Get Cheapest Assignment in Australia, UK, US, UAE, Canada and NZ Order Now

HI5020 T3 2021 Corporate Accounting

0 Comments

Assessment Details and Submission Guidelines
TrimesterT2 2021
Unit CodeHI5020
Unit TitleCorporate Accounting
Assessment TypeIndividual Assignment
Assessment TitleCash flows statements
Purpose of the assessment (with ULO Mapping)This assignment aims at developing an understanding of students on different aspects of a cash flows statement as well as what information can be derived from the cash flows statement. Students will learn how to prepare the statement of cash flows using direct and indirect method, understand why a company may have reported profit but negative cash flows, and form the ability to look into the profit figure in conjunction with the cash flows information so as to get a complete picture. Hence this assignment helps students to learn how to prepare, present, analyse and synthesise cash flow related data and information for a company or for a corporate group (ULO 1, 3, 4, 5).
Weight35 % of the total assessments (35 marks)
Total Marks35 % in a written report
Word limit3000 words ±500 words
Due DateAssignment submission: Final Submission of individual Assignment: Week 10, 21 September Tuesday, 11:59 pm   Late submission incurs penalties of five (5)% of the assessment value per calendar day unless the administration has granted an extension and/or special consideration before the assessment deadline.
Submission GuidelinesAll work must be submitted on Blackboard by the due date, along with a completed Assignment Cover Page.The assignment must be in MS Word format, with no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.   Reference sources must be cited in the text of the report and listed appropriately at the end in a reference list using Harvard referencing style. The following guidelines apply:   Reference sources in assignments are limited to sources that provide full text access to the source’s content for lecturers and markers.The Reference list should be located on a separate page at the end of the essay and titled: References.It should include the details of all the in-text citations, arranged alphabetically A-Z by author surname. In addition, it MUST include a hyperlink to the full text of the cited reference source. For example; P Hawking, B McCarthy, A Stein (2004), Second Wave ERP Education, Journal of Information Systems Education, Fall, http://jise.org/Volume15/n3/JISEv15n3p327.pdf All assignments will require additional in-text reference details which will consist of the surname of the author/authors or name of the authoring body, year of publication, page number of content, paragraph where the content can be found. For example; “The company decided to implement a enterprise wide data warehouse business intelligence strategies (Hawking et al, 2004, p3(4)).”

HI5020 Corporate Accounting Individual Assignment T2 2021

   cid:image001.png@01D73C0F.86B36A00 Non Adherence to Referencing Guidelines Where students do not follow the above guidelines: 1.   Students who submit assignments which do not comply with the guidelines will be penalised 10 percent marks.   Students who comply with guidelines and the citations are “fake” will be reported for academic misconduct.

Assignment Specifications

Assessment tasks:

Question 1

Aggressive Corporation approaches Matt Taylor, a loan officer for Oklahoma State Bank, seeking to increase the company’s borrowings with the bank from $100,000 to $150,000. Matt has an uneasy feeling as he examines the loan application from Aggressive Corporation, which just completed its first year of operations. The application included the following financial statements.

AGGRESSIVE CORPORATION Income Statement For the year ended December 31, 2018
Net sales $200,000
Expenses:  
Cost of goods sold$110,000 
Operating expenses50,000 
Depreciation expense    10,000 
Total expenses   170,000
Net income $ 30,000
  AGGRESSIVE CORPORATION Balance Sheets For the year ended December 31, 2018/December 31, 2018
 20182017
Assets  
Current assets:  
Cash$ 10,000$0
Accounts receivable60,0000
Inventory40,0000
Long-term assets:  
Equipment100,0000
Accumulated depreciation  (10,000)  0
Total assets$200,000$0
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable$ 20,000$0
Interest payable10,0000
Long-term liabilities:  
Note payable100,0000
Stockholders’ equity:  
Common stock40,0000
Retained earnings    30,000  0
Total liabilities and stockholders’ equity$200,000$0

The income statement submitted with the application shows a net income of $30,000 in the first year of operations. Referring to the balance sheet, this net income represents a more-than-acceptable 15% rate of return on assets of $200,000.

