Accounting Principles

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 5: Accounting Principles

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Grading Grid

P3 P4 P5 P6 P7 M2 M3 M4 D2 D3

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Contents
Introduction: .................................................................................................................................... 2
Task 1: ............................................................................................................................................. 2
Unadjusted trial balance: ....................................................... Error! Bookmark not defined.
T-account.................................................................................................................................... 2
Adjusted trial balance:.............................................................................................................. 3
Balance sheet: ............................................................................................................................ 4
Income statement: ..................................................................................................................... 4
Statement of changes in owner’s equity: ................................................................................. 5
Task 2: ............................................................................................................................................. 5
Computation or identification of the ratios: ........................................................................... 7
Comparison to the performance of PNJ Joint-stock Company over time and
Presentation of the trend analysis in charts ............................................................................ 9
Task 3: ........................................................................................................................................... 11
Draw up the cash budget for next year and present information in figures/charts .......... 11
An evaluation of the budgets role .......................................................................................... 11
Conclusion:.................................................................................................................................... 13
REFERENCE: ............................................................................................................................... 14

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Introduction:
As a PwC Postgraduate Intern, I recently finished a six-month probationary term. I'm now involved
in a variety of initiatives that include providing accounting and consulting services to businesses
in order to identify high-growth customers and scalable business models. In addition, I provide
guidance and support with corporate budgeting to help clients understand how budgeting can be
used to provide information about best resource allocation, as well as to aid in control and decision-
making.

Task 1:
T-account

Prepaid ínurance Account No.

Date Explanation Debit Credit Balance

a Dec 31 Unadjusted Balance 14,250
7,500
6,750

Teaching supplies Account No. Account No.

Trans. Trans. Training fees earned

no. Date Explanation Debit Credit Balance

e Steptemper 1 Unadjusted Balance 51,000
no. Date Explanation Debit Credit Balance 8,460
b Dec 31 Unadjusted Balance 9,200 59,460
6,450 Account No.
2,750 Unearned training fees
Account No. Date Explanation Debit Credit Balance
Steptemper 1 Unadjusted Balance 21,150
Accumulated depreciation, equipment
8,460
Date Explanation Debit Credit Balance 12,690
c Dec 31 Unadjusted Balance 23,500 Account No.
15,700 Tuition fees earned
39,200 Date Explanation Debit Credit Balance
Account No. f Octorber 15 Unadjusted Balance 132,000
7,300
Accumulated depreciation, professional library
139,300
Date Explanation Debit Credit Balance Accounts receivable
d Dec 31 Unadjusted Balance 9,800 Date Explanation Debit Credit Balance
4,900 Octorber 15 Unadjusted Balance 0
14,700 7,300
7,300

Account No.
Trans. Salaries payable

no. Date Explanation Debit Credit Balance

g December Unadjusted Balance 0
740
740
Account No.
Salaries expense
Date Explanation Debit Credit Balance
g December Unadjusted Balance 62,000
740
61,260
Account No.
Prepaid rent
Date Explanation Debit Credit Balance
h December Unadjusted Balance 3,570
3,570
0

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Adjusted trial balance:

ABC INSTITUTION
Unadjusted Trial Balance
December 31st Adjustment Adjusted trial balance
Debit Credit Debit Credit Debit Credit
Cash $ 36,200 36,200
Accounts receivable - 7,300 7,300
Teaching supplies 9,200 6,450 2,750
Prepaid insurance 14,250 7,500 6,750
Prepaid rent 3,570 3,570
Professional library 39,200 39,200
Accumulated depreciation, professional library $ 9,800 4,900 14,700
Equipment 78,500 78,500
Accumulated depreciation, equipment 23,500 15,700 39,200
Accounts payable 22,000 22,000
Salaries payable - 740 740
Unearned training fees 21,150 8,460 12,690
ABC, capital 92,750 92,750
ABC, withdrawals 45,750 45,750
Tuition fees earned 132,000 7,300 139,300
Training fees earned 51,000 8,460 59,460
Depreciation expense, Professional library - 4,900 4,900
Depreciation expense, Equipment - 15,700 15,700
Salaries expense 62,000 740 62,740
Insurance expense - 7,500 7,500
Rent expense 32,130 3,570 35,700
Teaching supplies expense - 6,450 6,450
Advertising expense 22,000 22,000
Utilities expense 9,400 9,400
Total $ 352,200 $ 352,200 54,620 54,620 380,840 380,840

The Key Account Manager has delegated responsibility for creating the adjusted trial balance and
year-end financial statements (Income Statement and Balance Sheet) for ABC to this document,
while following to accounting principles, conventions, and standards. Additionally, another job is
to make necessary adjustments to the income statement and balance sheet and to document them.

