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MODULE:

INTRODUCTION TO ACCOUNTING

DECEMBER 2013

Title: Introduction to Accounting

Assignment topic:
Part A of the Assignment:
a) The following represents a trend percentage analysis of the Income statement of ABC Ltd. over a four year period. Year 1 is the base year and equal to 100

Account | Year 1 $ | Year 2 | Year 3 | Year 4 | Sales | 296,700 | 100 | 125 | 150 | Cost of sales | 176,900 | 112 | 130 | 160 | Gross profit | | | | | Selling and distribution profits | 35,600 | 115 | 133 | 162 | Administration and general expenses | 45,900 | 107 | 115 | 123 | Financial expenses | 15,800 | 98 | 96 | 92 | Net profit | | | | |

b) Complete the financial figures for all years in the table below.

Account | Year 1 $ | Year 2 | Year 3 | Year 4 | Sales | 296,700 | | | | Cost of sales | 176,900 | | | | Gross profit | | | | | Selling and distribution profits | 35,600 | | | | Administration and general expenses | 45,900 | | | | Financial expenses | 15800 | | | | Net profit | | | | |

b.) Based on the financial information provided, evaluate the financial performance of ABC Ltd. over the four year period using ratio analysis.

Part B of the Assignment:
a) The credit manager of ABC Ltd is concerned that the pattern of monthly sales receipts shows credit collection is poor compared to the budget. The sales manager insists the credit manager is to blame. Why might the credit manager be to blame for the deterioration in the credit collection period?

b) Explain the different reasons why a manager might submit a budget estimate that is biased. How does a company guard against this?

Word count (from the start of Introduction section to the end of the Conclusion section): 2004

Executive summary:
Accounting is the...

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