Matt’s concern stems from his recollection that the $100,000 note payable reported on the balance sheet is a three-year loan from his bank, approved earlier this year. He recalls another promising new company that, just recently, defaulted on its loan due to its inability to generate sufficient cash flows to meet its loan obligations.

Seeing Matt’s hesitation, Larry Bling, the CEO of Aggressive Corporation, closes the door to the conference room and shares with Matt that he owns several other businesses. He says he will be looking for a new CFO in another year to run Aggressive Corporation along with his other businesses, and Matt is just the kind of guy he is looking for. Larry mentions that as CFO, Matt would receive a significant salary. Matt is flattered and says he will look over the loan application and get back to Larry concerning the $50,000 loan increase by the end of the week.

Required:

  • Prepare a statement of cash flows for Aggressive Corporation.
  • Explain how Aggressive Corporation can have positive net income but negative operating cash flows.
  • How does the finding of negative operating cash flows affect your confidence in the reliability of the net income amount?
  • Why do you think Larry mentioned the potential employment position? Should the potential employment position with Aggressive Corporation have any influence on the loan decision?

Question 2

“Why can’t we pay our shareholders a dividend?” shouts your new boss at Polar Opposites. “This income statement you prepared for me says we earned $5 million in our first year!” You recently prepared the financial statements below.

POLAR OPPOSITES Income Statement For the year ended December 31, 2018
 ($ in millions)
Net sales$65
Cost of goods sold(35)
Depreciation expense(4)
Operating expenses(21)
Net income$ 5
POLAR OPPOSITES Balance Sheet December 31, 2018
 ($ in millions)
Cash$1
Accounts receivable (net)16
Merchandise inventory14
Machinery (net)  44
Total assets$75
Accounts payable$7
Accrued expenses payable9
Notes payable29
Common stock25
Retained earnings    5
Total liabilities and stockholders’ equity$75

Although net income was $5 million, cash flow from operating activities was a negative $5 million. This just didn’t make any sense to your boss.

Required:

Prepare a memo explaining how net income could be positive and operating cash flows is negative. Include in  your  report  the  calculation  of  operating  cash  flows  of  negative  $5  million  using  the indirect method.

Question 3

Bryan Eubank began his accounting career as an auditor for a Big 4 CPA firm. He focused on clients in the high-technology sector, becoming an expert on topics such as inventory write-downs, stock options, and business acquisitions. Impressed with his technical skills and experience, General Electronics, a large consumer electronics chain, hired Bryan as the company controller responsible for all of the accounting functions within the corporation. Bryan was excited about his new position— for about a week until he took the first careful look at General Electronics’ financial statements.

The cause of Bryan’s change in attitude is the set of financial statements he’s been staring at for the past few hours. For some time prior to his recruitment, he had been aware that his new employer had experienced a long trend of moderate profitability. The reports on his desk confirm the slight but steady improvements in net income in recent years. The disturbing trend Bryan is now noticing, though, is a decline in cash flows from operations. Bryan has sketched out the following comparison ($ in millions):

 2018201720162015
Operating income$1,400$1,320$1,275$1,270
Net income385350345295
Cash flows from operations16110120155

Profits? Yes. Increasing profits? Yes. So what is the cause of his distress? The trend in cash flows from operations, which is going to the opposite direction of net income. Upon closer review, Bryan noticed a couple events that, unfortunately, seem related:

(i)         The company’s credit policy has been loosened, credit terms relaxed, and payment periods extended. This has resulted in a large increase in accounts receivable.
(ii)        The salaries of the CEO and CFO, are calculated based on reported net income.

Required:

(a)What is likely causing the increase in accounts receivable? How does an increase in accounts receivable affect net income differently than operating cash flows?
(b).Explain why executive compensations for officers, such as the CEO and CFO, might increase the risk of earnings management.
(c)Why is the trend of cash flows from operations, combined with the additional events, such a concern for Bryan?
(d)What course of action, if any, should Bryan take?

