Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
Unit5: Accounting Principles
Assignment Brief 2
Student Name/ID Number
Unit Number and Title Unit 5: Accounting Principles
Academic Year 2022-2023
Unit Tutor Jawad Syed
Assignment Title Production and Interpretation of Financial Statements
Issue Date 12.05.2023
Submission Date 20.01.2023 Resubmission Date: 23.06.2023
IV Name Dennis Smith Assign Brief IV Date:
05.06.23- 09.06.23
Submission Format
Submission is in the form of a portfolio of evidence compiled using the evidence produced
for two assignments, it will also include the following:
A detailed letterto a named client. The letter must be clearly worded,well-structured and
should make use of appropriate business language and terminology. The letter can also include
clearly labelled tables and charts.
It will accompany and support the appropriately constructed financial statements (income
statement and statement of financial position) for the business in question.
A bibliography should be provided using the Harvard referencing system (or alternative referencing
system). Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly.
The word count is 2000 to 2500 words, although you will not be penalized for going under or
exceeding the total word limit.
Unit Learning Outcomes
LO2Prepare basic financial statements for unincorporated and small business
organisations in accordance with accounting principles, conventions and standards.
LO3Interpret financial statements.
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
Transferable skills and competencies developed
Managing financial data
Written communication using a range of media
Manipulating and interpreting data using spreadsheets
Effective communication of relevant information across the organisation
and to appropriate stakeholders
Creation and interpretation of information and showing how that
information can be used most effectively to add value to the or
anisation
Ability to use quantitative skills to manipulate data, evaluate, estimate
and model business problems
Application of accounting knowledge to consistently deliver high-
quality, accurate data and information in a timely fashion.
Vocational scenario
Having successfully completed your six-month probation as a Graduate Trainee at the accountancy
firm, you have now been attached to a unit in the firm that de ls with the provision of accountancy
and consultancy services to small businesses that are typically set up as sole traders, not-for-profit
or partnerships. The firm is careful about which small and emerging businesses it works with as it
seeks to spot growth potential and
identify and work with clients that have scalable business models.
Assignment activity and guidance
You are initially working with a selection of three of these small businesses that have been trading
for three years and which now need annual trading statements to be compiled and submitted in line
with government requirements. You have been given:
• an extended trial balance for each business, including accruals, prepayments and figures for bad
debts and depreciation
• a range of comparative key performance ratios from the previous year. The
businesses are:
1. PFS Typing Services- a small not for profit organisation
2. RichSmith- sole trader selling perfumes
3. McDowell and Coots- a small partnership business trading in second-hand books. These
local businesses do not make use of contemporary software to support its bookkeeping and
accounting function. This is something which concerns you as you feel that it represents an
opportunity for the business to save time and resource.
Your supervisor has provided the following Trial Balances and additional information for
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
each of the three businesses/clients:
PFS Typing Services (not for profit). Trial balance at 31 December 2021
£ Debit £ Credit
Computer and furniture 7500
Subscriptions 26000
Donations 30000
Staff costs 16000
Administrative fees 12500
Rent of premises 3000
Stationery and postage 2250
Cash at Bank 14500
Cash in Hand 250
56000 56000
There was no cash in hand or in the bank on 31 December 2020. Rent of £1000 remained unpaid
for the year 2021 on 31 December 2021.
RichSmith (Sole trader)- Trial balance at 31 December 2021
£ Debit £ Credit
Cash in Hand 2000
Cash at Bank 64000
Trade receivables 12000
Trade payables 7000
Capital account 80000
Drawings 5000
Sales 61000
Purchases 30000
Opening stock 14000
Carriage and marketing 4000
Employee salary 8000
Insurances paid 2000
Office rent 2000
Furniture and fittings 5000
148000 148000
Please note that 5% of trade receivables at 31.12 2021 should be written off as bad debts,
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
£1000 should be accrued for insurances, furniture should be depreciated at the rate of 10% using
thestraight-line method and Closing Stock at 31 December 2021 totalled
£20,000.
