Reference no: EM131823911

Find Your Firm's Annual Reports and Spreadsheet

The assignment for this unit is made up of eleven (11) steps. As you complete these eleven steps, you will find your company's annual reports and have a look at them. You will then practice aspects of the recording process using Excel. You will also create a Trial Balance from your company's financial statements, and explore its Inventory and Depreciation policies. You will also have the opportunity of creating a set of business transactions for your company, recording these in MYOB software and producing a set of financial statements using MYOB. As well, you will have the opportunity to experience how interacting with others in the unit may be able to help you to better understand the concepts we will be studying.

You just need to do only 7-10 steps.

Step 7:

Step 7 involves you exploring the inventory practices of your firm.
Please read Chapter 6 (page 236) and Chapter 19 (pages 802-829) from Hoggett et al (2015) (the textbook for our unit) to help you complete this Step.

Inventory often forms a significant part of a firm's business (although not all firms have inventory; for example, Ryman Healthcare does not have any inventory). Go to your firm's annual reports that you downloaded as part of Step 3. Open each soft copy file and search for where ‘inventory' is referred to. You may find your document has a search function. You can also find comments on inventory in the notes to your firm's financial statements. Read these comments to get a feel for how your company manages its inventory. Make sure that you do this for EACH year for which you have downloaded an annual report.

As you are doing this, write down the key concepts that you find interesting, and whether they relate to each year or just one year. You will find specific information about your firm's inventory policies as part of the detailed notes to the financial statements. Note the figures for Inventory for your firm. Are they large or small numbers? What do these figures mean? You might find that your firm's note on inventory contains key terms such as Raw Materials, Work in Progress, Finished Goods, Net Realisable Value. (see Chapter 8 p.346, Hoggett et al, 2015 - the textbook for our unit).

What does your firm disclose (and not disclose) about its inventory? Has your firm changed its inventory practices over the years that you are reviewing? If so, why? How might this have affected your firm's financial statements? What type of inventory system does it use (perpetual or periodic)? What method of inventory does it use (weighted average, FIFO, LIFO, specific identification)? What are some of the associated issues and costs that your firm might be facing with its inventory management? Why might this be the case? Are there any areas where you think your firm could improve its inventory management? How did you identify these areas? If you have had any experience with inventory, make sure you also describe these experiences.

Step 8:

Step 8 involves exposing you to a commonly used accounting software. In this step, you will learn how to use MYOB AccountRight.

In ACCT11059 Accounting, Learning & Online Communication you were introduced briefly to accounting systems and cloud computing. Did you know that you can ‘try- before-you-buy'? Most computerised accounting systems will provide an option where you can trial a version of their software for free (usually for a period up to 30 days). In this step, we will trial MYOB software, one of the leading small business accounting software in Australia.

Important note: You only have 30 days within which to trial MYOB for free, beginning from the date that you download and install it onto your computer. You will need this software to complete Steps 8 and 9 of this assignment, so please ensure you are able to complete both steps within 30 days from the time that you install MYOB onto your computer.

Go to the MYOB website and click on Try FREE for 30 Days. Then, you can learn how to use this software for free. Remember: when you set this up in your computer, you only have 30 days to complete Steps 8 and 9.

MYOB offers tutorials for operating their products. Simply choose which product you have downloaded for the trial version (AR AccountRight), click on the ‘Start Learning' button and follow through the prompts. Allow about 1.5 hours for the initial training on set up, and a further 3 hours for learning how to use the software.

As part of completing this training, take a screen shot* of your last screen/transaction in MYOB in each of the two phases (setup and training), and include both screen shots in your Word document as evidence you have completed the set up and training. If you do not include two screen shots showing your completion of the set up, and completion of the training, you will not receive marks for this aspect.

Then, go to the EzyLearn MYOB Online Training Skills Test and complete the 13- question quiz. You have 30 minutes within which to complete the quiz; however, if you are reasonably competent in MYOB it should take you far less time (perhaps about 10 minutes). Take a screen shot of your results (provided on screen when you complete the 13 questions) and include this in your Word document for this step. Again, if you do not include this screen shot*, you will not receive any marks for completing the quiz.

*If you do not know how to create a screen shot, please read the Guide for how to complete a screen shot, or the Guide to Windows Snipping, or the Guide for Mac users.