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Balance sheet:
ABC TEACHING INSTITUTE
Balance Sheet
For Year Ended December 31, 2020

Assets
Total assets
Cash $36,200
Accounts receivable $7,300
Teaching supplies $2,750
Prepaid insurance $6,750
Prepaid rent $0
Professional library $39,200
Accumulated depreciation, professional library $14,700
Balance $24,500
Equipment $78,500
Accumulated depreciation, equipment $39,200
Balance $39,300
Total $116,800

Liabilities
Total liabilities
Accounts payable $22,000
Salaries payable $740
Unearned training fees $12,690
Total $35,430
Owner's Equity
Debit Credit
ABC, capital 81,370
Total liabilities
and equity 116,800

Income statement:

ABC TEACHING INSTITUTE

Income Statement
For Year Ended December 31, 2009
Debit Credit
Revenues: 0 198,760
Tuition fees earned 139,300
Training fees earned 59460
Expenses: 164,390
Depreciation expense, Professional library 4900
Depreciation expense, Equipment 15700
Salaries expense 62740
Insurance expense 7500
Rent expense 35700
Teaching supplies expense 6450
Advertising expense 22000
Utilities expense 9400
Net income 34,370

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Statement of changes in owner’s equity:
ABC TEACHING INSTITUTE
Statement of Changes in Owner's Equity
For Year Ended December 31, 2020
Debit Credit
ABC, Capital, December 31, 2019 92,750
Plus net income 34,370
Total 127,120
Less withdrawals by owner 45,750
ABC, Capital, December 31, 2020 81,370

Task 2:

PNJ’s Annual Report (PNJ, 2020)

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PNJ’s Annual Report (PNJ, 2020)

PNJ’s Annual Report (PNJ, 2020)

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 PNJ’s Annual Report (PNJ, 2020)

PNJ’s Annual Report (PNJ, 2020)

Computation or identification of the ratios:
1. Liquidity:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 7,143,929,036,497
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 = = 3,241,284,233,443 = 2.204043
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

2. Efficiency
a. Inventory turnover

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 14,076,055,770,112
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 = = 2.073617766
(6,545,905,987,056+ 7,030,420,371,216)/2

b. Asset Turnover

17.510.788.650.999
𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 = 8,483,146,098,451+8,602,964,421,816 = 2.049710335 times
2

3. Solvency
𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑛𝑔−𝑡𝑒𝑟𝑚 𝐷𝑒𝑏𝑡𝑠 9,376,877,000
𝑫𝒆𝒃𝒕 − 𝒕𝒐 − 𝑬𝒒𝒖𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 = = 2,276,123,620,000=0,004119669476
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′ 𝐸𝑞𝑢𝑖𝑡𝑦

4. Profitability
a. Margin ratio
- Gross profit margin
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 3,434,732,880,887
𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕 𝒎𝒂𝒓𝒈𝒊𝒏 = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑠 × 100%=17,510,788,650,999 x 100% =

0.1961495253%
- Net profit margin
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 1,069,310,105,261
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕 𝒎𝒂𝒓𝒈𝒊𝒏 = × 100%=17,510,788,650,999x 100% = 0.06106578787
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑠

b. Return ratio
- ROA
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑹𝒆𝒕𝒖𝒓𝒏 𝒐𝒏 𝑨𝒔𝒔𝒆𝒕𝒔 = × 100%
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑠𝑠𝑒𝑡𝑠 (𝐸𝑛𝑑 𝑜𝑓 𝑃𝑒𝑟𝑖𝑜𝑑 𝐴𝑠𝑠𝑒𝑡𝑠)
1,069,310,105,261
= 8,602,964,421,816
8,483,146,098,451+
2

= 0.03129179412
- ROE
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑹𝒆𝒕𝒖𝒓𝒏 𝒐𝒏 𝐸𝑞𝑢𝑖𝑡𝑦 = 100%
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐸𝑞𝑢𝑖𝑡𝑦 (𝐸𝑛𝑑 𝑜𝑓 𝑃𝑒𝑟𝑖𝑜𝑑 𝐴𝑠𝑠𝑒𝑡𝑠)
1,069,310,105,261
=
5,241,861,865,008 + 4,577,265,811,347
2
= 0.2178014464
5. Market prospects

