#
B# >irector of esearch and >evelo$ment#
'# Accounts cler# Em$loyee#
"# Select the o$tion that does not re$resent criteria for differentiatingbet/een financial and management re$orting#
A# The level of detail in the re$orts
B# egulations binding the re$orting
'# Timeliness of the re$orts
># ;hether the re$orts are useful for decision7ma# Pre$aid e6$ense
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#
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;hich of these is
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not
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$art of shareholders eDuity in the balance sheet
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A# Share ca$ital
B# etained earnings
'# evaluation reserve
># EDui$ment
3# ;hich of these is not a current liability
A# Ban< loan re$ayable in five years
B# Accounts $ayable
'# Ta6 $ayable
># Accrued e6$enses
The distinction bet/een current and non7current liabilities is based on9
A# ;hether the liability is secured or unsecured
B# The siRe of the liability'# ;hom the liability is o/ned to
># ;hen the liability is due for $ayment
!# )f current assets are ! , non7current assets are " and eDuity is
2 , liabilities must be9
A# B# -
'# 2
># !
!!# The balance sheet
A# $resents the income and e6$enses of an entity for a s$ecific $eriod of time#
B# re$orts the changes in assets, liabilities and eDuity over a $eriod of time#
'# re$orts the assets, liabilities and eDuity at a s$ecific $oint in time#
># summarises the change in eDuity over a s$ecific $eriod of time#
!2# ;hich of these is not a business transaction
A# Business o/ner uses $ersonal funds to buy a la$to$ for home use#
B# 0oney is collected from a customer o/ing from goods sold last /ee# stoc< at the ending $lus $urchases less stoc< at the beginning#
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!"#
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EDuity finance for a sole trader comes from9
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A# the issue of shares to $ublic#
B# loans from financial institutions#
'# the o/ner and $rofit retained in the business#
># government loans#
!5# The act of an em$loyee e6$osing an entityCs unethical $ractices is termed as9
A# /histleblo/ing#
B# insider trading#
'# bribery#
># integrity#
SEC&(/. B5 )(SCUSS(/. 7UES&(/.S 2@8 M'*+S4
7uestion 1A 28 marks4
E6$lain any four terms listed belo/ to a friend /ho has no accounting bac
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SEC&(/. C P*/B=EMS 2:8 M'*+S4 7uestion 1D5
Preparation of >inancial *eports" 2:8 marks4
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Accountseceivable
12
EDuity-H1H2&
!
ent E6$ense "3
)nsurancee6$ense
-
'ash at ban< 25
Advertisinge6$ense
1
;ages e6$ense !2
EDui$ment 2"
Accounts $ayable "3
'ost of sales 23
Utilities e6$ense - 1
+oan @long 7term !1
)nterest e6$ense &
>e$reciatione6$ense
2"
etainedearnings-H1H2&
"2
Sales evenue 1"21
>ividend Paid 2
4iven the follo/ing balances in various accounts, $re$are an income statement for
Prasad Pty +td for the year ended - %une 2!#
1. %repare a simple .unclassi&ed/ income statement of%rasad %t" @td for the "ear ended 0 6une 2010( .1 mar>s/2. %repare a classi&ed !alance sheet on 0 6une 2010 in form(
.1 mar>s/
&he End
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%ast eBamination pape
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r
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&he Uni!ersity of the South Pacific
ou are given the follo/ing $ast e6amination $a$er to hel$ you to $re$are for yourfinal e6amination# .o/ever, remember that the e6amination $a$er that you /illta(.'= E'M(.'&(/.
