IB Business Management – Finance and Accounts

3.4C: Final Accounts: Activity

IB Business Management: www.BusinessManagementIB.com

3.4 FINAL ACCOUNTS: ACTIVITY C

Read the case study information below and answer the questions that follow.

FRONT OF THE Q PLC

Front of the Q is a human resource

management consultancy and
recruitment agency. The company was
founded in 2010 by four young university
friends who are the majority shareholders.
They believed they had the connections
and networks to be able to match the
very best university graduates to the most
sort after companies young graduates
wished to work at.
The core competency of the young
company is in its ability to implement and
utilise their own social networking
software and integrate this into the large social networking sites such as Facebook and
LinkedIn. Growth has been phenomenal.

Study the simplified version of the 2014 balance sheet for Front of the Q as at 31 December
2014, below.
IB Business Management – Finance and Accounts
3.4C: Final Accounts: Activity

2013 2013 2014 2014

($m) ($m) ($m) ($m)
ASSETS
FIXED ASSETS:
Property 22 25

Vehicles 3 6

Equipment 12 22

Intangible assets 15 25

A H

CURRENT ASSETS:
Stocks (inventories) 3 3

Debtors (accounts receivable) 12 15

Cash and cash equivalents 2 5

B I

CURRENT LIABILITIES

Creditors (accounts payable) 16 14

Short-term loans 6 J

C 26

Net current assets D K

NET ASSETS E L

Long-term liabilities:

Long-term loans 12 M

SHAREHOLDERS’ EQUITY

Share capital 22 31

Retained earnings 13 18

F 49

Capital employed G N

Source: www.BusinessManagementIB.com
 IB Business Management – Finance and Accounts
3.4C: Final Accounts: Activity

QUESTIONS: 28 MARKS, 50 MINUTES

1. Define the following terms:

i. Debtors/accounts receivable
ii. Stocks/inventories
iii. Current assets
iv. Long-term liabilities [8 marks]

2. Calculate the values of A-N in the balance sheet for In Front of the Q for 2013 and 2014:
[14 marks]

3. Explain why it is important to stakeholders in In Front of the Q to be provided with two years
of balance sheet values in the published accounts; make reference to some of the data
in your answer. [6 marks]