QUANTIC PROJECTS 

 
Accounting Case Study  
Learning Objectives 
1. Prepare journal entries, T-accounts, multi-year balance sheets, income statements, 
and cash flow statements. 
2. Analyze and critique financial statements, and use ratio analysis to propose 
recommendations to improve the financial health of a business. 

Project Description 
Read ​Highland Malt​: ​Accounting Policy Choices​ ​in Financial Statements​. Prepare a 
multi-year1 balance sheet, income statement, and cash flow statement for Highland Malt 
and briefly discuss the entity’s financial health and how it can make improvements. This 
task will require you to make certain assumptions about the firm’s business operations, 
and to prepare all required journal entries and T-accounts. Note that the main component 
of this case study is the successful creation of the financial statements. The discussion 
section should be no more than one, single-spaced page, and should be limited to: 
● Key assumptions you made 
● Financial ratio analyses you performed 
● Recommendations you are making to improve the financial health of the company. 
 
Assumptions  
When preparing the financial statements, add the following assumptions to your own: 
1. Revenue recognition.​ Treat sales of whisky as revenue (not deferred revenue nor 
any other liability). 
2. Inventory costing methods​. Use the first-in, first out method (FIFO) when 
calculating the Cost of Goods Sold (COGS). Do not include any of the expenses in 
Exhibit 4 in COGS. 
3. Income taxes​. Ignore taxes. (Treat EBIT as net income.) 
4. Expense categories​. Include all costs listed in Exhibit 4 as fixed costs that fall 
under Selling, General and Administrative expenses (SG&A). Do not include any of 
these costs in COGS. 
 
 
Tips & Resources 
1
​The start-up capital was raised in 2018, along with some inventory and a loan. All sales 
occurred in 2019. As such, the 2018 portion of the income statement only includes 
interest expenses. 

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● Please review the list of ​Frequently Asked Questions​ at the end of this document 
for answers to common questions about the case study. 
● Make sure to go through our ​Creating Financial Statements in Excel​ course before 
starting this project—this will help you prepare your financial statements. 
● We recommend that you work in a group for this project​. Taking our ​Cultural 
Intelligence​ course before starting your first Quantic group project may help you 
to interact and work effectively in a group setting. 
● Groups are ​limited to a maximum of five. 
● Please note that if you are working in a group, your feedback will be emailed back 
to your entire group. If you do not wish to reveal your email to the rest of your 
group, email us at ​projects@quantic.edu​ to let us know. 
 

 
Accounting Case Study Rubric
Scores 2 and above are considered passing. Students who receive a 1 or 0 will not 
receive credit for the assignment, and must revise and resubmit to receive a passing 
grade. As a reminder, the required financial statements are the balance sheet, income 
statement, and cash flow statement. 

Score  Description 

● Clearly addresses the case study prompt. 

5  ● Includes all financial statements. They are accurate and intelligible. 
● Balance sheet balances ​and​ statements have no more than 1 minor error*. 
● Clearly states assumptions. 
● Explores suggestions for improving the firm’s financial health.  

● Clearly addresses the case study prompt. 

4  ● Includes all financial statements. They are accurate and intelligible. 
● Balance sheet balances ​and​ statements have no more than 3 minor errors*. 
● Clearly states assumptions. 
● Lists suggestions for improving the firm’s financial health. 

● Clearly addresses the case study prompt. 

3  ● Includes all financial statements. They are accurate and intelligible. 
● Balance sheet balances ​and​ statements have no more than 
○ 1 major error with up to 3 minor errors*; or 

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○ 6 minor errors*. 
● Clearly states assumptions. 
● Lists suggestions for improving the firm’s financial health. 

● Clearly addresses the case study prompt. 

2  ● Includes all financial statements. 
● Meets one of the following two criteria: 
1. Balance sheet balances ​and​ statements have no more than 
○ 2 major errors with up to 3 minor errors*; 
○ 1 major error with up to 6 minor errors*; or 
○ 9 minor errors*. 
2. Balance sheet does ​not​ balance and there are no more than 3 minor 
errors*. 
● Lists suggestions for improving the firm’s financial health. 

● Includes all financial statements. 

1 
● Doesn’t turn in a case study or completely fails to address the case study 
0  prompt. 
● Does not include all required financial statements. 
 
*Major errors include things such as the ending cash on the cash flow statement not 
matching the cash balance on the balance sheet. An example of a minor error is putting 
the sections of the balance sheet in the wrong order. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Accounting Project FAQs 

Below, you will find ​clarifications for some of the language​ in the prompt and case study, 
answers to questions about ​assumptions​ you should make, information about ​how to 
structure and submit the project,​ and answers to some common questions about the 
grading process.

Language Clarification 
What does the prompt mean when it says to ​treat sales of whisky as revenue​? 
This means that although the customer does not receive the whisky for 12 years, you 
should realize the sales instantaneously and match the appropriate expenses 
accordingly. 
 
