Financial Accounting and Reporting - Sage 50 - Case Study Example

Financial Accounting and Reporting Financial Accounting and Reporting Section A Sage 50 is business management software that has been developed by the Sage Group. Sage 50 is an accounting software with an impressive selection of management features, reporting options, inventory functionality as well as connected services that are widely used in both small and big business enterprises to help meet the accounting needs of the users. Sage 50 software has been used for credit control, document management, handling of sales and purchases, for stock control and order processing. This accounting software developed by the Sage Group has also been used in the generation of invoices, reports, sales letters and statements. This business management software integrates with other sage products as well as Microsoft applications thereby creating a business management system that offers multi user and multi company configurations and settings that is suitable for all kinds of businesses, whether small or big. This has therefore made this software popular in many businesses worldwide. The various features of Sage 50 that facilitate functions such as handling of sales and purchases, stock control and order processing has made this software very beneficial to the business community. This is in addition to the various advantages and benefits that are associated with it. There are several advantages that this accounting software is associated with. The first advantage of Sage 50 is that this business management software has the ability to simplify complex accounting task in an organization or business through its various features. This is done by the ability of the software to eliminate repetitive routines which in return speeds up the processes. By eliminating repetitive tasks and speeding up processes this business management software ends up making the process where it is used efficient. Sage 50 further helps in achieving tighter financial control and transformation of a process hence increased process efficiency. The other advantage or benefit of Sage 50 business management software is that this software allows businesses make the maximum use of accounts data. Sage 50 is based and developed on an integrated approach to business. This therefore makes it facilitate maximum use of account data by making all accounts facts and figures readily available to the users. This therefore allows for the use of this readily available data in a wider concept of work The third advantage of sage 50 as business management software is that it allows the management to quickly assess current trading situations and take the necessary actions to solve the problem. Sage 50 also allows the management to quickly seize opportunities. When the marketing department of a business or organization uses sage 50, they are able to analyze trends and also identify new targets that can be exploited by the business .The sales department can use sage 50 business management application to help them identify and see the best and worst customers. This information can be used by the management to quickly readjust to these situations hence boosting the overall performance of the business. Sage 50 is a business tool that possesses immense versatility. Sage 50 software can be used in various applications such as handling of sales and purchases, order processing and stock control. It can also be used in the generation of invoices, reports, statements as well as sales letters. Because of the several features and functions of sage 50 it helps in achieving an all round performance in all the areas of the activities of a business or an organization. This versatility also allows for the wide range application ands use of this software .Sage 50 has found application in virtually all kinds, types and sizes of businesses due to its versatility. The use of sage 50 in a business allows the users grow and also give the small businesses a helping hand in handling of various business issues. The e-marketing option of sage 50 fro example helps the small businesses using the software in handling the tough and complicated field of online marketing (Randolf, 2014). Sage 50 is business management software that is developed based on familiar procedures or methods that are used in manual accounting. This therefore make items produced by use of this application such as cheques, invoices, VAT returns and bank statements appear on screen exactly as though they have been manually generated. The other advantage of sage 50 software is that it is easy to use. Sage 50 possess a selection of management features as well as inventory functionalities and reporting options that are easy to use. Throughout the accounting software, there exists a lot of on-screen prompts that allow the sage 50 user to create files, access and update all financial information that require updating. Furthermore, this accounting software has a guide that help in complicated procedures. The sage 50 wizard is incorporated in the application in order to guide the user through complicated accounting and business management procedures step by step. In order to make its usage even more easy, sage 50 software comes with a full manual as well as operating instructions that are usually straight forward and easy to learn. This therefore allows the user to fully understand the operation of this business management software as well as understanding the various features that it has. The other advantage of using sage 50 is that the users of this software can easily access and get technical information and support from the vendors of the software. These services are provided by the vendors as after sale services to the clients. . The use of sage 50 in small has increased significantly due to a number of factors. Sage 50 has enabled small business manage their key processes effectively by covering all the accounting needs of the business from VAT returns to credit control. It has facilitated instant management of information and provision of accurate reports. Another impact it has had on small businesses is that it has helped save time and money as well as offering complete business control. Sage 50 has also facilitated easy use and display