LIPC1150 Financial Decision Making L4 Assignment 01 Brief | DMU

Published: 01 May, 2025

Category	Assignment	Subject	Fiance
University	De Montfort University	Module Title	LIPC1150 Financial Decision Making

Assignment Title	Assignment 1 Individual Coursework
Level	4
Academic year	2025

LIPC1150 Assignment Brief

1. You have been asked by a client to advise on the financial position of two companies in a similar trade sector. You have been supplied with the following financial statements.

Income Statement for the year ended 31 March 2024

		James Ltd	Smith Ltd
	Notes	£000	£000
Revenue		638	493
Cost of sales		(331)	(297)
		––––––	––––––
Gross profit		307	196
Distribution costs		(36)	(29)
Administrative expenses	1	(99)	(46)
		––––––	––––––
Profit before taxation		172	121
Taxation		(21)	(22)
		––––––	––––––
Profit for the year		151	99
		======	======

Statement of Financial Position as at 31 March 2024

	Notes		James Ltd			Smith Ltd
	Notes		James Ltd			Smith Ltd
Non‐current assets (NBV):		£000	£000	£000	£000	£000	£000
Non‐current assets (NBV):
Property, plant and equipment	1			198			111
Current assets:
Inventory			60			58
Trade and other receivables			35			43
Cash and cash equivalents			2			–
			––––	97		––––	101
				––––			––––
Total assets				295			212
Equity and liabilities:				====			====
Equity and liabilities:
Share capital (£1 share each)				50			30
Retained earnings				161			66
				––––			––––
Non‐current liabilities:				211			96
Non‐current liabilities:
Borrowings			–			20
Current liabilities:
Trade and other payables	2	74			74
Current tax payable		10			12
Bank overdraft		–			10
		––––	84		––––	96
			––––	84		––––	116
				––––			––––
Total equity and liabilities				295			212
				====			====

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Notes to the financial statements:

The non‐current assets held by the companies are as follows:

	James Ltd	Smith Ltd
	£000	£000
Land and buildings	97	43
Fixtures and fittings	28	17
Motor vehicles	73	51
	––––	––––
	198	111

Trade and other payables for both companies include a proposed dividend. James Ltd has proposed a dividend of £50,000 and Smith Ltd a dividend of £40,000.

Required:

Calculate appropriate ratios (at least 2 from each group) and critically appraise the current financial position of each of the two companies.

2. Write down the main sources of finance available to the company and discuss them in detail.

3. Khan Limited trial balance at 31 March 2024 was as follows.



	Dr. (£)	Cr. (£)
Plant and Machinery (cost)	14,000
Plant and Machinery- accumulated depreciation			3,100
Equipment (cost)	9,500
Equipment - accumulated depreciation			2,000
Motor vehicle (purchased 1 April 2023)	12,000
Motor vehicle- accumulated depreciation			4,200
Opening inventory (stock)	5,600
Trade receivables	12,000
Trade payables			17,000
Cash in hand / Bank	15,610
Ordinary Share Capital of £1 share each			26,660
Revenue			167,150
Purchases	54,100
Returns outwards			1,200
Water bills	4,150
Delivery Cost	3,600
Discount allowed to customers	2,150
Wages and Salaries	42,100
Rent	14,300
Insurance	5,600
Miscellaneous expenses	26,600

	221,310		221,310

The following additional information is also available at 31 March 2024:

Closing inventory (stock) is £7,120
Salaries and wages of £3,610 were unpaid.
£670 of Rent was paid in advance at 31-03-2024.
Depreciation for the year to 31 March 2024 is to be provided as follows:

Plant and Machinery - 10% straight line method.

Equipment - 5% straight line method.

Motor vehicle - on a reducing balance basis at 10% per year.

Tax for the year was £3,200.

Required:

Prepare the Income Statement for the year ending 31st March 2024.
Prepare the Statement of Financial Position for the year ending 31st March 2024.

4. Explain the following accounting concepts with examples:

(1) Business Entity

(2) Prudence

Learning Outcomes of LIPC1150

LO1: Demonstrate knowledge of the major accounting concepts and users of financial statements.
LO2: Show an understanding of the various adjustments made in financial statements and an appreciation of the effect these adjustments have on the measurement of profit and valuation of assets.
LO3: Calculate and report financial ratios.

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You are required to:

Individually complete the coursework using Microsoft Word.

Save your file as a .docx file (only .docx files will be marked) and upload your narrated word file to the Learning Zone assignment folder.

Saving and uploading your work:

Your work should be saved as Your Pnumber and then your name.

Example: P2222222 Rina Mistry

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If you want to see the related solution of this brief, then click here: Financial Decision Making