Reference no: EM133885608

Accounting for Managers

Purpose of the assessment - This assignment aims to provide students with an understanding of the fundamentals of the procurement and fulfilment processes, how SAP S/4HANA supports this function, and how the accounting processes supports this function.
This activity will cover ULO 1, 2, and 5.

Learning Objective 1: Critically evaluate the function of accounting and identify potential users of accounting information and its role in the business decision making process.

Learning Objective 2: Research, assess and apply the principles of accounting in recording business transactions in the accounting cycle and the role of accounting information systems.

Learning Objective 3: Apply financial statement analysis techniques and critically evaluate business financial performance.

Case Study

Procurement Scenario

GBI re-sells a range of bicycles. There is a request for the Deluxe Touring Bike (black). After reviewing the stock, you realise that stock is required, and you are required to start the procurement process. The Deluxe Touring Bike (black) is purchased from the vendor; Olympic Protective Gear. This vendor is already created in the system. You create a purchase order for the Deluxe Touring Bike (black), which is forwarded to the vendor. The goods arrive, and you will create a goods receipt and verify the physical receipt in stock. An invoice will arrive, which will need to be entered into the system. Payments will be posted to the vendor, and you will review the impact the purchase has on General Ledger.

Your task is to complete the procurement process from a specified scenario and produces several screenshots to verify the completion of the process. The screenshots are to be inserted (pasted) in the specified areas below. If you are unsure how to take a screenshot, please refer to Google.

Question 1

Enterprise Resource Planning (ERP) systems like SAP S/4HANA play a critical role in streamlining procurement and financial operations within organisations. The Procure-to-Pay (P2P) process integrates functions such as purchase order creation, goods receipt, and invoice verification, while automatically updating the general ledger in real time.As part of your learning experience in this unit, you completed a SAP Procurement Assignment that required working through the end-to-end P2P process. This question invites you to reflect on the challenges, insights, and key takeaways from that experience.

Required:
Based on your SAP Procurement assignment, answer the following reflection prompts:
Note: In your responses, refer to specific SAP components such as the stock requirements list, purchase order creation, goods receipt, and invoice posting.

a) Describe one challenge you encountered when navigating the purchase order or goods receipt steps in SAP.

b) How did the SAP system's real-time integration with the general ledger enhance your understanding of inventory and financial management? Get online assignment help services Now!

c) Explain the importance of maintaining accurate stock requirements lists and ensuring timely invoice receipts in the procurement cycle.

d) Identify one key takeaway from your assignment that highlights the role of procurement in supporting an organisation's overall financial health.

Question 2

Calculating depreciation ensures that asset costs are properly allocated over time, enabling businesses to accurately report financial results and comply with accounting standards. The method of depreciation should reflect the pattern of economic benefits expected from the asset.

Pinnacle Equipment Pty Ltd, a growing construction services company, recently invested in advanced equipment to enhance site operations. On 1 July 2023, Pinnacle Equipment purchased excavation machinery for $275,000. Additionally, the company paid $12,500 for installation and testing to prepare the machinery for use. The equipment has an expected useful life of 10 years and an estimated residual value of $7,500. The company uses the straight-line method of depreciation, as the benefits from the machinery are expected to remain consistent over its useful life. (Ignore GST.)

Required:
a) Calculate the total cost of the machinery.

b) Prepare the journal entry to record depreciation expense for the year ending 30 June 2024.

c) Calculate the accumulated depreciation at the end of the second year.

Question 3

Reconciling a company's internal cash records with external bank statements is a vital internal control activity that ensures financial integrity and accuracy. The bank reconciliation statement identifies timing differences, unrecorded items, and potential errors or fraud, enabling companies to produce reliable financial reports and manage cash effectively.

You are the newly appointed assistant accountant at Evergreen Interiors Pty Ltd. As part of your responsibilities, you are required to prepare a bank reconciliation statement as at 31 March 2025, using the details extracted from the company's cash records and bank statement.

Table - Bank Reconciliation Data for Evergreen Interiors Pty Ltd (31 March 2025)

Description Amount ($)
Deposits made on 31 March, not yet credited by the bank 3,800
Closing balance as per bank statement (Cr) 6,200
Cheques issued but not yet presented 2,500

Required:
a) Prepare the bank reconciliation statement as at 31 March 2025, assuming the bank statement shows a credit balance of $6,200.

b) Prepare the bank reconciliation statement again, assuming the bank account is overdrawn, and the bank statement shows a debit balance of $6,200.

Question 4
a) There are different methods used to estimate doubtful debts, such as the percentage of sales method and the aging of accounts receivable method. Choosing the appropriate method can significantly affect the accuracy and reliability of financial statements.

Required:
Compare the percentage of sales method and the aging of accounts receivable method for estimating doubtful debts. Which method provides a more accurate estimate, and why?

b) Bloom Vista Ltd supplies decorative pots and vertical garden kits to lifestyle retailers on 30-day credit terms. The business uses the allowance method to account for doubtful debts, based on a percentage of accounts receivable. The following data is available for the financial year ending 30 June 2025:

Description Amount ($)
Total Sales 1,050,000
Sales Returns and Allowances 30,000
Cash Collected from Customers 740,000
Estimated Doubtful Debts (% of AccountsReceivable) 5%

Required:
a) Calculate the accounts receivable balance before any adjustment.

b) Calculate the amount to be recorded in the Allowance for Doubtful Debts.

c) Prepare the adjusting journal entry to record the estimated doubtful debts at 30 June 2025.

Question 5

Effective inventory management is critical to the financial success of any trading or manufacturing organisation. Accurate calculation of the cost of goods sold (COGS) and ending inventory ensures compliance with accounting standards and enhances decision-making related to purchasing, pricing, and profitability.

Open Ltd operates a retail business and uses the perpetual inventory system. During April 2025, the following transactions were recorded:

Note: Open Ltd uses the specific identification method of inventory valuation. GST is to be ignored.

Required:
Using the specific identification method, determine:

a) The cost of ending inventory asat 30April 2025, assuming it comprises:
• 13 units from beginning inventory
• 24 units from the 3 May purchase
• 3 units from the 12 May purchase

b) The cost of goods sold (COGS) for the month of April.