The figures in the income statement are calculated/included because accountants apply the Matching concept and the Prudence Concept.
accounting
Description
Question 2 continued
You are required to:
⦁ (30 marks)
Calculate the ratios listed below for both years 2 marks per ratio
Show clearly how you calculated the ratio 1 mark per ratio
and
Give 1 reason why the ratio may have changed from 2019 to 2020, referring to the figures in the financial statements if relevant.
2 marks per ratio.
The ratio you should calculate are;
Gross margin 5 marks in total
Operating Margin 5 marks in total
Days sales in closing inventory 5 marks in total
Usage of non-current (fixed) assets 5 marks in total
Days purchases in payables and 5 marks in total
The Gearing ratio. 5 marks in total
⦁
(i) Calculate the company’s net cash flow for 2020 and explain in 1 sentence what your
answer means. (6 marks)
(ii) From a review of the company’s financial statements (no additional calculations are
required)
Provide 2 possible reasons for the net cash flow in 2020. (4 marks)
Question 3 Total 20 Marks
Answer Part A OR Part B
Part A.
⦁ The figures in the income statement are calculated/included because accountants apply the Matching concept and the Prudence Concept.
Explain what each concept means and how it affects any 1 figure in the Income Statement (12 marks)
⦁ Explain any 2 differences between financial accounting and management accounting.
(8 marks)
OR
Part B
You are considering setting up a public relations business. A number of your college friends from DkIT have expressed an interest in assisting you in the new venture.
You are now considering if you should set up the business as a sole trader, a partnership or a limited liability company
⦁ Explain one advantage and one disadvantage of each of these methods of operating your business (12 marks)
⦁ Describe how the income statement and the statement of financial position differ between a sole trader and a limited liability company.
(8 marks)
Instruction Files
AccountingAssignment.docx
72.3 KB
