3 rd Year Business Studies Higher Level Martin Quinn

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1 3 rd Year Business Studies igher Level Martin Quinn Final Accounts and Ratio Analysis No part of this publication may be copied, reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission from The Dublin School of Grinds. Ref: 3/bus/h/mq The Dublin School of Grinds Page 1 Martin Quinn

2 6-OUR CRAS COURSES MAY & JUNE 2017 TEACERS TAT WILL INCREASE YOUR CAO POINTS The final push for CAO points... 6th Year Fees 1 Course The Dublin School of Grinds is running 6-hour Crash Courses at the end of May and the beginning of June. These courses give students the best possible advantage as they prepare for the all-important State Examinations. One last ounce of effort could make all the difference Courses Courses Courses Courses 510 3rd Year Fees ow these courses will benefit you:»» They will give you an exam strategy plan to help you maximise your grade on the day»» They will provide you with a final boost of confidence before exam day»» They will offer you one last opportunity to avail of expert teaching before the State Examinations 1 Course Courses Courses 275 Subject Accounting Level Date Time Friday 2nd June Biology Biology Saturday 3rd June Business Friday 2nd June Chemistry Friday 2nd June Economics Sunday 4th June English English Sunday 4th June French Saturday 3rd June Geography Saturday 27th May Irish Saturday 3rd June Maths Paper 1 Saturday 27th May 5 Courses 445 Maths Paper 1 Saturday 3rd June Maths Paper 2 Maths Paper 2 Sunday 4th June Maths O Saturday 27th May Maths O Friday 2nd June Physics Sunday 4th June Spanish Friday 2nd June 3rd Year Stress Buster Course Fees: 50 Venue: The Stillorgan Plaza (next to Odeon cinema) Date: Saturday 20th May Time: 10:30am - 12:00pm To book, call us on or book online at DSOG Crash Courses May2017 2pg A4.indd 2 6th Year 4 Courses 360 Note: At these courses our teachers will predict what questions are most likely to appear on your exam paper. These questions will be covered in detail and our teachers will provide you with model 1 answers. This course has been specially developed to ease students worries and show them the techniques which will help them to stay calm both in the lead up to the State Examinations and on exam day itself. This course is tutored by Enda O Doherty, who has 25 years experience in the field. Crash Courses Timetable Subject Business Studies Level Date Time Saturday 27th May English Saturday 27th May French Irish Maths Science Saturday 3rd June Spanish Sunday 4th June = igher O = Ordinary Please note: all 6-our Crash Courses will take place in The Stillorgan Plaza (next door to Odeon Cinema). 05/05/ :17

3 Note: The Final Accounts questions comes up every year as Q4 Paper 2. The Final Accounts question includes a Trading, Profit and Loss Appropriation Account and a Balance Sheet 1. Key Tips Before starting question make sure you read thoroughly and on the Exam Paper mark where each of the entries should go. REMEMBER: In Part A all entries must be entered twice. Once in the Trading Profit and Loss and again in the Balance Sheet. Always include the Title on the TPL and BS as you receive marks for this. Eg. Trading, Profit and Loss Appropriation Account of LVG Ltd for year ending 31 December 2014 Balance Sheet of LVG Ltd for year ending 31 December Trading, Profit and Loss Appropriation Account Trading Account Sales Sale Returns = Net Sales We must then subtract the cost of sales from the Net Sales. Cost of Sales include opening stock, purchases, carriage inwards and import duty. Cost of goods sold = Cost of goods available for sale Closing Stock Gross Profit = Sales Cost of goods sold Profit and Loss Account Appropriation Account We now add the companies gains and subtract their expenses from the gross profit to get our Net Profit. All gains are recorded on the credit side of ledger accounts and on the Trial Balance. Credit Gains!!! All expenses are recorded on the debit side of ledger accounts and on the Trial Balance. Debit Expenses!!! ow does an organisation distribute its Net Profit? Dividends allocates a share of the profits to shareholders Reserves/Retained Earnings money kept by the business. Calculating dividends declared Find % of Issued Share Capital The Dublin School of Grinds Page 3 Martin Quinn

4 3. Balance Sheet Fixed Assets not directly affected by the daily transactions Current Assets value is directly affected by normal daily transactions Liabilities any debt owed by the business Working Capital = Current Assets Current Liabilities Net Assets = Fixed Assets Working Capital Capital Employed Sources of Finance Issued Shared Capital Reserves/Retained Earnings Long Term Loans 4. Adjustments NB: Follow these Rules Expenses due are added to expenses in the TPL Account and are a Current Liability Expenses prepaid are subtracted from expenses in the TPL Account and are a Current Asset. Gains due are added to gains in TPL Account and are entered as a Current Asset Gains prepaid are subtracted from gains in TPL Account and are entered as a Current Liability The Dublin School of Grinds Page 4 Martin Quinn

5 Trading Profit and Loss Appropriation Account Sales Less Sales Returns Less Cost of Sales Opening Stock Purchases Less Purchases Returns Add Carriage In Add Import Duty Less Closing Stock GROSS PROFIT Add Gains Rent Receivable Commission Receivable Interest Receivable (Add due and subtract prepaid) Less Expenses Insurance Advertising Rent Wages Bad Debits Depreciation Interest (Add due and subtract prepaid) NET PROFIT Less Dividends Add Opening Reserves RESERVES Fixed Assets Land Buildings Machinery Vehicles Equipment Current Assets Closing Stock Debtors Cash Expenses Prepaid Gains Due Current Liabilities Expenses Due Gains Prepaid Bank Overdraft Creditors Working Capital Total Net Assets Financed by: Issued Share Capital Reserves Long Term Loans Balance Sheet Cost Depr NBV The Dublin School of Grinds Page 5 Martin Quinn

6 5. Ratios The Final Accounts tell us if the Business is making a profit. owever, it also gives an opportunity to see if the Business in being well run. Profitability Ratios Return on Capital Employed: Net Profit x 100 Capital Employed Liquidity Ratios: Can the business pay off their debts? Current Ratio/Working Capital Ratio: Current Assets Current Liabilities Acid Test/Quick Ratio: Current Assets Closing Stock Current Liabilities Net Profit Margin: Net Profit x 100 Sales Gross Profit Margin: Gross Profit x 100 Sales Gross Profit Mark up: Gross Profit x 100 Cost of Goods Sold Stock Stock Turnover Cost of Sales Average Stock (Opening Stock + Closing Stock/2) The Dublin School of Grinds Page 6 Martin Quinn

7 PAST EXAM PAPERS 2016 Paper 2 Question 4 The Dublin School of Grinds Page 7 Martin Quinn

8 2014 Paper 2 Question 4 The Dublin School of Grinds Page 8 Martin Quinn

9 SAMPLE ANSWERS The Dublin School of Grinds Page 9 Martin Quinn

10 The Dublin School of Grinds Page 10 Martin Quinn

11 Martin Quinn 3rd Year Business Studies igher Level As an experienced examiner, Martin Quinn brings with him a deep understanding of the curriculum and marking scheme. Martin's extensive knowledge of the Business Studies syllabus, complemented by his ability to relate to students, means he is fully equipped to prepare students to achieve their maximum capabilities. OUR EXPERT TEACERS