of information in a way that is beneficial to the users as well as allowing more people to work on the system at once. Sage 50 has also provided a comprehensive data storage and full data security. Therefore this business management software has impacted positively on businesses (Shelly, 2013). Despite the several advantages an benefits of sage 50 that have been discussed above, this business management software that was developed by Sage group has a couple of disadvantages. The first disadvantage of sage 50 is that the software has a single location inventory. The other disadvantage that limits the application of sage 50 is that this accounting software does not support multi currency hence limiting its use. Sage 50 does not support Mac. The final disadvantage of sage 50 is the cost of acquiring the software and the annual fees or costs that is associated with its use since it is a licensed accounting soft ware (Williamson, 2013). Learning about sage 50 operation and getting help Sage 50 accounting software normally comes with a manual that clearly guide s the user on how to use the software for various business management tasks .The sage 50 manual guides the user through the steps that are involved in setting up the business or organization sage platform, the setting up of the customer and supplier sections as well as some other essential tasks that include reporting. The manual further guides the user of sage 50 on how to manage the system files and other business services. The client is also enlightened by the manual on the system requirements for sage 50 application usage. This therefore greatly helps the user in fully understanding this application for accounting services (Williamson, 2013). Mistakes are usually natural in any given tasks that people are involved in. Therefore sage 50 has taken this into consideration and provided a platform or feature that helps the user correct his or her mistakes that may occur during the use of sage 50 software. The user is allowed to view his or her postings, find them, correct and delete the postings and transactions easily. This helps in correcting mistakes that may occur. In order to facilitate easy usage and learn about new features that are incorporated in sage 50 software, there are improved assistance features in this software. The software has a library of videos that helps in guiding the user through new areas and features hence helping the user to fully utilize the potential of sage 50 software in business management (Edenner, 2014). There are a variety of options that are easily and widely available to the user of sage 50 on getting help on the software. One option is getting help as one works. The user can get help using the in-product window and from the search tab in the Help section of the software. The user can look for any kind of help on sage 50 using this section. The second way of getting help is through the sage City which is an online community of other sage 50 users (Harry, 2014). The Sage City has a knowledge base where there are answers to frequently asked questions about sage 50 software and its usage. In addition to this, the sage city has a live chat that provide services such as customers services ,registration of the product as well as product support that can be accessed by login to the sage customer portal Training on the use of sage and its various applications is normally done through the sage university training. The sage university learning center enables the users to learn what is new and the latest training courses through videos and tutorials (Ellen, 2014). There also exist various classroom training courses in different areas as well as online courses that are taken at sage university. All theses are done in order to enable the users to fully understand the software and its various features and applications. Sage 50 software is distributed by various authorized vendors worldwide. These authorized vendors also offer after sale services and technical support to the clients. The users of sage 50 can also contact sage for technical support as well as for customer care services through its telephone contacts and through the company website (Ainembazi, 2014). Recommendations Sage 50 software is accounting software that has several advantages. Though it has some disadvantage, the benefits associated with this software far much outweighs the disadvantages. Therefore this software can be used for accounting services in both small and big businesses and organizations. However, proper training on the use is required in order to fully exploit all the features that are incorporated in the sage 50 software. Section B Preparation of the NEXT plc and its subsidiaries financial statement were prepared in accordance with the International Financial Reporting Standards that have been adopted for use in the European Unions. It was also done in accordance with the companies Act of the year 2006.In addition the NEXT PLC financial statement for 2013 financial year was prepared on historical cost basis apart from in the case of only some financial instruments, assets and liabilities and pension assets which are measured based on fair value. The financial statement was also done on the same accounting policies that had been used the previous year. The chosen item for analysis from the NEXT PLC 2013 financial statement is inventories. Inventories are the raw materials, the goods that are in the making process as well as he finished goods that belong to NEXT PLC. The inventories are usually considered to be a portion of the assets of the business that are ready or will be ready for sale in the near future. Inventories normally represent the most important assets that many businesses have. This is because the turnover that from these inventories usually represent on of the main on primary sources of revenue. The inventory turnover also represents the subsequent earnings of the shareholders or owners of the company. In this particular financial statement belonging to the NEXT PLC, the inventories are put together with the current assets, customer and other receivables, other financial assets as well as cash and short term deposits. This grouping is done in the unaudited consolidated NEXT PLC balance sheet. Inventories