McDowell and Coots (Partnership). Trial balance at 31 December 2021
£ Debit £ Credit
Capital account - McDowell 30000
Capital account- Coots 30000
Current account- McDowell 4000
Current account- Coots 4000
Office equipment 20000
Opening stock 18000
Drawings- Coots 2000
Administrative costs 4000
Trade receivables 10000
Sales revenue 56000
Purchases 20000
Trade payables 4000
Rent paid 6000
Insurances 3500
Delivery costs 6000
Cash at bank and in Hand 38500
128000 128000
Please note that office equipment bought in 2021 should be depreciated at the rate of 10% per
year using the reducing balance method. Prepaid rent at 31 December 2021 amounted to £3000
and Closing inventory at 31 December 2021 totalled £21000.
The files for each client include some ratios calculated for previous years as follows:
PFS Typing Services 2020 Surplus for the year: Revenue NIL, Staff costs:Total income= 30%
Rich Smith: 2020 Gross Profit Ratio=60%. 2020
Current Ratio=1:1
2020 Efficiency Ratio (Days’ credit taken) =65 days
Allaband and Bhara: 2020 Current Ratio=50%
2020 Efficiency Ratio (Days’ debtors in sales) = 85 days
Your supervisor, one of the firm’s Key Account Managers, has asked you to ompile the
year-end financial statements ready for submission and provide, for each client, some
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
detailed analysis of the figures produced, which will be presented in the form of an accompanying
letter.
Specifically, you will undertake the following:
1. From the data provided, you are required to prepare the year-end financial statements,
taking into consideration accounting principles, conventions and standards. You will
need to make and show appropriate adjustments to both the income statement and
thebalance sheet.
2. Write an accompanying letter to the client that will be sent with the completed
financial statements.
The letter needs to include:
• calculation of relevant profitably, liquidity, asset usage and investment ratios
• critical evaluation of the performance to the business year on year (making reference to data
you have calculated, and data provided from the previous year), with reference to relevant
benchmarks as well as any limitations of using financial ratios as p rformance measures
• an outline of the benefits of contemporary accounting software packages, with examples of
products on the market
• justified conclusions and recommendations for your client.
Recommended Resources
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
Please note that the resources listed are examples for you to use as a starting
point – the list is not definitive.
Weblinks
The balance careers. Business letter format with examples. Available at:
[Link] m/how-to-format-a-business-letter-2062540
o
Xerox. Writing an effective business letter. Available at: [Link]
us/small-business/tips/business-letter
HN Global
HN Global (2021) Reading Lists. Available at:
[Link]
HN Global (2021) Student Resource Library. Available at:
[Link]
HN Global (2021) Textbooks. Available at:
[Link]
Learning Outcomes and Assessment Criteria
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
Pass Merit Distinction
LO2Prepare basic financial statements for unincorporated and
small business organisations in accordance with accounting
principles, conventions and tandards.
s
P3Prepare financial statements from a M2Produce financial statements
LO2 and LO3
given trial balance for sole traders, from a given trial balance, making
D2 Critically evaluate
partnerships and not-for- profit appropriate adjustments.
organisations, to meet accounting financial statements to
principles, convent ons and standards. assess organisational
perf rmance using a
rangeoof measures and
benchmarks to make
justified conclusions.
LO3 Interpret financial statements.
P4Calculate and present financial M3Evaluate the performance of
ratios from a set of final accounts. an organisation over time,
P5 Compare the performance of an using financial ratios with
organisation over time using financial reference to relevant
ratios. benchmarks.
Student Declaration
I certify that the contents of my assignment will be entirely my own work and
understand fully the consequences of plagiarism.
Signature: ………………………………. Date: ………………………..
Resubmission Signature: ………………………… Date: ………………………..
Plagiarism
Empire College London
Assignment Brief – BTEC (RQF)
HNC in Business & HND in BUSINESS (Business Management)
Plagiarism is a particular form of cheating. Plagiarism must be avoided at all costs and
students who break the rules, however innocently, will be penalised. You must keep a careful
record of all sources you use, including all internet material. It is your responsibility to ensure
that you understand correct referencing practices. These are referred to in the Handbook.
Please consult the relevant unit lecturer or your course tutor if you need any further advice.
