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accounting assignment help

accounting assignment help

Introduction

The Accounting Service Pty Limited (ASPL) is a company that provides taxation, financial planning and accounting services to clients and is supervised by James Kate, its manager. In Task 2A, the journal entries, ledger accounts and the trial balance of the company Accounting Service Pty Limited (ASPL) had been prepared. However, it has been found that there have been certain errors in the trial balance in the company, which had been prepared in Task 2A. Being the accountant of Accounting Service Pty Limited and being responsible for all its accounting records, this task has been performed in order to determine the errors in transactions along with rectifying them and prepares the different financial statements of the company. In this task, after the financial statements of the company has been prepared, a detailed report has been prepared for James Kate, highlighting the financial performance of the company and stating whether his concern about using alternative accounting approaches is correct or not. It will also provide views on the different types of issues, other than the financial ones, which Accounting Service Pty Limited might be facing in future and how they can be overcome.  

 RE: Reporting on the financial performance of the company and various other issues that can be having an impact over the performance of the company and the ways in which they can be overcome.

(a) Whether his concern is right, whether alternative accounting approaches (for depreciation and uncollectible) can help in improving financial performance

From the financial statements of Accounting Service Pty Limited prepared above, one can determine that the company has ended up earning a net loss at the end of the period June 30, 2018. This shows that the financial performance of the company has been quite poor during the first quarter of the financial year 2018. It can also be analyzed that the net profit ratio, the return on assets and the return on capital employed of Accounting Service Pty Limited are in negative figures. This is yet again an indication that the financial performance of the company has been quite poor for the period ending June 30, 2018. Hence, it can be derived that Accounting Service Pty Limited is in great need of bringing about improvements in its financial performance. As a result, it can be analyzed that concern of James Kate on evaluating alternative approaches of accounting for uncollectible and depreciation is correct, as they can be helpful for bringing about an improvement in Accounting Service Pty Limited’s financial performance.

(b) The ratios of the firm comparing with the standard ratios

According to Uechi et al. (2015), the ratio analysis technique helps in evaluating the performance of a company in comparison to the average performance of the industry. In order to get an idea and overview of the performance of a company, the ratios of the company can be compared and contrasted with the industry standards. The table presented below provides a comparison of the standard ratios of the industry and the ratio of Accounting Service Pty Limited -

The above table compares the profitability, liquidity and solvency ratios of Accounting Service Pty Limited. The profitability ratios are the ones that help in evaluating the performance that an entity shows in terms of profitability (Khan and Khokhar, 2015). On the other hand, the liquidity ratios are the ones that help in analyzing a company’s short-term debt meeting capacity while the solvency ratios help in evaluating its long-term debt meeting capacity (Marin and Lazar, 2016). The comparison of the net profit margin, return on capital employed and return on assets of the company with that of the industry indicates that the profits of Accounting Service Pty Limited are extremely poor. The company is in immediate need of taking actions that will improve its performance. However, the comparison of the liquidity ratios and solvency ratios with the ones of the industry shows that the performance of Accounting Service Pty Limited is quite good in terms of long and short-term debt meeting capacity. Hence, from comparing Accounting Service Pty Limited’s financial performance with that of the industry, it can be concluded that the company is performing well in terms of liquidity and solvency but its profitability is extremely poor.

(c) Comparative Balance sheet and common-size comparative Balance sheet

According to Zhang and Li (2017), a comparative balance sheet provides the side-by-side information on the equity, liabilities and assets of a company in comparison to its previous period. The common-size balance sheet of a company, however, indicates the numerical value of each entry and its percentage in relation to the total value of its related entries (Thomas et al., 2016). From the analysis of the comparative and common-size balance sheets of Accounting Service Pty Limited, it can be evaluated that the value of both total liabilities and total assets of the company have increased from the beginning of the June quarter and its end. It can be analyzed that all the assets of the company have increased by considerable percentages over the quarter.

However, the supplies of the company have depleted considerably. On the contrary, the accounts payable of the company has depleted, its GST collected has increased, along with increases in its capital and total owners’ equity. The common-size income statement of Accounting Service Pty Limited shows the cash held in the company and its fixed assets are the main components of its balance sheet while accounts payable and owners’ equity are the main components of the liabilities portion of its balance sheet. Hence, it can be said that the financial position of Accounting Service Pty Limited has improved during the first quarter of 2018 despite of a decrease in financial performance.

 

References

Hrebicek, J., Soukopova, J., Stencl, M. and Trenz, O., 2014. Integration of economic, environmental, social and corporate governance performance and reporting in enterprises. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis59(7), pp.157-166.

Khan, M.N. and Khokhar, I., 2015. The effect of selected financial ratios on profitability: an empirical analysis of listed firms of cement sector in Saudi Arabia. Quarterly Journal of Econometrics Research1(1), pp.1-12.

Lakshmi, T.M., Martin, A. and Venkatesan, V.P., 2016. A genetic bankrupt ratio analysis tool using a genetic algorithm to identify influencing financial ratios. IEEE Transactions on Evolutionary Computation20(1), pp.38-51.

Marin, A.M. and Lazar, C.D., 2016. Balance Sheet-General Information on Financial Health, Liquidity and Solvency of an Economic Entity. Ovidius University Annals, Economic Sciences Series16(2), pp.538-543.



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