or stocks for the Next PLC 2013 financial year were valued at a cost lower than the standard cost or the net realizable monetary value of the stocks. This is done to reduce the effects of depreciation of the value of the stock on the financial position NEXT PLC. On the other hand the net realizable value of the stocks of inventories at PLC is based on an estimated selling price of the stocks less further costs that are to be incurred during the disposal of the stocks. This is also done to protect the Groups financial position from diverse effects that may result during the disposal of the valued stocks. Current assets Inventories 331.8 371.9 Customer and other receivables 718.1 699.1 Other financial assets 6 21.6 12.5 Cash and short term deposits 136.3 56.4   _________ _________ 1,207.8 1,139.9 Inventories 2013 £m 2012 £m Merchandise stocks 331.8 366.0 Property development stocks – 5.9 331.8 371.9 In the financial statement for NEXT PLC for the year 2013, the inventories that were included in the calculations were divided into two. The inventories comprised of merchandizing stocks and the property development stocks. In 2013, the merchandising stocks for the Group was valued at £m 331 while the property development stock was valued at zero. This is in contrast to 2012 where the merchandizing tock was valued at £m336 and property development stock at £m5.9.The total value of the inventories for the year 2013 was a summation of the value of the merchandising stocks and the value of the property development stocks and it stood at £m 331.8.This is lower than the value of the Group’s inventories in the previous financial year which was £m 371.9. In order to reduce the reduction of the value of the inventories in the 2013 financial year, the NEXT PLC financial statement reviews the various risks that can cause the loss in value. The financial statement for the year 2013 indicates that NEXT PLC reviews the warehousing as well as the distributions that supports the business throughout its entire operations. The risks that are listed in the financial year that might cause decrease in the value of the inventories include interruption that may result from physical damage of stocks, restricted access, and shortage in capacity. Insufficient processes and failure in delivery services are also included. The financial statement further states that planning process is in place in order to ensure that the NEXT PLC has sufficient storage handling capacity for the current and expected business volumes that cover both short as well as long terms cases. The financial statement also states that there are monitoring plans that are usually executed in order to continually ensure that the goods belonging to NEXT PLC are delivered to the NEXT retail shops, directory customers or clients and the third party clients. The monitoring is done to ensure that the delivery to the above three stated parties are done in a manner that is not only timely but also cost efficient. These are done in order to ensure that the valuation of the inventories or stocks does not deviate widely in a manner that can affect the financial position of the business. Notes 2013 £m 2012 £m ASSETS AND LIABILITIES Non-current assets Property, plant & equipment 10 537.3 581.9 Intangible assets 11 44.8 45.6 Interests in associates and other investments 12 7.2 7.1 Defined benefit pension surplus 21 65.6 35.1 Other financial assets 15 30.9 44.6 685.8 714.3 Current assets Inventories 13 331.8 371.9 Customer and other receivables 14 718.1 699.1 Other financial assets 15 21.6 12.5 Cash and short term deposits 16 136.3 56.4 1,207.8 1,139.9 Total assets 1,893.6 1,854.2 NEXT PLC Financial Statement Note 13 The NEXT PLC financial statement has also has Notes to its financial statement at the end of the document. The notes to the financial statement have been included to explain specific items in the statement and also to provide a more comprehensive and easy to understand assessment of the financial conditions of NEXT PLC. The notes are divided into different sections with each section talking about a given item. In the NEXT PLC financial statement for the 2013 financial year, Note 13 of the financial statement talks about the Group’s inventories. From the financial statement’s note 13, it is clear that the group has two kinds of inventories. These are the merchandising stocks and the property development stocks. The merchandizing stocks are the goods or stocks that the company has and that will be sold in the near future. Property development stocks on the other hand refer to the items or goods that the company has that are to be used for development of property. These two groups of inventories are valued according to the NEXT PLC’s accounting policies that are stated in the accounting policy section of the financial statement. References Ainembazi, A., 2014. Top ten best accounting softwares. [Online] (updated 30/08/2013) Available at [Accessed 22/5/2014] Ellen, K, 2014. Sage 50 software review. [Online] (Updated 20/4/2014) Available at [Accessed 22/5/2014] Edenner, K, 2014. Accounting softwares. [Online] (Updated 12/2/2014) Available at < http://www.kashflow.com/features/accounting-features > [Accessed on 22/5/2012] Harry, J, 2014. Accounting review. The Journal of the American Accounting Association, 12(5), pp.66-89. Koploy, M., 2014. Business accounting softwares. [Online](Updated 22/5/2014) Available at (Accessed 22/5/2014) Randolf, J., 2014.A strategy for finding the right accounting software. [Online] (Updated 2/2/2014) Available at < http://www.journalofaccountancy.com/issues/2003/sep/astrategyforfindingtherightware > [Accessed 22/5/2014] Shelly, E., 2013. Six tips to for choosing business accounting software. [Online] (Updated 19/10/2013) Available at [Accessed 22/5/2014] Stevenson, P., 2014. Accounting softwares 2014 [Online] (Updated on 31/3/2014) Available at < www.review.toptenreviews.com/ > (Accessed on 22/5/2014) Williamson, J., 2013. Accounting softwares review. [Online] (Updated 30/12/2013) Available at (Accessed 22/5/2014) Willian, K., 2014. Small business accounts software [Online] (Updated 13/2/2014) Available at < http://financialsoft.about.com/od/smallbusiness/ss/Accounting_Soft_2.htm > (Accessed 22/5/2014) Read More