Are COGS included in SG&A? It is not clear. 
In a company that uses COGS, product costs are considered direct labor, direct materials 
and manufacturing overhead. To simplify the case study, we consider all of the COGS 
costs to be included in the production schedule with the items in Exhibit 4 to be SG&A. 
Therefore, include all costs listed in Exhibit 4 as fixed costs that fall under Selling, 
General and Administrative expenses (SG&A). Do not include any of the expenses in 
Exhibit 4 in your COGS calculation. 
 
Which method should we use when calculating the Cost of Goods Sold (COGS)? 
Use the first-in, first out method (FIFO) when calculating COGS. 

Assumptions 
 
How should the capital be treated? Should we treat this as ​paid-in capital or preferred
stock issuance? 
You may take either approach. Some choose to show Common Stock, Preferred Stock, 
and related PIC accounts by assigning an arbitrary PAR value. Others choose to only 
show preferred stock and common stock accounts. The choice is yours. The important 
thing is that total equity is correct. 
 
What should we do about taxes? 
Ignore taxes. (Treat EBIT as net income.) 
 

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Were payments made in cash or on credit? 
While you may assume that all sales of whisky were paid in cash to Spencer, Spencer 
owes Highland part of these sales. Treat the amount of sales that Spencer owes 
Highland as an accounts receivable from Spencer. Treat sales of whisky as revenue (not 
deferred revenue nor any other liability). 
 
 
The case study gives no information on the order in which barrels were purchased.  
As long as you are using the stipulated first-in, first-out method (FIFO) when computing 
the cost of goods sold (COGS), it doesn’t matter for the financial statements when barrels 
were purchased relative to other customers within the same accounting period. In your 
follow-up analysis, you are free to make any reasonable assumptions that are necessary 
to make a numerical point. For example, “if we assume that all the Highland barrels were 
sold first this year, then we can see that, compared to production costs…” 
 
How should dividends be treated? 
The case study does not state that dividends are paid. Assume that they are not. 
 
Was rent paid for the warehouse in 2018? 
According to the footnote on page 3, no rent was paid for the warehouse in 2018. 
 
Which currency should we use for the transactions? 
Although the firm is based in Scotland, assume all transactions are conducted in US 
dollars ($). 

Structure and Submission 

Can I work on this project solo? 
Yes. However, we strongly recommend that you work in a group of no more than five 
students for this project. Collaborating with others is not only a great way to make the 
most of your MBA, but our research tells us that working in a group improves your 
chances of graduating.  
 
Should I break out SG&A separately or can we just label all these as Operating 
Expenses (for example, the journal, and the income statement)? 
You do not need to list every SG&A item out separately.  
 
How should I structure the submission? 

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Make sure to go through our ​Creating Financial Statements in Excel​ course before 
starting this project—this will help you prepare your financial statements. You should use 
the templates in this course to prepare your statements.   
 
What is included in the discussion section? 
The discussion section should be used to: 1) state any assumptions you have made when 
preparing the statements, 2) present your analysis of the financial health of the company, 
and 3) make recommendations to improve the firm’s financial health. 
 
Can I go over one page in the discussion section? 
The discussion should be no more than a single page. You will not be penalized for 
going over one page, but you should not need longer than a page to provide your 
analysis.  
 
What is the difference between ​lists suggestions for financial health​ and explores 
suggestions for financial health as set out in the grading rubric? 
Listing suggestions for financial health indicates that you have provided a list of 
strategies that Highland Malt could implement to improve financial health. Exploring the 
suggestions means weighing the various strategies, and making recommendations as to 
the best strategies to pursue, given what you have learned about the company. 
 
How should the work be submitted? 
Submit one single PDF file. You do not need to include any Excel sheets or show your 
calculations. You do not need to submit any journals or ledgers. While the journal entries 
are important in preparing the financial statements, the grade will be based on the 
financial statements and discussion of profitability. If you are working in a group, one 
person should submit the project to ​projects@quantic.edu​ clearly stating the names of all 
contributors. 
 
What kind of help is available at the Accounting office hours?  
Accounting office hours are optional (but encouraged!). You can attend to obtain 
guidance on the project, so make sure you attend with questions in mind. A link to sign 
up to attend office hours will be sent out over Slack and email in the middle of the 
accounting concentration.  
 
 

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Grading 
What is a passing score? 
For the Accounting project, you must receive a 2 or higher to receive credit. If you 
receive a passing score on a project, a score of 100 is averaged into your final project 
score. For failures or unsubmitted projects, a score of 0 is averaged into your final score. 
For example, if you receive a 3/5 on a project, a 100 will be averaged into your final 
project score (not a 60​).  
 
Do I have to complete this project to graduate? 
Yes! You must submit and pass at least two written projects (Accounting, Leading 
Organizations, or Finance) in order to be eligible to graduate. 
 
What happens if I don’t receive a passing score? 
If you don’t receive a passing score, you will need to revise and resubmit. If you need 
assistance making the necessary corrections to your plan or presentation, please attend 
one of our Accounting office hours. You can find the schedule in the Events tab in the 
Network section on your dashboard. 
 
What happens if I submit late? 
Although your grade won’t be penalized for a late submission, submitting your 
Accounting project late may result in you not receiving your grades at the same time as 
the rest of your cohort.  
 

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