Questions and Answers of Accounting Business Reporting For Decision

Explain what is meant by an ICO. Differentiate between IPOs and ICOs.
You have been given the following information regarding an entity. One of your friends is interested in investing in it. Help your friend by calculating some cash-based ratios, explaining what the
From the following data for Starlight Enterprises, calculate the receipts from accounts receivable for June, July and August of 2021.Credit sales are normally settled according to the following
From the following data for Fantastic Sales, calculate the receipts from accounts receivable for September, October and November of 2021.Credit sales are normally settled according to the following
Following the collapse of the Toys“R”Us franchise in the United States, Toys“R”Us Australia went into administration on 21 May 2018, leaving 700 staff and 44 stores nationwide with an
An entity has $660000 of assets, including current assets of $180000. The following information has also been ascertained about the entity.• The two owners have contributed $150000 each.• The
Budget Travel plans to commence operations on 1 July 2021. The following data and estimates relate to the three months ending 30 September 2021.Required(a) Prepare a monthly cash budget for the three
Wynham Stereos produces and sells speakers and CD players. The following information about the costs related to the systems has been collected.Wynham Stereos normally produces 25000 of these systems
Juices R Us sells bottles of freshly squeezed juice to small convenience stores throughout Melbourne. Its latest statement of profit or loss for the last 12 months is as follows.* all variable costs#
Tropical Processing is a single-product entity and provides the following summary data relating to its product for 2020.Required(a) Calculate the break-even in units and sales dollars for 2020.(b)
Soft Pearl Company incurs the following costs to produce 50000 light switches for floor lamps in 2020.The Ignition Company has offered to supply the switches for $8 per unit. An analysis of the
Leonardo Company has the capacity to manufacture 250000 units annually of its only product. The following information is available.Required(a) Calculate the number of units that need to be sold
Katy Davis has had a passion for cycling for years. She has decided to explore turning her passion into a business. She has spent the last few months exploring the industry and collecting information
The financial controller of Seats R Us has established indirect cost pools and cost drivers for the coming year as follows.The sales team has received an order for 1500 seats and produced them. The
Talk2Me Communications manufactures headsets to make phones hands free. In 2020, the entity produced 30000 units, of which 24000 were sold. The following costs were recorded for 2020.Determination of
Cost rivers can be based on either volume or activity. Provide an example of each.
The Flametree Company has two independent projects it could invest in. The financial operations manager has completed some analysis and presented the information to the board. The board has asked you
Briefly outline four pricing practices that are illegal in Australia.
Discuss the allocation process for indirect costs.
Your friends have decided to organise a number of functions to raise funds for a trek to a Himalayan base camp. The functions planned are: a cinema night; a disco at the local hotel; and a trivia
Discuss potential investment opportunities for each of the following.(a) A computer hardware manufacturer(b) A car dealership(c) A clothing retailer(d) An accounting firm
Higgins Ltd is considering the purchase of one out of two acceptable pieces of equipment. Each design is expected to have individual advantages.Required(a) What additional financial information does
What impact does taxation have on investment decisions?
An inner city amateur theatre company, Theatre Empire, is planning on performing a new take on two Shakespearean plays, Hamlet and Macbeth, at an old Brisbane theatre in the inner-city suburb of
A small industrial machine costs $136000 and is expected to earn annual net cash inflows of $58200, $52600, $49500 and $42100, before it wears out sufficiently to be unreliable and must be sold for
Emerald Ltd is considering a new machine which will reduce net cash inflow by $38000 in the current year, but increase net cash inflow by $9000, $14000, $18000, $22000, $26000 and $26000 in the
An improvement to the process in a children’s shirt factory will cost $1.2 million, but will result in net cost savings of $380000 annually for the next ten years.Required(a) If funds are worth 12
James Denning wants to buy a caravan rental business in the inner Melbourne suburb of Richmond. James spends $1500000 on the purchase of the business including caravans and further advertising and
PART A(a) Explain the advantages and disadvantages of using factoring or discounting. 4 marks(b) Discuss what type of businesses would benefit from floor-plan finance. 4 marks(c) Graham Ltd is a
Tracey has just started a new IT business and is thinking of leasing a new luxury car. She has her sights on a BMW coupe. A lease company offers her a deal which comprises a $35200 payment on
In the 12 months to June 2018, IBM recorded $18.5 billion in cloud revenue, up 23 per cent. Ginni Rometty, IBM’s CEO, claimed ‘more clients are engaging IBM on their journey to the cloud . . .
Which of the following entities do you think would have the greatest proportion of working capital held as cash? Why?(a) Local butcher(b) Hardware store(c) Stallholder at a weekend market selling
Which of the following entities do you think would have the greatest proportion of working capital held as accounts receivable? Why?(a) Local butcher(b) Hardware store(c) Stallholder at a weekend
Which of the following entities do you think would have the greatest proportion of working capital held as inventory? Why?(a) Local butcher(b) Hardware store(c) Stallholder at a weekend market
Distinguish between rights and options.
