Acc00712 Business Accounting And Manufacturing Assessment Answers

The students are required to select 2 business types from the following business types;

1- Service Business

2- Retail Business

3- Manufacturing Business

This assignment is all about comparing two selected business types and providing the different Financial Statement formats and any other disclosures that should be provided to the users.

You do need a cover sheet with the Student name and student number, (this is very important for marking)

Section 1: Introduction

Give an introduction to the assignment by describing your question and the importance of the topic ,including different business types.

Section 2: First business type

Explain the nature of the business, transaction records, preparation of financial reports, financial reports formats and extend of disclosure.

Section 3: Second business type

Explain the nature of the business, transaction records, preparation of financial reports, financial reports formats and extend of disclosure.

Section 4: Comparison of two business types

How different are the nature two businesses, recording transactions, financial reports preparation and formats.

Section 5: conclusion

Discuss what you learnt after thinking about the previous sections.

A service business is something that provides intangible services to other people. Service type firms offer expert skills, know-how, information, and other alike products.

Examples of service businesses are: universities, reparation workshops,, banks, secretarial firms, and regulation firms

• Merchandising or Retail business

They are also known as buy and sell business. They are the business which buy in lots at wholesale price and sells to the customer at retail price through setting up of shops.

They actually gain profit by buying things at lower price and selling them at higher price. Examples are Grocery stores ,suppliers and other resellers

• Manufacturing business

A manufacturing business buys materials to make products They combine raw materials, any type of labour, and factory overhead to make the process complete. Then the products are sold to customers. A manufacturing business is any occupational that uses mechanisms, parts or raw materials to make the final product. These finished properties will be given straight to consumers or to other industrial businesses that consumes them to make a product that will be different (Accounting verse, 2017) 

• There are generally many business types.

This are the forms of business:-

• Sole proprietorship business

It is a very normal type of business and a person alone can start off with the business. It is not a legal entity. The business liabilities are the liabilities of the sole proprietor. He or she will be responsible for everything. He will actually be personally liable for all his acts.

• Partnership

There can be different types of partnership that can actually happen which would be contingent on the nature of the prearrangement and partner accountability for the professional. 

• Firm

A corporation is more composite and generally recommended for superior, recognised corporations with multiple personnel

• Limited liability partnership

In limited liability partnership there can be two or more persons together working. The liability is unlimited. Each partner will bring their own capital to the business and conduct the operations (Accounting course , 2017)

• Cooperative

People form organizations to meet a co-operative requirement or to deliver a service that welfares all member-owners.

Section 2: service firms

There are five nature of services

Intangibility: These are the services which are given by doctors or lawyers. We certainly can’t touch the services. The accountant can give accounting services , the advocate

Inconsistency :As there is no standard tangible product that is being formed we can see that there will peg services provided at intervals

Inseparability: The services are sometimes inseparable. Like for example the Tam machines have replaced people going in to banks but there the customer presence is always needed to describe the nature of the transaction

Involvement : It is the contribution of the purchaser during the service delivery process . He can alter the services according to his demands and wishes.

The transaction can be recorded manually or electronically as the business wants.

Preparation of reports are done by the auditors.

Financial statements for the bank present a very different and complex problem if compared to manufacturing or any companies. Bank actually take money from the savers and then pay interest to them . They actual then give that money to people who wants loans and then take interest from them. Their profits are resultant from the binge between the amount they pay for reserves and the rate the banks receive from debtors. Managing this system will lead the back to grow profits They are just acting as a mediator between providing credit and taking credit an in the middle generating their business

Bank is said to be a highly leveraged business . It is one the most highly structured finance industries in world wide world, depositors have some level of declaration in the reliability of the banking scheme. As a result, savers can emphasis most of their labours on how a bank will achieve in dissimilar financial surroundings.

Taking Bank of china financial report is prepared as per the accounting standard of the country (Bank of china, 2017)

Preparing general-purpose monetary declarations can be humble or compound depending on corporate size. Some declarations need note revelations Details like this usually be contingent on the determination of the monetary statements.

For instance, banks often want basic financials to verify the a company can pay its debts, while the SEC required audited financial statements from all public companies.

The statements are ready by transferring the explanation or account balances on the familiar trial balance to a set of monetary statement patterns.

IAS 30 deals with the disclosure of financial statements of the bank

The objective of IAS 30 is actually gives good presentation and proper disclosure of all the standards should be there and also other standard requirements should be fulfilled. The major intention is to give the users proper information and not mislead them so that the financial position of the banks can be known to everyone as people invest in banks to get interest and no investor want to invest their money in something which is actually not worth it.

Any banks statements of income should be actually group by income or expenses by nature. (IAS 30, 2017)

Banks should always group their assets or liabilities according to the liquidity time . They must disclose all the fair values of every classes of the assets and liabilities as required by IAS 32

Proper disclosures are made in respect to

Some types of contingencies or commitments which require proper disclosure

Any losses on the advances or the loans

Assets that will be pledges as security

Any risk associated with the bank

Any meditation or absorption on the liabilities , assets, or any off balance sheet items

Any assets or liabilities which are being matured will be actually disclosed.