Assignment Structure should be as the following:

Abstract – One paragraph List of Content Introduction

Body of the assignment with detailed answer on each of the required tasks Summary/Conclusion

List of references

Marking criteria

Marking criteriaMarks
Abstract1
List of content & overall presentation of the assignment1
Introduction1
Question 1: (11 Marks) 
(a) Prepare a statement of cash flows for Aggressive Corporation.5
(b) Explain how Aggressive Corporation can have positive net income but negative operating cash flows.2
(c) How does the finding of negative operating cash flows affect your confidence in the reliability of the net income amount?2
(d) Why do you think Larry mentioned the potential employment position? Should the potential employment position with Aggressive Corporation have any influence on the loan decision?2
Question 2: (10 marks) Prepare a memo explaining how net income could be positive and operating cash flows negative. Include in your report a determination of operating cash flows of negative $5 million using the indirect method.10
Question 3: (10 marks) 
(a) What is likely causing the increase in accounts receivable? How does an increase in accounts receivable affect net income differently than operating cash flows?2.5
(b) Explain why executive compensations for senior officers, such as the CEO and CFO, might increase the risk of earnings management.2.5
(c) Why is the trend of cash flows from operations, combined with the additional events, such a concern for Bryan?2.5
(d) What course of action, if any, should Bryan take?2.5
Conclusion1
TOTAL Weight35

Academic Integrity

Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please

consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Sills link on Blackboard.

Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment.

Table 1: Six categories of Academic Integrity breaches

PlagiarismReproducing the work of someone else without attribution. When a student submits their own work on multiple occasions this is known as self-plagiarism.
CollusionWorking with one or more other individuals to complete an assignment, in a way that is not authorised.
CopyingReproducing and submitting the work of another student, with or without their knowledge. If a student fails to take reasonable precautions to prevent their own original work from being copied, this may also be considered an offence.
ImpersonationFalsely presenting oneself, or engaging someone else to present as oneself, in an in-person examination.
Contract cheatingContracting a third party to complete an assessment task, generally in exchange for money or other manner of payment.
Data fabrication and falsificationManipulating or inventing data with the intent of supporting false conclusions, including manipulating images.