PNJ’s Annual Report (PNJ, 2020)

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 Financial indicators (TVSI, 2022)

Comparison to the performance of PNJ Joint-stock Company over time and

Presentation of the trend analysis in charts
ROA (trailing 4 quarter) %
20 17.94 17.56
18 15.88
16 13.73
14 12.52
Percentage (%)

12
10
8
6
4
2
0
2016 2017 2018 2019 2020
Year

The percentage of ROA of PNJ from 2016-2020 (TVSI, 2022)

The Major Financial Indicators Table summarizes the VRE's key financial indicators; however,
the study following will focus on four statistics: gross profit margin, earnings per share (EPS),
return on assets (ROA), and return on equity (ROE) during a five-year period, from 2016 to 2020.
To begin, gross margin is a financial indicator used to analyse a business's strategy and financial
health. It is defined as the amount remaining after subtracting the cost of goods sold. Gross profit
margin is calculated by dividing gross profit by total sales. Gross profit margin is sometimes
referred to as gross profit margin. Gross profit margin is the profit gained before sales, general,
and administrative expenditures are deducted, and it is similar to the business's net profit margin
(Dinh, 2022). The statistics began at 16.48 percent in 2016 and climbed significantly by roughly

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1% to 17.42 percent in 2017. It grew to 19.07 percent in the third year and peaked at 20.36 percent
in 2019. However, there are indicators of a minor decline to 19.61 percent by 2020. (TVSI, 2022).
A higher gross profit margin indicates a more lucrative and efficient business. This does not,
however, imply that the firm is failing as a result of its low gross profit margin. As a result,
assessing the index's usefulness is dependent on the unique circumstances of each organization
and sector. Earnings per share (EPS) is a financial term that refers to the proportion of profit
distributed to each outstanding share of a company's common stock. Typically, a corporation will
disclose the weighted average of its outstanding shares over the reporting period. Earnings per
share, a frequently used indicator of profitability, are often provided in two forms: basic earnings
per share and diluted earnings per share, which includes any securities. only securities, privileged
certificates, and privileged certificates (Le, 2022). At the start of 2016, the accomplished data was
4.58 percent; by 2017, the figure had climbed significantly to 6.71 percent. After two years, this
percentage gradually decreased to 5.75 and 5.30 percent, respectively. Then, in 2020, a
considerable decline occurred to the lowest number of 4.75 percent (TVSI, 2022). We shall first
define return on assets (ROA) before examining PNJ's ROA from 2016 to 2020. Return on assets
(ROA) is a profitability metric for businesses stated as a percentage of total assets. Investors can
evaluate their return on investment (ROI) by calculating how much money they generated on their
own (or the amount of assets). When a firm uses its assets to create profits, its performance is
measured by the rate of return on those assets (ROA). Return on assets (ROA) is a financial
indicator used by managers, analysts, and investors to determine the financial health of a business.
The return on assets of a business is measured by comparing the value of its assets to the value of
its profits over a certain time period. Return on assets is a financial management word that refers
to the efficiency with which a corporation utilises its resources to create profits (Vnexpress, 2021).
According to TVSI (2022), the figure above represents PNJ Joint Stock Company's success in the
first five years of 2016. As seen in the basic graph, the return on total assets (ROA) has dropped
during the previous five years. According to the statistics, the return on investment (ROI) in the
first year was fairly low at 13.73 percent (TVSI, 2022), before increasing to 17.94 percent the
following year. The third-quarter return on assets (ROA) decreased marginally to 17.56 percent,
but continued to slide to 15.88 percent in 2019. 2022) (TVSI). It fell to a five-year low of 12.52
percent in the last year of the research period, the lowest level in five years (TVSI, 2022). Return
on Equity is the ultimate statistic (ROE). This is a metric that indicates how well a business uses
its equity. ROE is calculated by combining profitability (as indicated on the income statement)
and average equity (as indicated on the balance sheet) (Dung, 2019). This figure peaked at 32.00
percent in 2016. It climbed marginally to 32.58 percent after a year. However, these percentages

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have slowly declined to 28.68% in 2018 and 28.69% in 2019. By 2020, this figure plummets to
21.78 percent (TVSI, 2022). Clearly, this is continuing in a downward trend.
The Covid 19 outbreak, which had a severe influence on the company's corporate revenue and
commercial operations, was mostly responsible for the company's fall in return on assets.