SEMES&E* ? 811
P*(.& M/)E
(ime Allowed + hours plus 10 minutes reading
100 mars 406 of final grade5
INS
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Section ' 19 multiple choice uestions 2:8 marks4
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Circle the letter of the correct choice on the multiple choice ans0er sheet
pro!ided"
!# A ratio is of limited usefulness unless it is com$ared /ith /hat
A# Benchmar# a$$ear in the ne6t accounting $eriod
-# Before a ma# (one of the above
5# The A is calculated by dividing /hich of these
A# 4ross $rofit by ordinary share returns
B# (et $rofit by $reference share returns
'# Average net $rofit by average investment
># (et $rofit by average investment
1# ;hat is the disadvantage of the A method
A# )t is difficult to understand#
B# )t ignores the im$ortance of cash as the ultimate resource, /ithout/hich businesses cannot survive#
'# )t is relatively un# (one of the above#
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#
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Some costs, by nature, are both fi6ed and variable @e#g# a mobile $hone on fi6ed$lan $lus call costs# .o/ are these costs referred to
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A# Fi6ed
B# Lariable
'# 0i6ed
># (one of the above
3# The decision rule /ith )nternal ate of eturn @) is to acce$t $rojects
A# for /hich the ) e6ceeds the entityCs eDuired ate of eturn @#
B# that have a $ositive time value for money#
'# that ignore inflation#
># for /hich the Pay bac< Period is greater than the )#
)f senior managers set targets and budgets for their unit managers, this
is referred to as /hat
A# Partici$ative style of budgeting
B# Authoritative style of budgeting
'# 'ombined $artici$ative and authoritative style of budgeting
># A variance style of budgeting
!# .o/ can net /orebts to be re$aid /ithin the ne6t !2 months
># 'urrent assets less inventory
!!# Profitability ratios inform users
A# about the returns and ris# none of the above#
!-# ;hat does an entityCs credit $olicy determine
A# The value of its $urchases
B# The value of non7current assets'# The value of its credit sales
># The cost of finance
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!"#
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By com$aring the $lanned level of activity /ith the brea
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A# evaluate the ris< involved in the activity
B# change the fi6ed cost structure of the entity
'# ma# evaluate ho/ em$loyees have $reformed
!5# ;hat does trend analysis usually involve
A# 'om$aring trends in the maristinguish clearly bet/een the follo/ing $airs of terms by using e6am$les#
a Fi6ed costs and variable costs
b eturn on assets and eturn on eDuity
c Strategic $lanning and Budgeting
@" marescribe fi!e 0ays in /hich budgets can assist managers in decision ma
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Section C Calculation and (nterpretation 2:8 marks4
7uestion 8 218 marks4
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Selling$rice $erunit
!1
Lariablecost $er unit
!
Fi6ed costs !2 Units sold "
The follo/ing information relates to a ne/ $roduct $roduced by Sunshine
+imited9
8ou are re=uired to calculate:
a/ the !rea>-e$en point in units and dollars . mar>s/ !/ theoperating pro&t if the selling price increases !" D2 per unit andthe &Bed cost increases !" D 000( . mar>s/
2.ote5 >ormula for calculating break-e!en point is &otal >ixed CostsF
Contribution margin per unit4
7uestion 1 218 marks4
88 88D
Current ratio"9! -9!
7uick ratio !#59! !9!
(n!entory
turno!er
period
- days " days
)ebtors
&urno!er
period
1 days 5 days
)ebt ratio 1M 3M(nterest
co!erage5 times - times
The follo/ing ratios have been calculated for Prasad +td, an entity s$ecialiRing in
selling groceries#
*omment on the entit"s li=uidit", asset eGcienc" and capitalstructure(
. mar>s for each plus I mar> for correct
categor"/7uestion 218 marks4
4ordon +td is considering a $ossible investment in one of t/o $rojects# Both
$rojects are to do /ith the $urchasing of ne/ machinery# The firmCs cost of
ca$ital is !"M# >etails relating to the $rojects are given belo/#
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)nternal ate ofeturn @)
!M !-M
(et PresentLalue @(PL
2,
!-,
Paybac< Period@PP
"years
- years*euired9
a Based on the Duantitative data $rovided, /hich $roject should 4ordon +tdinvest
in if it uses9
i Paybac< Period method ;hy ii )nternal
ate of eturn method ;hy iii (et
Present Lalue method ;hy
@1 mar