WEEK 3

Practice makes progress.

“I can do all things through Christ which strengthened me” – Philippians 4:13

Instruction: Discuss the following.

1. Describe an accounting system.

o Accounting system is a system that is employ in a company to organize financial
information. It is either manual or computerized. The reason why we need to use
this system for us to keep track of expenses, income, and other activities. In short,
it is to keep an eye with all the data that affects the finances of business
organization. This business accounting system is particularly helpful when the
firm needs to generate reports. As the owner, we probably know that proper data
reports impacts greatly the process of decision-making. In the transactions all, the
data were gathered manually. So now as we are living in a computerized age.
Moreover, that allows the firms to store the financial records easily. Now the firm
or organization can enter all the data change them and interpret simply logging
into the accounting system on the computer or mobile phone. There are four types
of accounting system namely the managerial accounting which provides the
managers with necessary information for planning and operation control.
Inventory accounting provides a means to track and plan inventory levels and
other activities that related. Industry specific accounting refers to a system
tailored for a specific industry. Not-for-profit accounting has its unique
requirements too. It mainly involves ensuring that finances are channel to the
right direction. It can be able to produce expenditures reports. Accounting system
makes easier for the management of firms and organizations to gather, store,
locate, and to know how much or if the business is earning income from
transactions or just losing money and efforts. We always used the QuickBooks it
is an accounting software package developed and marketed by Intuit. This product
are geared mainly toward small and medium-sized business and offer on-premises
accounting application as well as cloud-based version that accepts business
payments, manage pay bills and payroll functions.

2. What is importance of having duties and responsibilities for each member of finance
department?
o Finance department is the part of an organization that is responsible for acquiring
funds for the firm, managing funds within the organization and planning for the
expenditure of funds on various assets. The importance of having duties and
responsibilities for each member of finance department is to ensure that adequate
funds are for the resources that are required to help achieve the organizational
objectives. It also ensure that the costs are control that there is an adequate cash
flow and it also establishes and further controls all profitable levels. Therefore, it
can be consider that the finance department are the backbone of any organization.
Without any form of financial control, the company would be unable to control
the inward and outward flow of cash and in terms of utilizing the cash, without
 the finance department, there would be very little knowledge or direction as to
where the company can invest and how much they can invest in.

3. What is the importance of including the qualifications in the duties and responsibilities?
o The importance of including the qualifications in the duties is that it makes
qualified and eligible or not for a specific duty in an organization. It stands for the
fact that it is the requirements that accepts it to be fully bring into a duty and in
responsibility it does not have any qualifications but the important thing in it is
that once there is a responsibility it has to be fully view and focus on to have an
answer and action.

4. Design a chart of account.

Chart of Accounts

LIABILITY
EQUITY
ASSETS What you owe to others
outside the business How much money is
Value of what you own. invested in the business?

5.
How the position of a management accountant would affects the organizational structure of
Cash on Hand Capital Account
Accounts Payable Withdrawal Account
Cash in Bank
Revenue Account
the finance department? Expense Account
o The position of a management accountant would
affect the organizational structure of the finance department in terms of decision-
making that would definitely concern the whole firm and organization whether a
plan or proposal would approve or turn around to think for a new concept to
propose and put it above the other failed idea. The budget that would make the
propose idea into a project that the firm would work on and give it to the next
department who will do it through labor.
Rosalie C. Langbay
BSA – 3

WEEK 4
Practice makes Progress.
“I will walk by faith even when I cannot see.” – 2 Corinthians 5:7

Instructions: Discuss the following.

1. How will the vertical analysis of an income statement help the decision maker?
o The vertical analysis of an income statement help the decision maker in
spotting spikes in expenses that would save the business to prevent
unnecessary things to happen so as much as possible that they can only
release a wise and good decisions with everything. A decision maker
should always be crucial in everything within the business itself, vertical
analysis itself of an income statement contribute the decision maker to see
and identify which expenses the firm should be focusing more and less.
2. What are the various uses of horizontal analysis in assisting the decision maker in making
sound decisions?
o The various uses of horizontal analysis in assisting the decision maker in making
sound decision simply put, the outcome of the firm actions which was after the
decision making made was given by the decision maker it is usually to increase
or to decrease everything inside the company which an owner should be
luxuriating so they can get a lot of profit the same with the outcome of the a
leader’s choices and decisions that can, and usually will, make it whole and worth
of everything or to break them and lose all investments.