Task 3:
Draw up the cash budget for next year and present information in figures/charts
Nov(this year) Dec(this year) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Production Units 500 680 420 420 320 380 430 520 580 610 730 790 860 880
Sales Unit 450 640 390 530 370 410 420 530 540 570 700 770 830 840

Cost of Goods solds 4000 5440 3360 3360 2560 3040 3440 4160 4640 4880 5840 6320 6880 7040
Cash receivable 14400 20480 12480 16960 11840 13120 13440 16960 17280 18240 22400 24640 26560 26880

HAC Business
Cash budget
January to December
Nov(this year) Dec( this year) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash inflows
Cach receive from customer 4992 6784 4736 5248 5376 6784 6912 7296 8960 9856 10624 10752
Cach receive from customer on credit for 2 month 5760 8192 4992 6784 4736 5248 5376 6784 6912 7296 8960 9856
Cash received from customer by credit card 2496 3392 2368 2624 2688 3392 3456 3648 4480 4928 5312 5376
Total cash available 13248 18368 12096 14656 12800 15424 15744 17728 20352 22080 24896 25984
Cash outflows/disbursement
Advertising expenese 4250 4250 4250 4250
Credit cash expense 34.944 47.488 33.152 36.736 37.632 47.488 48.384 51.072 62.72
74.368 68.992
75.264
Selling expense 2048 1248 1696 1184 1312 1344 1696 1728 1824
2464 2240
2656
The direct labour cost 2730 2730 2080 2470 2795 3380 3770 3965 4745
5590 5135
5720
Various fixed production overheads 1322 1334.6 1338.38 1381.514 1394.454 1398.336 1441.501 1454.45 1458.335 1501.501
1514.45 1518.335
Supply cost 3360 3360 2560 3040 3440 4160 4640 4880 5840
6880 6320
7040
Liabilities 9200
Total outflow/disbursement 9494.944 8720.088 11957.53 8112.25 8979.086 14579.82 11595.88 12078.52 18180.06 15265.49 16522.82 30459.6

Cash balance/Net cash 3753.056 9647.912 138.468 6543.75 3820.914 844.1757 4148.115 5649.478 2171.945 6814.507 8373.182 -4475.6

An evaluation of the budgets role

Definition
Budgeting is the act of quantifying an organization's intentions in order to ensure that it meets its
objectives within a certain time period. This strategy is used to develop budgets, which are utilized
to control spending, analyse performance, and make strategic decisions regarding the
organization's future. When it comes to financial and other resources, a budget is a detailed plan
outlining how they will be acquired and used in the future over a certain time period. Budgets may
be established for certain departments, functions, or financial and resource limits, depending on
the circumstances. Indeed, some argue that budgeting is a technique for integrating an
organization's collective wisdom into a workable strategic plan. Budgetary planning and control
may be thought of as the short-term measurement and monitoring of an organization's long-term
strategic plans. The term "development" refers to the process of developing strategic plans that
detail the objectives to be pursued in accordance with the firm's strategy. Budgeting is the method
through which a business's long-term plan is carried out (Shim, Siegel, & Shim, 2011).
Purpose:

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Manage revenue and expenditure for a certain period of the project. Determine what adjustments
are needed in that project. Budget creates a transparent basis for the accountability of relevant
personnel.
Factors that directly affect budget in business
Institutions and policies of the state; Disasters and plagues; Legal and political conditions.; Local
economic factors; Possibility of additional financing from other sponsors, Time to develop a
budget plan.
Basic components of a budget plan
The first point to make is the income or profit source. This is a critical metric that funders look for
in any firm. Diversifying income sources and maintaining constant earnings demonstrates your
business's durability and potential to develop, demonstrating that you are not reliant on a single
sponsor. Typically, revenue is generated from product sales, financial market operations, and
income from company funds (Shim, Siegel, & Shim, 2011).
Another critical component of the budget plan is the expenditures. In other words, they are the
costs that firms incur to engage in initiatives, pay employee wages, and provide customer service,
among other things. These expenditures are deducted from the business's revenue. In general, these
expenditures should be classified according to the unit, the day, or the number of participants
(Shim, Siegel, & Shim, 2011).
Benefits:
In planning: Budgeting enables the evaluation, testing, and establishment of managerial policies
and objectives as enterprise-wide standards. Budgeting enables the most lucrative pathways for
money and other resources to be selected. Budgeting instils a cost-conscious mind-set in a
business, promotes resource efficiency, and builds a profit-driven culture throughout the firm. It
highlights the financial investment necessary to accomplish a goal. Budgeting encourages fruitful
competitions, offers an incentive to operate effectively, and instils a feeling of purpose in each
employee. All of these favourable circumstances contribute to higher production and staff
productivity. Budgeting supports the whole national economy when it is adopted in practically
every company organization. It ensures employment security, efficient resource usage, and
effective waste prevention (Shim, Siegel, & Shim, 2011).
In decision-making: Budgeting, as a spending plan, is an extremely useful technique for
regulating a business's revenue and expenses. Budgeting enables managers to allocate authority
while yet keeping control of the business. It rapidly identifies organizational flaws, inefficiencies,
and deviations that may be remedied promptly to attain a specified goal. Budgeting enables an

