Accounting for Non-Financial Managers

Case Study Assignment
Worth 10% of your Final Grade

Students have been assigned into groups for this assignment, since everyone has been in
groups for the business case that was just submitted. Each group will have 5 or 6 students, at the
end of the assignment there will be a peer evaluation which will be done in Moodle by 16:10 on
Friday Decemer 4th, 2020.
This assignment is based on a new business of your choice (from the ground up) – yes,
you’re the owners. Any idea of a business you have will work, so your dreams of running a
business will come true on paper.
Students will be creating a mock business that has been in operation for 12 months. At
the end of the 12-month period (your first fiscal year) you will be preparing all the financial
statements required to apply for a bank loan for the expansion of your business.
The assignment must be in both Word and Excel for calcuations and submitted online in
Moodle before 16:10 on Monday November 30, 2020. If the assignment or peer evaluation is not
submitted on time, there will be a 10% per day penalty (weekends count). All assignments
submitted by the due date will be returned at the last lecture on Monday December 7, 2020.
The Assignment submission is to be submitted the follow way:
• Part 1: Cover page,with names of the people in the group, and Group number / letter
• Part 2: The application (range of 1,000-2,000 words)
• Part 3: Financial statements (two columns – actual first year and projected second year),
• Part 4: Cash budget and revenue projection,for year two
• Part 5: Management accounting overview (1,000-2,000 words)
Details of each part is found below in this assignment.
Submission Details:
Assumption that there is no Pendamic (Covid-19)
However if you have a Pendamic business idea you can proceed with it,
So do not let the current ecomonic situation affect you business choices.
Use your imagination
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Given the following information for the business:
1. Each group member has initially contributed equal amounts of capital to a combined total
of $60,000 for the start of the company, and your company will have have a line of credit
of $30,000 if required at 12% per annum.
2. Rental of space for the business including Utilities will be $2,500 per month first year
and $2,600 the second year,
3. Sales for your first years operations should be realistic, all businesses start slow and all
members will have to work long hours to keep expenses down.
4. Regular business expenses will apply – such as insurance, business telephone
(cellphones), wages, advertising ,inventory, etc.
5. You will have to purchase a computer(s) and printer(s), a cash register (if your business
requires it), shelving, furniture, inventory, equipment, etc – whatever is required to
generate sales for the business.
Part 1: Cover page
The cover page of the assignment must indicate the name of the company, course number and
name, name and student numbers of all of the author(s), Group number, and date of the
submission.
Part 2: The Application
• A description of your business, with some details:
o Why your group decided to pick / do this business
o What the company does,
o Who is your competition,
o Where and how you are contacting the business,
o Information about when you started the business and how it was started;
o How your start up captial (initial investment) was used,
o How successful (or not) the first years was / is,
o What are the companies plans for the future (2nd year with details, and years 3 – 5
plans of the business),
▪ Expandtion plans if you have any as part of your companies future – be
realisic,
▪ Or how do you plan to keep your business running if your first year results
donot look good,
o Any other additional information you think the bank should know about your
business
• The reason for the bank loan (including future vision for the company),
• Repayment details and schedule.
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Part 3: Financial Statements
For the first fiscal year and subsequent forecasted year:
• Income Statement
• Statement of Shareholders Equity
• Balance Sheet
• Cash Flow Statement
• A document of ALL the financial ratios for the business after its first year and for the
forecasted second year of operations. All the ratios that can be calculated in the four
categories listed below, (with calculation full details and presentation as explained
below):
• Profitability
• Equity,
• Solvency
• Efficiency.
Part 4: Monthly cash budget for projection for the second year of operations (show total
cash revenue and cash expenditures separately)
Part 5: Management Accounting Overview
• Orgranization Chart
• Budgetary Control. and recommendations of controls, with explanation that the
management of the company will apply for the forecasted second year. Using Chapters
8,9,and 10 of the textbook.
Example of how the ratios will be presented in full detail for Part 3 (figures used below are
examples only):
Quick ratio
Cash ($21,120) + Short-term investments ($20,481) + Accounts Receivable ($16,849)
Total Current Liabilities ($80,610)
=
21,120 + 20,481 + 16,849
= 0.73
80,610