3. Ratio analysis as analytical tool to discover efficiency in the operation.

o Yes, it is useful for measuring performance of an organization. To discover
efficiency in the operation the physicians must analyses all the information to
know the reason of illness. It serves as an analytical tool to discover efficiency in
the operation by means of establishing relationship the numerical and quantitative
between figures of a financial statement to ascertain and locate strengths and
weaknesses of a firm as well as its current financial position and historical
performance.
4. As a learner, why study the various limitations of financial analysis?
o We study various limitations of financial analysis because it can help us to make
the right financial decision in our future-plan business and for improving the
economic health of an organization. As we able to know how to analyze and
review the company’s financial statements we able to cure and develop
everything in organization. We cope and the view if the company can answer
related the company’s earnings capacity and if it can be able to pay and meet the
interest and principal obligations, ability to pay dividends and whether it needs to
have more investments to in to save the company or there’s no hope to continue
anymore. It deals how to treat and run the business according to its current
situation and foresee the business incoming state tomorrow and so on.

5. Why do we have to analyze the financial statements?

o We have to analyze the financial statements so we can capture the company’s
financial position for a given period-of-time. The greater the number of
transaction a company makes, the harder it is for the company to gauge its
performance at any given moment. Managers analyze competitors’ financial
statements and compare them to internal finances because it is useful in
developing tactical options and strategies. Also useful in valuation are historical
cash flows and profit, which then can be used to estimate future years.

6. What are the strong points of financial analysis in the learning process of management
accounting?
o The strong points of financial analysis in the learning process of management
accounting is to monitor and evaluate the operational and organizational budgets.
In doing so, cost efficiency and effectiveness are important to keep in mind along
with the allocation of specific financial resources to monitoring, evaluation and
learning activities. The financial analysis therefore educate and prepare the firm
to be more responsible for taking decisions and formulating plans and policies for
the future so the management accounting and the organization itself could be able
to achieve the business goals they want.

Instructions: Solve the following problems.

1. The following information were taken from the books of Izabela Boutique:

Year 2014 Year 2013

Cash 30,000 35,000
Short term investments 50,000 30,000
Accounts Receivable (net) 75,000 70,000
Inventory 90,000 80,000
Prepaid expenses 20,000 15,000
Total current assets 265,000 230,000

Total current liabilities 150,000 100,000

Net credit sales 650,000
Cost of goods sold 400,000

a. Calculate the current ratio.

 Computation:
Current asset/Current liabilities = Current Ratio
265,000/150,000 = 1.766 or 1.77
a. Compute the inventory turnover and number of days in inventory.
 Computation:
Cost of Goods sold/Average Inventory balances = Inventory Turnover
400,000/90,000 = 4.44

Number of Days in Inventory

365 days/4.44 = 82.207 or 82.21
b. Compute for receivable turnover and number of days in receivable.
 Computation:
Net Credit Sales/Average Accounts Receivable = A/R Turnover
650,000/70,000 = 9.285 or 9.29

Number of Days in Receivable

365 days/9.29 = 39.28 or 39.3
c. Compute for the gross profit rate.
 Computation:
Gross Profit/Net Sales = Gross Profit Ratio
250,000/650,000 x 100 = 38.4
2. From the information taken from the books of IstaNislao Hardware, perform some specific
analysis:

Year 2014 Year 2013

Sales 765,000 650,000
Cost of Goods Sold 459,000 357,500
Selling expenses 114,750 78,000
Administrative expenses 153,000 143,000

a. Income statement
Income Statement
IstaNislao Hardware
October 2020
2014 2013
SALES REVENUE Sales 765,000 650,000
Cost of Goods Sold 459,000 357,500
Gross Profit: 306,000 292,500
OPERATING EXPENSE Selling Expense 114,750 78,000
Administrative Expense 153,000 143,000
Total expense: 267,750 221,000
Net Income: 38,250 71,500
b. Vertical analysis

