ACC1AMD-Accounting For Management Decisions - Accounting & Finance Assignment Help

Task 

Accounting For Management Decisions

Question 1                                         
a) Charlie Brown works in a local accounting firm as an auditor. He caught up with his friends Linus, Marcie and Franklin on the weekend. It turns out that Charlie is involved in the audit of the company Linus currently works for as their management accountant. Charlie was talking about how the company seems to be in desperate need of an injection of funds to remain in operation and that his boss, the audit partner, is considering whether he needs to include a “going concern” qualification in the audit report this year. Charlie said that to try and preserve Linus’ job he would attempt to convince the partner that the finance is coming. He encouraged Linus to amend the latest arrangement with the bank that finishes on 20/6/2022 to 2023.

List 2 breaches of the fundamental principles of ethics APES110 Code of Ethics for Professional Accountants and explain why it has been breached.                      
b) For the four scenarios described below, indicate the business structure each one is likely to adopt — sole trader, partnership or company (public or proprietary) and why.   
  
(i) Ian has commenced a hairdressing business by himself.

(ii) Four industrial engineers with established careers wish to set up a business developing recycling techniques to reduce business waste to near zero. They want to be able to raise capital by issuing shares to the public.

(iii) Evonne and Ben wish to start a donut business. They are concerned about the legal issues (for example, their personal liabilities) for this business once they start trading.

(iv) Luke, John and Chelsea have been running separate agricultural businesses but are finding the costs and hours are very high for one person and are only just keeping their individual businesses operational. They have decided to combine their businesses so they can share resources and have more time off to spend with their families.

c) The owner of ‘Green Gardening Incorporated’, Ms Green, has breached a number of accounting concepts and principles and as their accountant you are trying to identify the issue and explain why Ms Green has not treated the situation correctly.                    

In the table below you are to complete the following:
(i) identify the concepts or principles that have been violated (one only for each scenario)
(ii) explain why it has been violated     

Scenario
a. Ms Green used company funds to purchase a computer for personal use for $3,000. She recorded it as a decrease in Cash and an increase in Office Equipment.
b. Ms Green was keen to make her 2021 profit look better, so she added in plant sales that occurred on the first two days of 2022.
c. Merchandise inventory with a cost of $45 000 is reported at its net realisable value of $65 000 in the statement of financial position.
d. Green Gardening Incorporated is currently being sued by a customer as a tree fell on him as he was walking around the nursery. It is expected that the company will have to pay damages; however, the amount is currently uncertain and so Ms Green has decided not to include it anywhere in the financial statements.

d) Explain the difference between the allowance method to account for bad debts and the direct write-off method of bad debts? 

Question 2                                             
You are considering providing Garden City Ltd with supplies. 

Required
(i) Complete the horizontal analysis below                            

All answers must be rounded to 2 decimal places.