College of Administrative and Financial

Sciences
Bachelor of Science in Business
Informatics 2nd Trimester, AY 2020-21

FINAL SPECIALPROJECT-BSBI422
Instructions:
 Answer ALL questions/requirements / Present what are required in the CASE STUDIES
 Marks will be awarded for good presentation and thoroughness in your approach
 NO marks would be awarded for the entire project if any part is found to be copied
directly from printed materials or from another student.
 Complete this cover sheet and attach it to your Case Study Output.

Student Declaration:
I declare that:
I understand what is meant by plagiarism (illegal copying of one’s work)
The implication of plagiarism is tantamount to cheating (work will get no pts.)
This project is all my own work and I have acknowledged any use of the published and unpublished works of
other people.

Student’s Signature:………………………………….. Date:…………………………..

Total number of pages including this cover page

Program Course Section Time/Days Due Date Date Submitted

BSBI BSBI422
Course Title Financial Accounting

Student’s Full Name

Professor’s Name
DR.MARY BENITTA JEGAN
FOR OFFICIAL USE ONLY
MARKS
Teacher’s Marking Scheme MARK
AWAR
/ Marker’s S
DED
Commen
ts
Question1 10
Question2 10
Question3 5
Question4 10
Question5 5
Question6 10
Marker Total Marks/ Marks Awarded 50
’s
Name

Signat Grade Equivalent

ure
 A. STORES LEDGER

The choice of inventory costing method is an important one for companies since

consequence of the choice is apparent in both the balance sheet and the income statement. In

periods of raising prices, companies choosing the income-reducing method of Last-in-First-out

(LIFO) also leave the lower earlier prices in their inventory values.

This results in inventory values in the balance sheet that are based on the older prices, the

LIFO method results in lower net incomes and also lower values in the current assets. The only

advantage to choosing this method is the lower tax expenses based on the lower income. The

American tax code requires the use of the LIFO method for financial reporting purposes if that

method is used for tax purposes. When used for tax purposes, LIFO with its lower reported

incomes correspondingly results in substantial tax savings for companies with large amounts of

inventories, typically most large merchandising and manufacturing companies in the economy.

With the understanding of these answer the below questions.

1. Problem:
From the following information , prepare stores ledger Account under FIFO Method(10
Marks)
2019 Particulars
Jan1 Received 600 Units at BD10 per unit
Jan10 Received 200 Units at BD 34 per unit
Jan15 Issued 600 Units
Jan20 Received 200 Units at BD18 per unit
Jan25 Issued 500 Units
Jan28 Received 700 Units at BD22
 Answer1:
1. LIFO
Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory
Calculation of Closing Inventory Units
Closing Inventory Units = Opening + Purchases - Sales
= 6 + 10 - 7 = 9 units
Calculation of closing inventory value                   
Since LIFO is followed, it means units sold will be the one which are purchased later
2 Units sold on Jan 8 would be sold from the opening balance of 6 units. It means opening units remaining
is 4 units at cost of 10 each ie $ 40
5 units sold on Jan 20 would be sold from the 10 units purchased on Jan 13. It means purchased units
remaining would be 5 units at cost of $ 12 each ie $ 60
Inventory Cost = 40 + 60 = $ 100
Cost of Goods Sold = 60 (10*6) + 120(12*10) - 100 = $ 80

2. FIFO
Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory
Calculation of Closing Inventory Units
Closing Inventory Units = Opening + Purchases - Sales
= 6 + 10 - 7 = 9 units
Calculation of closing inventory value                   
Since FIFO is followed, it means units sold will be the one which are purchased first
2 Units sold on Jan 8 would be sold from the opening balance of 6 units. It means opening units remaining
is 4 units at cost of 10 each ie $ 40
5 units sold on Jan 20 would be sold from the 4 units remaining from opening unit and 1 unit from the units
purchased on Jan 13. It means purchased units remaining would be 9 units at cost of $ 12 each ie $ 108
Inventory Cost = $ 108
Cost of Goods Sold = 60 (10*6) + 120(12*10) - 108 = $ 72
b) In case of minimizing the tax, owner should adopt LIFO method because in that case, cost of goods sold
is higher and it means the company has to pay less tax, as its profit would be lower
 3. Problem:
From the following information , prepare stores ledger Account under LIFO(10 Marks)
2020 Particulars
March1 Received 600 Units at BD22 per unit
March10 Received 500 Units at BD 14 per unit
March15 Issued 400 Units
March20 Received 600 Units at BD28 per unit
March28 Received 200 Units at BD22 per unit
March31 Issued 300 unit.

Answer 2 :

Quantity
Quantity Closing
Date purchase Unit/cost Total Unit/cost Total Unit/cost Total
issued units
d
1-Mar 600 22 13200       600 22 13200
10-Mar 500 14 7000       100 14 1400
15-Mar       400 14 5600      
20-Mar 600 28 16800       500 28 14000
28-Mar 200 22 4400       0 0 0
200 22
31-Mar           7200      
100 28
Total     41400     12800     28600

B.CASH FLOW STATEMENT

Comparative statements of cash flows hold clues to a company’s earning potential, risk,

and liquidity. These statements show the repeatability of the company’s sources of funds,

their costs, and whether such sources may be relied on in the future. The uses of funds for

growth and for maintaining competitive position are revealed. An analysis of comparative

Statements of Cash Flows helps in understanding the entity’s current and prospective

financial health.