Service 3 Manufacturing business

A manufacturing business is any occupational that uses mechanisms, parts or raw materials to make the final product. These finished properties will be given straight to consumers or to other industrial businesses that consumes them to make a product that will be different Manufacturing trades in today's biosphere are generally encompassed of machineries, automatons, processors and humans that all exerts in a specific way to create a creation.

Manufacturing plants often use an get-together line, which is a procedure where a creation is put calm in arrangement from one effort position to the next. By affecting the product down an gathering line, the complete good can be put organized quicker with fewer manual labour. It's significant to see that some productions refer to the industrial process as fabrication.

The financial records of the company ,as the manufacturing company requires lots of events known as cycle of accounting in to the monetary statements. This cover all the expense , income ,assets and liabilities. There are actually two compartments or elements of recording of all the transactions. There will be purchase sales loan or any loan repayment. Then what business do is that they total all the dealings or transactions in to respective ledger accounts. Each of these books or financial records covers a specific group of movement such as income, expenditures, accounts payable, trade receivable, cash or capital.

Because a producer carries an record or stock , it will generally be compulsory to use the accumulation or accrual rather than cash technique when preparing books for tax determinations. Accrual incomes recording dealings or communications at the time currency develops .

It will be divided in to section as work in progress and finished goods.

The inventories will contain raw materials. Proper accounting standards should be followed by the management such as IAS 2 for inventories and other standards.

Proper disclosures will be there

Disclosures regarding corporate governance

Disclosures regarding internal financial control of the company

Disclosures regarding the Business responsibility report

Related party disclosures will be there

Assets that will be pledges as security

Any meditation or absorption on the liabilities , assets, or any off balance sheet items

Any assets or liabilities which are being matured will be actually disclosed.

Disclosures regarding appointment and reappointment of directors (Infosys, 2017)

Section 4 Comparison of two business types

• The main difference between service and manufacturing firms is that their output. The output in service business is intangible , it’s not possible to touch the service whereas in manufacturing the outputs or the raw materials can be touched and felt.
• Service firms do not actually hold stock or inventory whereas manufacturing main business is to hold inventory , create goods. There are work in progress, finished goods .
• Service firms actually don’t create or provide a service until and unless the customer or the client’s needs it. Though they project and grow the scope and content of services in improvement of any orders. They actually provide a tailor of services or the clients need such as some hours of consultancy, some hours of design, some hours of installation. Constructors can crop goods without a purchaser order or prediction of shopper demand. Though, manufacturing goods that do not see market needs is a poor approach.
• Service firms are not labour intensive as manufacturing firms are labour intensive. Service firms like Deloitte PWC employs number of people like CPA or accountants who provide expert advice, taxation advise .M manufacturers can mechanise many of their construction progressions to shrink their labour necessities, although some business officialdoms are labour rigorous mainly in countries where the cost of the labour is very low
• Service firms do not require a corporeal construction site. The people generating and distributing the service can be situated anywhere and everywhere. For example, global firms such as advisers Deloitte or PWC use communiqué systems to entrée the most suitable service services and information from workplaces around the world. Manufacturers must have a proper location and place to work. They have to create a proper warehouse to create proper service and to create proper products.

Section 5

Conclusion

Starting any business will require lots of patience time and money. After all the learning’s it can be said that business are expanded through proper investments and proper planning. Every business is unique in their own way whereas service firms gives services that is intangible whereas the manufacturing firms gives services that are tangible such as the products and other various raw materials. Service firms and manufacturing firms are both important to create difference in the world (Linton, 2017)

References:

Infosys (2017).INFOSYS [online] Available at: https://www.infosys.com/investors/reports-filings/annual-report/ [Accessed 9^th April. 2017]

Bank of china(2017).Bank of china[online] Available at: https://www.bankofchina.com/uk/aboutus/ab4/201606/t20160620_7109806.html [Accessed 9^th April. 2017]

Linton , I(2017).Differences between manicuring and services business[online] Available at: https://smallbusiness.chron.com/five-differences-between-service-manufacturing-organizations-19073.html [Accessed 9^th April. 2017]

Financial statements(2017).Importance of financial statements[online] Available at: https://www.microbuspub.com/pdfs/chapter3.pdf [Accessed 9^th April. 2017]

PWC (2017).Importance of financial statements[online] Available at: https://www.pwc.in/assets/pdfs/services/ifrs/illustrative-ind-as-consolidated-financial-statements-march.pdf [Accessed 9^th April. 2017]

IAS 30(2017IAS 30[online] Available at: https://www.iasplus.com/en/standards/ias/ias30 [Accessed 9^th April. 2017]

Accounting verse(2017)Types and forms of business[online] Available at: https://www.accountingverse.com/accounting-basics/types-of-businesses.html [Accessed 9^th April. 2017

Accounting course (2017) Financial statements preparation[online] Available at: https://www.myaccountingcourse.com/accounting-cycle/financial-statement-preparation [Accessed 9^th April. 2017