Vroom Limited - Management Accounting - Case Study Example

ACCOUNTING FOR MANAGERS Name: Tutor: Subject: Date: TASK 1 Stakeholders A These are group of individual that have legitimate ownership in a business. There are quit number of them in Vroom limited. Internal stakeholders in this business of Vroom limited are manager Freda Chuse. This is the main decision maker in the business. The other internal stakeholder is Lucia who is accountant in business. The internal stakeholders are mainly affected by earnings of the business. Other stakeholder’s external stakeholder is the government who are they are not working directly but assist in payment of training grants appreciate mechanics. B Freda, the business manager, is taking an action instructing the accountant Lucia to stop an action of exposing to the government the accrued interest of the business while still the business have financial constraint. This is mainly done by Freda to enable them still benefit from grants offered by the government to the company. Lucia takes a step to ask the manager on all matters acted by employees must be as stated by the boss of business. For smooth operation of company, there must be a consultation as by the memorandum of association and understanding, any action taken by the junior workers should be stated by the executive of the business. As per this case of Freda and Lucia hence the necessity to for Lucia to seek consultation for any consequence should not be a problem to employees. Ethical issues involved This is collective principles and morals that a business should adapt as it executes its activities. Business should comply with this ethics to enable running and relevant conduct with society to exist. Fundamental issues This essential ethics in the company that mainly explain the trust in a company. The accountant Lucia takes a step to obey openly the ethic of business operation. The effort is turned down by a manager who want to benefits breaking the ethic of fundamental by failing to be transparent to the government. The company still benefit from grants paid by the government of $ 100 000 to employ and train apprentice mechanics. The government is trusting that business has an unwavering trust that is contrary to reality to what the business is doing. Decision-Making Issues This ethic entails making a vital step in which it creates an impact in the company. The manager takes an act deciding that the business should not disclose the accrued interest so as to save guard the revenue from the government. The decision in a business is one that the running is determined from. Accordance to the decision should not have a problem to employees hence Vroom Limited is endangering the integrity of accountant Lucia. Diversity Issues According to the diversity of interest and point of view in business. Lucia takes a step to give her view according to knowledge in business. This turned down by the boss self-interest who end up earning more commission with an increase in output in the company. D Lucia takes a step to defer revenue. This action takes them evade being liable in payment of apprentice’s mechanics. The expense of the business still has a great impact despite not observing the ethics of the running of the business. This has shown that despite the act of violating ethics the business progress still hindered by expenses resulting in the due course. TASK 2 Horizontal layout It is the computation of information of the financial progress of the business. It is based on simple grouping of information sorted over a period of time. The liability has been a hindrance to the owners of business over time since the problem of taking as an asset. Due to this I take a guess of an account prepared where complained that on the horizontal layout of statement capital had to be with assets. Capital is treated to be a liability to the owner of the business; this depicts that business is taken to be independent of hence it owes the owner capital. During computation in drawing the statement, it should be computed next to liabilities since it is part of liability to the owner. Something given become an asset but, in this case, the capital is not a realized interest to the business hence should not be taken as an asset. Also asset is considered to be money in bank or property that the business realized in due course but a capital is a debt that the owner gave to the business. The owner of the business should understand that now with his/her capital is the liability levied to by the business to settle during the operation of the firm. TASK 3 SCOTT’S FINANCIAL POSITION Scott’s company has a financial statement that is has shown progress in its business activity. The company is financially stable as it does not run under loss. Using statement given when you compute the shareholder’s equity; Shareholder’s equity= Total assets - total liabilities = (2410-1345) =1065 From this results, it gives that the business has a health income flow. The business is performing well since on finding difference between the revenue of the business and expenses. Revenue=sales-less cost of sales =$(2600000-1620000) =$ 980000 Deductions= expenses + income tax + proposed dividends =$ (660000 + 95000 + 160 000) =$ 915 000 Profit = revenue – deductions =$ (980 000 – 915 000) =$ 65 000 We find still they accrue profit in the business hence business is working well. Using the ratio of computation, we still find that business is working well and need for investors to invest in the business. Efficiency Using inventory turnover to estimate the how business takes its operation. It is done by taking a ratio of sales with that of inventory for the trading period. This gives us day over which to sell inventory.  =sales/inventories =$ 2600000/$ 600000 = 4 Hence, Scott’s business is efficient as it sales inventories in four days. Liquidity This enables business to check the level of settling its current liabilities. According to the data from Scott’s Current asset = 1420 Current liability = 1145 Liquidity = current assets/current liability =1420/1145 =1.24017465 The performance of the business is that successful from the result obtained. Hence, the company is solvent since it can meet its debt. Investment ratio This help in gating value in a stock investment in the business. In the case of our Scott’s business, we can compute using a ratio of sales of the stock with that of the cost of stock. =Sales/cost =$2600000/$1620000 =1.60493827/4 periods in a year =0.401235, substituting in ratio x: 1 We have 0.4:1. Showing that each dollar in a year will have accrued 0.4 dollars. B The investor has a full mandate to invest in Scott’s and Co. Ltd. The profit accrued in this firm give an assurance to investor since the income flow in this business is quite active. An investor who invest with $ 200 000 will gate an interest of; =rate per dollar * $ 200 000 =0.4 * $ 200 000 =$ 80 000 Returns on the asset are one of the explicit fundamental parts that is used to determine the position of the business giving back the invested resources. With this company, it is giving more secure ground due to its level of profitability hence more room for investors. Reference Emett, S. A., & Nelson, M. W. (2015). Discussion of “The effect of alternative accounting measurement bases on investors’ assessments of managers’ stewardship”. Accounting, Organizations and Society. Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning. Read More