Mike and Andy is a clothing store for teenagers. It is chronically short of cash, so arranges a 120-day bank-accepted commercial bill (BAB). According to the theory of management of assets, what use
Mike and Andy has on average $150000 of employees’ pay, tax withheld and superannuation contributions in its hands at all times. What use should it make of these funds?
JB Hi-Fi Ltd’s 2018 statement of financial position provides the following data.In 2018, JB Hi Fi Ltd earned record revenue (increased by 35.3 per cent) and the EPS (earnings per share) increased
Pineapple Plantations Pty Ltd manufactures sustainable, Pineapple-based products for sale to wholesalers and retailers around Australia and New Zealand. Dave Geitz, the manager, has a goal of
Lavender Plantations Pty Ltd manufactures Lavender-based products and commenced operations in 2019. Production and sales have grown consistently. Here are data for the last four years (in $
Explain the trend in crowdfunding over the past five years. What types of businesses are commonly financed by crowdfunding?
Toowong Ltd has been growing relatively slowly in a mature industry. Its trade creditor and credit sales data for the last five years (in $ million) are shown below.Required(a) Compute the creditors
A friend is thinking about starting a company manufacturing small robots for household chores. Explain to your friend the different types of finance that would be available to him.
CuteIT makes smartphone covers. The employee payroll averages $600000 per week. CuteIT would like to extend the pay cycle to fortnightly. The manufacturing workers union argues that the company is
Baxter Ltd reported $200 million in credit sales in 2017–18 and 2018–19. Average accounts receivable dropped from $25 million to $20 million over the two periods.Required(a) Assuming 220 trading
Katelyn Ltd arranges a 91-day commercial bill: 91 days because the 90th day was a Sunday. The face value is $200000 and Katelyn receives $197010. What is the yield?
Base Company buys in sand, gravel, cement powder and steel reinforcement. These raw materials cost about $15 million most years. Base Company has recently enjoyed a surge in sales after it
Pozible is a crowdfunding site for creative, community and passion projects. Go to the website at www.pozible.com.Required(a) What are the benefits of joining a crowdfunding community like
Plush Cruiser Ltd builds luxury houseboats. The entity needs funds for expansion. It could take out a fixed-rate or variable-rate business loan over, say, 25 years. An alternative is issuing new
Why measure organisational performance?
Feather Pillows Ltd has three divisions: Hard, Medium and Soft. Corporate expenses of $72000 are allocated to divisions based on sales. Data for the current quarter are as follows.RequiredPrepare a
What are the terms used interchangeably for a business unit? What is the responsibility of the manager of the business unit?
Explain the concept of eco-efficiency.
The following data relate to the Chinese Division of Hangzhou Incorporated.RequiredDetermine the:(a) Return on investment(b) Residual income Sales Direct variable costs Direct fixed costs Average
Outline a typical executive performance compensation package.
A division of a global multinational company reports sales of $1075000, variable costs of $500000, traceable fixed costs of $387500, allocated regional common costs of $75000 and allocated corporate
The statement of financial position and the statement of profit or loss for Lavender Plantations Pty Ltd are presented below.The WACC is 15 percent.RequiredCalculate the EVA. Current assets Cash on
A segment of Canine Holdings reports sales of $280000 and a profit of $60000. The data below also relate to this segment of Canine Holdings.RequiredDetermine the return on investment if the
You have been presented with a proposal to invest $200000 into a company (using $100000 of borrowed funds). In the first year of operations, the net operating profit after tax is expected to be
The data below have missing values. Determine the missing values indicated by the letters (a) to (i). Return on investment Profit margin Asset turnover Sales Investment Profit Division
For each of the following stakeholder groups, give an example of an eco-efficiency indicator.(a) Shareholders(b) Government(c) Top management(d) Site management(e) Project management(f) Divisional
A division reports divisional margin/profit of $180000, residual income of $36000 and investment for the period of $1440000. What is the minimum return being required by management?
Susan is a divisional manager with the Generator Company. Her performance report shows a positive divisional margin, but a loss for the year. Susan has complained to the CEO about the common costs
CEO remuneration packages have courted much controversy. These packages are normally divided into a base salary and incentive payments. The incentive payments are usually aligned with the financial
The most recent annual statement of profit or loss for High Tower Enterprises is presented below. Prepare a vertical analysis of the statement. Income Expenses Cost of sales Advertising
The following is a summary of key reported figures for Woolworths Ltd’s business segments for 2018 and 2017. Report on the profitability of the business segments. Australian food New Zealand
During 2021, Barb Ryan, the sole shareholder in Sunshine Farms Pty Ltd, decides to invest in automotive manufacturing equipment to reduce direct labour costs. She decides to fund the investment of
The following table shows the returns and valuations of selected listed retailers as at June 2018.Required(a) Explain what is meant by ‘P/E (times)’.(b) Calculate the expected growth in EPS
Our net profit remained the same as in FY17, the main reason being the contribution we made to our co-worker loyalty program, Give ($100 million), as well as the growing number of co-workers taking
If days inventory for Fab40 retail outlet was 35 days and days creditors was 12 days, calculate what the cash cycle would be if credit sales for a year amounted to $88000 and the average trade
Savannah Ltd had $84000 of profit and incurred $16500 in net finance costs during the recently completed period. Savannah’s liabilities and owner’s equity total $925000. Assuming a 30 per cent
Beatrice has prepared a statement of profit or loss for the 12-month reporting period ended 30 June on a cash basis, showing a $64800 profit. The cash-based statement shows the following.Additional
There are a variety of tools available to assist business owners to better understand the performance and position of their business. One such tool, provided by the ATO, allows a financial ratio
In its 2018 annual report JB Hi-Fi Ltd provides the gross margin for each of its divisions. Discuss what factors impact on the variation in these margins across the three divisions.