Step 9:

Step 9 involves you creating a set of business transactions for your company, recording these in MYOB, and producing a set of financial statements from MYOB.

Every day, you engage in and perform ‘transactions'. For example, filling up your car with fuel (and paying for it) is a transaction. In your financial records, if you were to record this transaction, it would appear as a DR to Fuel Expense and a CR to your Cash at Bank asset (or a CR to your Credit Card Liability).

Tip: Increases in Expenses are debits; decreases in Assets (and increases in Liabilities) are credits. See Study Guide Chapter 1, Section 1.4 on the three things you need to memorise.

To record this transaction in MYOB, you would use the ‘Spend Money' function in the Banking command centre to record this transaction.
So then, you can think of transactions as the interactions between customers and suppliers and a business. Transactions can be very simple, like our fuel example above, or more complex. If you look up any business dictionary, you will probably get a formal definition for a transaction such as "A transaction is an economic event that

initiates a recording process in a business accounting system." However, as you have seen, even if you do not have an accounting system (and, yes, most people probably do not keep track of their personal fuel expenses in an accounting system) you can still be creating transactions; even if you do not record them.

In this step, you need to create a set of ten (10) hypothetical business transactions that might be realistic for your allocated firm. Please ensure that the set of business transactions are related to your firm's industry and operations. You will need to include your set of business transactions in your Word document for this Step.

Once you have created your set of business transactions, you will then need to record them in your MYOB trial software. There are two ways in which you can complete this: either create a NEW company file in MYOB and record them there, or use your existing Clearwater file, and create your business transactions using dates after the last transaction for Clearwater.

For this step, please create a NEW company file.

Using a new file will require you to completely set up again; however, your reports will only reflect the business transactions that you created.

Once you have recorded your business transactions, you will need to export the All Journals report to Excel and include this in your Step 9. Use the MYOB help and tutorials, Moodle discussion forums and/or discuss f2f with others in our unit about how to generate this report.

You then need to generate a set of financial statements: Income Statement, Balance Sheet, and Cash Flow Statement. Again, use the MYOB help and tutorials, Moodle discussion forums and/or discuss f2f with others in our unit about how to generate these reports. Include these financial statements in your Word document submission for this Step; either export them to Excel, and copy and paste them into your Word document, or take a screen shot of each and include the screen shots into your Word document.

Now we get to the exciting part. Take a good look at your financial statements. What story do you think they are telling you? What I am interested in is YOUR interpretation of these financial statements. What tools might you use to analyse these financials? Why? Include (in your Word document) your analysis and discussion about the story your financial statements are telling you about your company.

Step 10:

Step 10 involves you describing your firm's Depreciation policies and creating Depreciation journal entries based on your firm's financial statements.

Please read Chapter 20 (pages 846-869) from Hoggett et al (2015) to help you complete this step.

Go to your firm's annual reports that you downloaded as part of Step 3. Open each soft copy file and search for where ‘depreciation' is referred to. You may find your document has a search function. You can also find comments on depreciation in the notes to your firm's financial statements. Read these comments to get a feel for how your company manages its deprecation of non-current assets. Make sure that you do this for EACH year for which you have downloaded an annual report.

As you are doing this, write down the key concepts that you find interesting, and whether they relate to each year or just one year. You will find specific information about your firm's depreciation policies as part of the detailed notes to the financial statements, and your firm may possibly have ‘depreciation and amortisation' listed in its Income Statement as a major expense account. You will also find that ‘Accumulated' depreciation and amortisation may be listed in your firm's Balance Sheet, or in a detailed note that relates to certain assets in the balance sheet (these assets may be called ‘Property Plant and Equipment'). Note these figures down as part of your key concepts.

Has your firm changed its depreciation methods over the years that you are reviewing? If so, why? How might this have affected your firm's financial statements? What type of depreciation method does it use (for example, straight-line, reducing balance, units of production)? Is depreciation a significant expense for your firm? Why or why not?

Using the information from your firm's financial statements (mainly the Balance Sheet, Income Statement and the relevant notes), identify at least three journal entries that may have been processed by your firm's accountants when recording your firm's depreciation. The journal entries can include numbers you have made-up, or alternatively be simply noted as ‘XXX'. Write the three journal entries as part of your response to this Step, in your Word document. What effect do these journal entries have on your firm's financial statements? Are there any areas where it might be possible to manipulate these entries?

Referencing: APA