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organized and disciplined approach to issue resolution inside a company (Shim, Siegel, & Shim,
2011).
In controlling: Budgeting force and encourage management to do an early and comprehensive
analysis of their challenges. It instils in managers a feeling of caution and the importance of
conducting comprehensive study prior to making choices. It acts as a benchmark, basis, or
yardstick for evaluating the performance of companies' departments and individuals. Individual
managers can evaluate their own actions and achievements and take suitable measures to improve
their performance (Shim, Siegel, & Shim, 2011).
Limitations:
In planning: Budgets are estimated; they rely on projections that are not always correct. The
precision with which estimates are created indicates the budgetary control system's strength or
weakness. As a result, keep in mind when using the system that the budget is based on estimations
(Shim, Siegel, & Shim, 2011).
In controlling: Budgeting is a management tool, not a substitute for management. It is only a
management tool. Execution of the budget will not occur automatically. The program must
incorporate the entire organization in order to fulfil financial objectives. It is an expensive
technique: Budget management systems are costly to implement and operate owing to the
necessity for specialized personnel and other expenses. It is critical to remember that the cost of
implementing and maintaining a budgeting management system must exceed the benefits derived
from its use. Achievement levels are difficult to quantify; very high levels of performance may
result in overly tight budgets, lowering morale. Additionally, antagonism can emerge when
financial limits place an organization under an undue weight. Budget control is a finished function,
and as such, changes to the budget may have no effect on continuing operations (Shim, Siegel, &
Shim, 2011).

Conclusion:
To summarize, the prior article described the needs for data analysis, computation, and the
numerous budgeting components. Along with concrete evidence, such as excel sheets, examples
have been most effective in bolstering the piece's persuasiveness. Additionally, the article provided
guidance and assistance with budgeting to assist businesses in comprehending how budgeting may
be utilized to provide information on best resource allocation and to support control and decision-
making power.

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REFERENCE:
1. VnExpress (2021). ROA, ROE là gì? [online] vnexpress.net. Available at:
https://vnexpress.net/roa-roe-la-gi-4304366.html [Accessed 27 Apr. 2022].
2. TVSI (2022) CORPORATE OVERVIEW [Online]. Available at:
https://finance.tvsi.com.vn/Enterprises/OverView?Symbol=PNJ (Accessed: 27 April
2022).
3. Shim, J.K., Siegel, J.G. & Shim, A.I., (2011). Budgeting basics and beyond, Vol. 574.
John Wiley & Sons. (Accessed: 27 April 2022)
4. Le, M.T. (2022). Lợi nhuận trên mỗi cổ phần (EARNING PER SHARE - EPS) là gì?.
[online]. Available at: https://luatminhkhue.vn/loi-nhuan-tren-moi-co-phan-earning-per-
share-eps-la-gi.aspx [Accessed 28 Apr. 2022].
5. Dinh, T.D. (2022). Tỉ suất lợi nhuận gộp là gì? Công thức xác định và ý nghĩa. [online]
Available at: https://luatduonggia.vn/ti-suat-loi-nhuan-gop-la-gi-cong-thuc-xac-dinh-va-
y-
nghia/#:~:text=T%E1%BB%89%20su%E1%BA%A5t%20l%E1%BB%A3i%20nhu%E1
%BA%ADn%20g%E1%BB%99p%20(%25)%20%3D%20L%E1%BB%A3i%20nhu%E
1%BA%ADn%20g%E1%BB%99p%20%2F%20Doanh,nhu%E1%BA%ADn%20g%E1
%BB%99p%20%2F%20Doanh%20thu%20thu%E1%BA%A7n. [Accessed 28 Apr.
2022].

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