In its 2018 annual report JB Hi-Fi Ltd refers to the ‘cost of doing business’ (CODB) ratio. Paraphrase what you believe the CODB represents.
The statement of financial position for Works Ltd reveals total assets of $420000, total liabilities of $230000 and equity of $190000 as at the end of the reporting period. Using these data,
Your friend has $5000 to invest in the stockmarket and is deciding between investments in Bamboo Ltd or Panda Ltd. In the most recent reporting period, Panda Ltd made a profit after tax of $1500000,
The sole trader of Rhode Store has approached you for a loan. You note that the closing cash balances for the last two years were $15920 and $18650 respectively. Rhode Store also took out a loan of
Tartan Company is a single-product entity and provides the summary data shown below relating to its product for 2020.Required(a) Calculate the contribution margin per unit.(b) Calculate the
Waffle House sells ice-cream cones in a variety of flavours. Financial data for a recent week are shown below.Waffle’s manager receives a call from a university student club requesting 200 cones to
Part A(a) Explain the advantages and disadvantages of the sole trader form of business structure compared to the partnership form of business structure. 4 marks(b) Summarise the differences between a
Blitz Nails has provided the following financial data for the last two financial periods.The manager, Jonie Matte, is beginning her planning for next year and requires the following
Scenario 1The following information has been extracted from the financial statements of Vivid, a social media company. Revenue is generated through advertising on the social media platform, where the
Terrace Company currently manufactures a sub-assembly for its main product. The costs per unit are as follows.Ballen Co. has contacted Terrace Company with an offer to sell it 5000 sub-assemblies for
Mermaid Enterprises operates a single-product entity. Data relating to the product for 2019 are as follows.Required(a) Calculate the break-even in both dollars and units for 2019.(b) Calculate the
Flash Pty Ltd manufactures handheld egg-beaters. For the first eight months of 2020, the company reports the following operating results while operating at 80 per cent capacity.Cost of sales was 65
IT Equip sells IT equipment, specialising in printers and projectors. The following statement reflects the contribution margin of each activity and overall profit levels.Required(a) Calculate the
Information for Harbour Industries is provided below.Required(a) Calculate the before-tax profit.(b) Calculate the number of units that need to be sold in 2020 to reach the after-tax profit
Lavender Plantations Pty Ltd advertises weekly specials and makes sure that the shelf space (9 metres) at the entrance to the store showcases these specials. For the current week, its three products
Find the missing figures for each of the independent cases shown below. Selling price/unit $0 20 10 (g) 15 Variable costs/unit (a) $15 8 80 (1) Units sold 20000 (c) (e) 2000 1500 Contribution margin
Best Beef Burgers operates a store in Melbourne and the following is its average monthly statement of profit or loss.The owner is currently preparing the budget for next year and is considering the
Gotrack Company produces compasses for cross-country skiing. The production capacity is 45000 compasses and the company is currently operating at 85 per cent capacity. Variable manufacturing costs
Bullen & Company makes and sells upmarket carrybags for laptop computers. John Crane is responsible for preparing Bullen & Company’s master budget and has assembled the data below for
For each of the following independent situations, calculate the break-even point in units.(a) Variable cost per unit of $3, annual fixed costs of $42750 and selling price per unit of $9.(b) Variable
Realty Company prepares monthly cash budgets. Provided next is a set of relevant data extracted from existing reports and the sub-budgets for the two months of September and October 2021.All sales
CVP analysis and break-even analysis are underpinned by a range of important assumptions. Briefly discuss four such assumptions.
M20 Company has presented the following estimates relating to 2021 activities.Sales in the December quarter of 2020 are $345000. All sales are on credit, of which 55 per cent are collected in the
Quality Goods Company operates antique and second-hand goods stores throughout Victoria. Such stores are currently very popular and sales are increasing each month. It has budgeted the following
When is it necessary to calculate the contribution margin per limiting factor?
Willow Health provides a range of healthcare services to the local community, including home visits by nurses to elderly patients. An allied health worker, who performs a range of tasks such as

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