It facilitates planning future ventures and financing needs. Comparative data help the
 Financial Manager, Controller and CFO identify abnormal or cyclical factors and changes

in the relationship among each flow element. The statement is a basis for forecasting

earnings based on plant, property, and equipment posture. It assists in appraising growth

potential and incorporates cash flow requirements, highlighting specific fund sources and

future means of payment. Will the company be able to pay its obligations and dividends?

The statement reveals the type and degree of financing required to expand long-term

assets and to bolster operations. The Financial Manager, Controller and CFO should

compute for analytical purposes cash flow per share equal to net cash flow divided by the

number of shares. A high ratio indicates the company is liquid.

4. What are the three types of cash flows presented on the statement of cash flows?(5 marks)

Three types of cash flows presented in the statement of cash flows are as follows:

(i) Cash Flow From Operating Activities: It indicates the amount of cash a company brings in
from its ongoing, regular business activities,such as manufacturing and sellings of goods or
providing services to customers.

(ii) Cash Flow From Investing Activities: It shows the cash generated or spent with respect to
investing activities such as purchase of physical assets, investment in securities, or sale of
securities or assets.

(iii) Cash Flow From Financing Activities: It shows the net flows of cash that are used to fund
the company. Activities like debt, equity or dividends comes under this type.
 5. Explain any differences between partnership and sole proprietorship(10marks)

Basis Partnership Sole Propritorship

It is a business model where two or more It is a business model where one

persons agree to carry out business and individual is an owner and operator of
share the profits or loss as mutually agreed the business. Profits or loss is borne
Definition between them. individually by owner.

In partnership formal agreement is needed

as here two or more persons are involved.
The agreement is called partnership deed Sole propritoship is by single person,
Agreement or partnership agreement. hence no such agreement is needed.

Here personal assets of partner can be Sole proprietor is solely responsible

Personal used to pay the debts of partnership. for any business debt. His personal
Liability for Moreover, if any partner fails to pay from his assets can also be used to pay the
Business personal property other partners are debt in case it fails to pay from
Debt required to pay on behalf of this partner. business assets.

Scope of Scope of finance in partnership is relatively The scope of finance is limited to only
Finance high as more people are involved here. one individual.

The decision is taken collectively and hence Individual person is solely responsible
difference of opinion may arise. Difference for whole decision of the business.
Decision of opinion can either help in better decision However, lack of different perspective
Making or can turn into indecisivness. may be there.

6. Identify whether each of the following items would appear in the operating, investing, or financing
activities section of the statement of cash flows. (5 marks)

A. Cash payments for equipment

B. Cash receipts from sales of goods

C. Cash dividends paid to shareholders

D. Cash payments to employees

 E. Cash payments to lenders for interest on loans

Answer:

Activity Items

B. Cash receipts from sales of goods

D. Cash payments to employees

Cash Flow from Operating Activity

Cash Flow from Investing Activities A. Cash Payment for equipment

C. Cash dividends paid to shareholders

E. Cash payments to lender for interest on loans

Cash Flow from Financing Activities

7. Prepare Indirect Method of cash flow statement( 10 Marks)

Liability 2017 2018 Asset 2017 2018

Share capital 200000 250000 Cash/Bank 30000 42000
Creditors(CL) 70000 40000 (CA) 120000 115000
Profit and loss 12000 23000 Debtors(CA) 80000 90000
a/c Stock(CA) 52000 66000
land

282000 313000 282000 313000

Cashflow Statement

Particulars $

Cashflows from operating activities:

Net change in P/L A/c 11,000.00

Change in working capital:

Decrease in debtors     5,000.00

Increase in stock -10,000.00

Decrease in creditors -30,000.00

Cashflows from operating activities -24,000.00

Cashflows from investing activities:

Purchase of land -14,000.00

Cashflows from investing activities    -14,000.00

Cashflows from financing activities:

Issue of capital 50,000.00

Cashflows from financing activities: 50,000.00

Net change in cash and cash equivalents 12,000.00

Add: Opening cash balance 30,000.00

Closing cash balance 42,000.00

Rubrics
10pts The presentation materials are complete,
presentable and free from grammatical and
spelling errors
5-7Pts The presentation materials are lacks few
details but presentable and free from
grammatical and spelling errors
2-4pts The presentation materials are lacks major
 details and not much presentable and with
grammatical and spelling errors
0-1pts The presentation shows little information of
the project.
General Instructions:
1. Required parts should be complete; all figures, tables and diagrams are clearly and logically
identified and strongly support the text.
2. All paragraphs should be well organized; use of sections is logical.
3. The report should include a professional cover page and index. Proper font type (choose
either Times New Roman or Arial for the entire document), black color and size 12 are
applied with appropriate margins. Choose line spacing 2. Make all subheadings bold.
4. All sources should be correctly and thoroughly documented; appropriate citation forms should
be utilized throughout.
5. Try to put the exact details and avoid unnecessary explanations.(Don’t copy paste from
internet.)
6. Last date of submission will be 1st May 2021.
7. There should be a maximum of only 4 students in a group. Ensure that each of the members
in a particular group are aware of the concept of your project. It should be a detailed one.
8. Specify the name of the members in the front page.
9. Use the cover page given. For group project, marks will be different for each student based
on their performance or knowledge in presentation.
10. Soft copy of the word file of the project should be submitted on the moodle on or before 1st
MAY2021 after which no marks will be awarded.