FNS50215 Diploma Of Accounting10

Each assessment component is recorded as either Satisfactory (S) or Not Yet Satisfactory (NYS). A student can only achieve competence when all assessment components listed under procedures and specifications of the assessment section are Satisfactory. Your trainer will give you feedback after the completion of each assessment. A student who is assessed as NYS is eligible for re-assessment. Should the student fail to submit the assessment, a result outcome of Did Not Submit (DNS) will be recorded.

Principles of Assessment

Based on Clauses 1.8 – 1.12 from the Australian Standards Quality Assurance’s (ASQA) Standards for Registered Training Organizations  (RTO) 2015, the learner would be assessed based on the following principles:

Fairness - (1) the individual learner’s needs are considered in the assessment process, (2)  where appropriate, reasonable adjustments are applied by the RTO to take into account the individual leaner’s needs and, (3) the RTO informs the leaner about the assessment process, and provides the learner with the opportunity to challenge the result of the assessment and be reassessed if necessary.

Flexibility – assessment is flexible to the individual learner by; (1) reflecting the learner’s needs, (2) assessing competencies held by the learner no matter how or where they have been acquired and, (3) the unit of competency and associated assessment requirements, and the individual.

Validity    – (1) requires that assessment against the unit/s of competency and the associated assessment requirements covers the broad range of skills and knowledge, (2) assessment of knowledge and skills is integrated with their practical application, (3) assessment to be based on evidence that demonstrates tat a leaner could demonstrate these skills and knowledge in other similar situations and, (4) judgement of competence is based on evidence of learner performance that is aligned to the unit/s of competency and associated assessment requirements.

Reliability – evidence presented for assessment is consistently interpreted and assessment results are comparable irrespective of the assessor conducting the assessment

Rules of Evidence

Validity       – the assessor is assured that the learner has the skills, knowledge and attributes, as described in the module of unit of competency and associated assessment requirements.

Sufficiency – the assessor is assured that the quality, quantity and relevance of the assessment evidence enables a judgement to be made of a learner’s competency.

Authenticity – the assessor is assured that the evidence presented for assessment is the learner’s own work. This would mean that any form of plagiarism or copying of other’s work may not be permitted and would be deemed strictly as a ‘Not Yet Competent’ grading.

Currency    – the assessor is assured that the assessment evidence demonstrates current competency. This requires the assessment evidence to be from the present or the very recent past.

Resources required for this Assessment

• All documents must be created using Microsoft Office suites i.e., MS Word, Excel, PowerPoint
• Upon completion, submit the assessment via the student learning management system to your trainer along with the completed assessment coversheet.
• Refer the notes on eLearning to answer the tasks
• Any additional material will be provided by Trainer

Instructions for Students

Please read the following instructions carefully

• This assessment is to be completed according to the instructions given by your assessor.
• Students are allowed to take this assessment home.
• Feedback on each task will be provided to enable you to determine how your work could be improved. You will be provided with feedback on your work within 2 weeks of the assessment due date.
• Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge. You will be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of competency.
• If you are not sure about any aspect of this assessment, please ask for clarification from your assessor.
• Please refer to the College re-assessment and re-enrolment policy for more information.

When reviewing the financial statements and supporting notes of a reporting entity, is it possible to find out about all the individual types of expenses and income that the entity has incurred or received? If not, how does management determine which expenses and income should be disclosed?

The financial statements of any entity, whether profit making or not, small or big and dealing in any industry are guided and are being prepared in accordance with the International Financial Reporting Standards and the local Generally Accepted Accounting Principles. While reviewing the financial statements, it is very much possible to identify the individual types of incomes and expenses that pertain or accrue to the entity. The notes to account that generally are the detailed version of the headings on the consolidated profit and loss account and the statement of financial position have all the detailed information. For example in the below screenshot, the extract of the annual report one of the major companies in USA, Samsung Electronics has been attached (Jefferson, 2017). This shows the view of the consolidated profit and loss account.

In this there are several notes like 32, 24, 25, 12, 27, 28, etc which will show the detailed information of the incomes and expenses as contained in the profit and loss account. In case note 32 is analysed, we find that that the individual types of incomes are being classified on the basis of the operating segments which are CE, IM, Harman, semiconductors, DP and many others. The company has also shown the revenue that is being earned in various regions or geographies.

Similarly, the expenses are also grouped based on the nature of the expenses like the cost of goods sold, the purchases, the wages and salaries of the employees, the pension, the depreciation and amortization expenses, welfare, commission and service charges, advertising and sales promotion expenditure and others which are very small in amount.

Similarly, there is also a break up given for selling and administrative expenses like transportation, warranty, packaging, etc. IN this way, expenses can be determined and recognised in the financial statements however not all of them are reported. The management of the company first determines the materiality level and the cut off amount beyond which the individual expenses and incomes should be reported in the financial statements. Rest all the other incomes and expenses which are below the given value limit or below materiality are classified under the head “Others”. The materiality limit is generally determined as a percentage of the sales or the profitability and then the management reports all the critical and significant heads of expenses and incomes in the notes to accounts leaving the rest to the accounted under the head others (Dichev, 2017).

2.Does the statement of comprehensive income provide a reconciliation of opening and closing retained earnings? If not, where can such a reconciliation be found?

The statement of comprehensive income or the consolidated profit and loss account does not gives the opening and closing balances of the retained earnings and does not gives any sort of reconciliation. Retained earnings is a part of the equity or the profit that has been earned by the company over the period of time and which has not been distributed but retained in business for further reinvestment. The only change in it year on year is the adjustment of the profit earned or loss incurred during the year. The profit after distribution of dividend is added back and the loss incurred is deducted from the prior year’s balance (Alexander, 2016). Since this is part of the equity or the owner’s capital, the same is shown in the consolidated statement of changes in equity.

From the above statement, it can be found that the entire reconciliation has been given. The opening balance was $ 170710 Mn, the profit for the year was $ 36553Mn, the dividend distributed and the retirement of the treasury stock was $5965 and $ 10496 Mn which makes the closing balance of the retained earnings to be $ 190801 Mn.

3.When is it permissible for a reporting entity to treat expenses directly as a reduction to retained earnings, rather than including them as part of the period's profit or loss?

The accounting standards do give a note and way out to deal with the expenses relating to the prior period if it has been missed out in the previous year of reporting by the reporting entity. As the prior period item cannot be directly adjusted in the profit and loss account of the entity in the current year, AASB 108 gives the way forward. It requires that all the prior period errors can be corrected by directly adjusting the same against the balance of the retained earnings that has been carried forward from the last year and by reinstating the comparative information in the current year reporting (Goldmann, 2016).

This is also a general statement or a guideline in the accounting standard which states that when the entity applies accounting standard for the first time, then any retrospective change should be made through adjustment in the retained earnings and not the profit and loss account simple because of the reason that the adjustments pertain to the last or prior years and it should not have an impact on current year’s profitability or else it would lead to misrepresentation of the facts.

References

Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-431.

Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), 617-632. Retrieved from https://doi.org/10.1080/00014788.2017.1299620

Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of Polish Business. Financial Environment and Business Development, 4, 103-112. Retrieved from https://doi.org/10.1007/978-3-319-39919-5_9

Jefferson, M. (2017). Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland . Technological Forecasting and Social Change, 353-354.