2014 % 2013 %
SALES Sales 765,000 100% 650,000 100%
REVENUE
Cost of Goods 459,000 60% 357,500 55%
Sold
Gross Profit: 306,000 40% 292,500 45%
OPERATING Selling Expense 114,750 15% 78,000 12%
EXPENSE
Administrative 153,000 20% 143,000 22%
Exp.
Total Expense: 267,750 35% 221,000 34%
Net Income: 38,250 0.05% 71,500 11%

c. Horizontal analysis
2014 2013 Increase Percent
(Decrease) Change
SALES Sales 765,000 650,000 115,000 17.7%
REVENUE
Cost of Goods 459,000 357,500 101,500 28.4%
Sold
Gross Profit: 306,000 292,500 13,500 4.6%
OPERATING Selling Expense 114,750 78,000 36,750 47.1%
EXPENSE
 Administrative 153,000 143,000 10,000 6.99%
Expense
Total expense: 267,750 221,000 26,750 12.1%
Net Income: 38,250 71,500 (33,250) 46.5%

d. Vertical and horizontal analysis.

2014 % 2013 %
 SALES Sales 765,000 100% 650,000 100%
REVENUE
Cost of Goods 459,000 60% 357,500 55%
Sold
Gross Profit: 306,000 40% 292,500 45%
OPERATING Selling Expense 114,750 15% 78,000 12%
EXPENSE
Administrative 153,000 20% 143,000 22%
Exp.
Total Expense: 267,750 35% 221,000 34%
Net Income: 38,250 0.05% 71,500 11%

2014 2013 Increase Percent

(Decrease) Change
SALES Sales 765,000 650,000 115,000 17.7%
REVENUE
Cost of Goods 459,000 357,500 101,500 28.4%
Sold
Gross Profit: 306,000 292,500 13,500 4.6%
OPERATING Selling Expense 114,750 78,000 36,750 47.1%
EXPENSE
Administrative 153,000 143,000 10,000 6.99%
Expense
Total expense: 267,750 221,000 26,750 12.1%
Net Income: 38,250 71,500 (33,250) 46.5%
Rosalie C. Langbay.
BSA – 3
Week 5
Practice makes progress!
“I will walk by faith even when I cannot see.” – 2 Corinthians 5:7

Instructions: Discuss the following.

1. Opportunity cost – It the value of something when a particular course of action is chosen. If a
company wants to redesign or not redesign the packaging. If the market research indicates that,
the company can raise consumer awareness by changing the design that they made to their
products and the company chose not to go ahead with the research. It is difference from sales
between what they earned and what they have earned when you took or forgo the other options
now.
2. Sunk cost – It is an expense that has already occurred and cannot be changed or avoided. In
short, a cost has already been paid and cannot be refunded or reduced. When the sunk are high, a
market becomes less contestable High sunk costs act as a barrier to entry of new firms because
they risk making huge losses if they decide to leave a market. An unavoidable expense became
the results of the organizations action during the period.
3. Variable cost – The production cost that change in proportion depending on the amount of
goods produced. To be direct, in every goods that is produced the variable cost increase by the
same amount. The total variable cost fluctuates with the amount of goods that are produce.
4. Differentiate product cost from period cost – The product cost is the cost that can be
apportioned to the product itself while the period cost is the cost that cannot be assigned to the
product but charged as an expense. Product cost stands with the volume of product produce
while the period cost talks about the spent in producing a product. Product cost also is a part and
included in inventory valuation but period cost does not. Manufacturing or production cost are
compromises of product cost then the period cost is non – manufacturing like office and
administration, selling and distribution, etc.
5. Standard costing – It is a costing method that is use to compare the standard costs and
revenues with the actual results, in order to arrive at the variances along with its causes , to
inform the management about the deviation and take corrective measures, for its improvement. If
the variance cost arises, management becomes aware that manufacturing cost have differed from
the standard planned and expected costs.