Source: INQAAHE, 2020

Marking Rubric

 ExcellentVery GoodGoodSatisfactoryUnsatisfactory
Abstract (1 mark)Apply judgement
List of content & overall presentation of the assignment (1 mark)Apply judgement
Introduction (1 mark)Apply judgement
Question 1:     
(a) Prepare a statement of cash flows for Aggressive Corporation. (5 marks)The statement of cash flows has been prepared without any errors. Appropriate format has been followed clearly showing the relevant sections.The statement of cash flows has been prepared. Appropriate format has been followed clearly showing the relevant sections. Minor errorsThe statement of cash flows has been prepared. Appropriate format has been followed clearly showing the relevant sections. Major errorsThe statement of cash flows has been prepared. Appropriate format has not been followed. Major errorsSome random attempts. Items are not correctly shown. Format has not been followed.
(b) Explain how Aggressive Corporation can have positive net income but negative operating cash flows. (2 marks)Every possible reason has been clearly identified and discussed about the difference between net income and operating cash flowsReasons have been clearly identified and discussed about the difference between net income and operating cash flows. Minor errorsReasons have been clearly identified and discussed about the difference between net income and operating cash flows. Major errorsShows very basic understanding of the reasons for the difference between net income and operating cash flows. Major errorsShows very poor or no understanding of the reasons for the difference between net income and operating cash flows.
(c) How does the finding of negative operating cash flows affect your confidence in the reliability of the net income amount? (2 marks)An excellent answer has been provided highlighting the implication of negating operating cash flows.A very good answer has been provided highlighting the implication of negating operating cash flows.A good answer has been provided highlighting the implication of negating operating cash flowsA basic answer has been provided highlighting the implication of negating operating cash flowsA poor or unsatisfactory answer has been provided highlighting the implication of negating operating cash flows
(d) Why do you think LarryAn excellent answer has beenA very goodA good answerA basic answerA poor or unsatisfactory
mentioned the potential employment position? Should the potential employment position with Aggressive Corporation have any influence on the loan decision? (2 marks)provided highlighting the implication of the possible employment offer on the loan decision by Matt.answer has been provided highlighting the implication of the possible employment offer on the loan decision by Matt.answer has been provided highlighting the implication of the possible employment offer on the loan decision by Matt.answer has been provided highlighting the implication of the possible employment offer on the loan decision by Matt.answer has been provided highlighting the implication of the possible employment offer on the loan decision by Matt.
Question 2: Prepare a memo explaining how net income could be positive and operating cash flows negative. Include in your report a determination of operating cash flows of negative $5 million using the indirect method. (10 marks)An excellent memo has been prepared highlighting all the reasons for differences between operating cash flows and net income. The reconciliation (indirect method) has been prepared correctly.A very good memo has been prepared highlighting all the reasons for differences between operating cash flows and net income. The    reconciliation (indirect method) has been prepared with minor errors.A good memo has been prepared highlighting all the reasons for differences between operating cash flows and net income. The    reconciliation (indirect method) has been prepared with minor errors.A basic memo has been prepared highlighting all the reasons for differences between operating cash flows and net income. The    reconciliation (indirect method) has been prepared with major errors.A very poor memo has been prepared highlighting all the reasons for differences between operating cash flows and net income. The      reconciliation (indirect method) has not been prepared.
Question 3:     
(a)What is likely causing the increase in accounts receivable? How does an increase in accounts receivable affect net income differently than operating cashAn excellent answer has been provided explaining what is causing the increase in the account receivable and how the increase in account receivable affects net income and cash flowsA very good answer has been provided explaining what is causing the increase in the account receivable and how the increase in account receivable affects netA good answer has been provided explaining what is causing the increase in the account receivable and how the increase in account receivable affects netA basic answer has been provided explaining what is causing the increase in the account receivable and how the increase in account receivable affects netA poor or incorrect answer has been provided explaining what is causing the increase in the account receivable and how the increase in account receivable affects net
flows? (2.5 marks) income and cash flowsincome and cash flowsincome and cash flowsincome and cash flows
(b)Explain why salary arrangements for officers, such as the CEO and CFO, might increase the risk of earnings management. (2.5 marks)Have  demonstrated an excellent understanding of the       interrelationship of CEO or CFO’s salary plan, earnings management, earnings and cashflows.Have demonstrated a very good understanding of the interrelationshi p of CEO or CFO’s salary plan, earnings management, earnings and cashflows.Have  demonstrated a good  understanding of the interrelationship of CEO or CFO’s salary plan, earnings management, earnings and cashflows.Have  demonstrated a basic  understanding of the interrelationship of CEO or CFO’s salary plan, earnings management, earnings and cashflows.Have  demonstrated a poor or no understanding of the interrelationship of CEO or CFO’s salary plan, earnings management, earnings and cashflows.
(c)Why is the trend in cash flows from operations, combined with the additional events, such a concern for Bryan? (2.5 marks)Has provided an excellent answer explaining the trend in the cash flows from operations and the reasons for the concernHas provided a very good answer explaining the trend in the cash flows from operations and the reasons for the concernHas provided a good answer explaining the trend in the cash flows from operations and the reasons for the concernHas provided basic answer explaining the trend in the cash flows from operations and the reasons for the concernHas provided a very poor answer explaining the trend in the cash flows from operations and the reasons for the concern
(d)What course of action, if any, should Bryan take? (2.5 marks)An excellent answer has been provided highlighting the possible courses of action relating to the issues that are causing concernA very good answer has been provided highlighting the possible courses of action relating to the issues that are causing concernA good answer has been provided highlighting the possible courses of action relating to the issues that are causing concernA basic answer has been provided highlighting the possible courses of action relating to the issues that are causing concernA poor answer has been provided without highlighting the possible courses of action relating to the issues that are causing concern
Conclusion (1 marks)Apply your judgement
Total 35     

Leave a Reply

Your email address will not be published. Required fields are marked *