ASSIGNMENT 1ACCT11059 ACCOUNTING, LEARNING AND

ONLINE COMMUNICATIONNicole Nelson 24/3/2017

Step 1

Ideas, reflections and reactions to reading the Introduction and Chapter 1 in the Study Guide.

Submitted as assignment and found on my blog https://nicnelsonblog.wordpress.com/2017/02/25/first-blog-post/

Step 2

Set up your personal profile on Moodle, include a few words introducing yourself in the Description box, include a photo and include a link to your blog. https://moodle.cqu.edu.au/user/view.php?id=54146&course=6856

And in the Blog Links Forum in the Communication box https://moodle.cqu.edu.au/mod/forum/discuss.php?d=192770#p542394

Set up your personal profile on Moodle and your blog. https://nicnelsonblog.wordpress.com/2017/02/26/starting-uni-is-this-a-mid-life-crisis/

Step 3

Identify your own company, posting on your blog some background information on your company and its industry, and commenting on other people’s blogs.

Best of the Best https://nicnelsonblog.wordpress.com/2017/03/18/best-of-the-best-acct11059/ includes the financials and spreadsheet.

From my blog post:

Wow I was so excited when I received my company and noted it was in the Travel & Leisure  industry. I thought fan bloody tastic, I've worked in the travel industry for more than 20 years. The company is called Best of the Best PLC so I was feeling pumped, it doesn't take much to motivate me. I went straight to their website and saw an image of a Porsche and a title Win Your Dream Car, this left me a little confused, I wasn't expecting that from a

company in the Travel & Leisure industry. 

Best of the Best PLC is a spot the ball competition where you purchase tickets to enter  the competition then mark the spot on an image where you think the ball has been digitally removed, if your chosen as the winner you could win your dream car, a winner is drawn every week. The business began in 1999 by its Founder and CEO William Hindmarsh and in 2006 became a UK registered company under the AIM (Alternate Investment Market, a sub-market of the London Stock Exchange).

As stated on the company's website, 'BOTB operates from seven UK and one international airport site and the Westfield shopping centre in West London.' This is where the businesses began however it has significantly grown in popularity with its online operations, selling tickets from as low as £2. The success of this company has been because it has embraced the latest technologies and increased its marketing for its website and now an App. It's

online revenue more than doubled in 2015. Another reason for its success could be due to the companies Commercial Director Rupert Garson who has an accounting background and MBA.

At first, I was really dubious about this business, I mean it's gambling right? Well yes, it is but there are Casinos around the world and lotto and I've participated in those several times (ah the memories of my time in Vegas come flooding back). As you can imagine, the biggest struggle for the company is trust, several people had seen the cars on display at the airports and would never buy a ticket, thinking yeah right, I'd never win, they probably only draw on winner a year, who actually win these cars? To combat this, they set up a YouTube site which films the winners getting a knock on their front door telling them they've won, here's a summary of last year’s winners,  BOTB 2016. These are also shared on their Facebook page, great marketing at a very low cost, however they have also significantly invested in marketing campaigns through digital mediums and TV in 2016!  Quoted from their website 'through the powers of social media, the walls of doubt surrounding the supercar giveaway company have started to crumble.' 

The company’s profits have grown and grown each year and they have even branched out overseas with their subsidiary companies so I'm sure their investors would be very happy. Their online revenue increased a further 40.6% last year to £7.06 million (2015: £5.02 million) – representing 70.5% of total revenue. What kind of investors are these people though, do they take advantage of those with gambling problems? Are they sinners in some peoples eyes? Here is a great article as the author Tariq Dennison talks about ethic vs vice stocks, 'incredibly profitable sector that does not necessarily need economies of scale, but certainly depends on volume for high absolute profits' in his 77 largest casino stocks by market cap 2017.

This company seems to change people's lives, add value as mentioned in Martin's study guide, and have continued to grow and adapt and embrace the changes to technology, each year looking into their business and coming up with fresh ideas. They have also been able to keep their Directors the same which creates trust and stability. I do believe though that rather than the travel and leisure industry it should be other amusement and recreation activities not elsewhere classified.

Identify clearly what your firm does, noted down any key concepts and questions.

Apart from those mentioned within my blog I had the following KCQ’s after reading their financials.

What stuck out to me the most was the increase in online revenues over the years;

2013 it increased 46.5 per cent. to £2.7 million representing 42.7 per cent. of total; 2014 increased by 13.9 per cent, representing 45.1 per cent. of total revenue; 2015 increased by 57.5% to £5.0 million (2014: £3.19 million) – representing 57.3% of total revenue; 2016 increased by 40.6% to £7.06 million (2015: £5.02 million) – representing 70.5% of total

revenue.This is HUGE, what a massive success story for this company, this is obviously where their clientele are and they are continuing to find new ways to increase this market share such as offering free games.

I noticed their revenues at physical locations increased slightly in 2013 and 2014 and way never mentioned again in the opening reports, I wonder how long the airport and shopping centre stands would last for. I noticed the net assets reduced in 2015 and 2016, the cars used as display cars at the shopping centres and airports are purchased and owned by the company, these are not used as prizes, the winner receives a brand new car straight from the dealer. The reason for the reduction in assets is because they are now in less physical locations so needing less cars to display.

In 2015 they began weekly draws of the prize cars from a fortnightly draw, the following years their revenue and profits still increased so they must have significantly increased the amount of people going into the competition to cover the extra costs.

In 2015 there was a special dividend of 14.5 pence per share amounting to approximately £1.32 million, pursuant to a court approved capital reduction, paid to shareholders on 19 December 2014.

I wondered why the total liabilities was stated twice one after the other in the Balance Sheet, this meant the company does not have non-current liabilities as total liabilities = total current liabilities + total non-current liabilities.

In the Statement of Movement in Equity I wondered why the opening balance was different to the closing balance from 2015 so I looked into the foot notes and found;

PRIOR YEAR ADJUSTMENT

During December 2015, HMRC made a decision in favour of the Company allowing overpaid VAT to be reclaimed dating back to December 2010.

Also during April 2016 a Corporation Tax Research & Development claim was submitted retrospectively for the years ended 30th April 2015 and 2014. The claim was refunded to the Company in the year to 30 April 2016. The impact of these amendments at 1st May 2015 was an increase in retained earnings of £473,717, an increase of £419,116 in receivables due within one year and a decrease in tax payable of £54,601. The year ended 30th April 2015 has been restated in the financial statements to ensure comparability is maintained. Revenue was increased by £173,670, administrative expenses increased by £26,050 and income tax reduced by £47,968. This meant I needed to insert a Prior Year Adjustment on my spreadsheet.

I also noted in 2016 the tax assessed for the year was lower than the standard rate of corporation tax in the UK. The different was explained in the footnotes and I have copied below;

2016 2015As restated

£ £Profit on ordinary activities before income tax 1,059,655 955,276Profit on ordinary activities multiplied by the standard rateOf corporation tax in the UK of 20% (2015-20.842%) 211,931 199,099

Effects of:Tax purposesCapital allowances in excess of depreciation (42,901) (21,835)Tax effect of overseas subsidiaries 16,117 (8,083)Deferred taxation 41,862 20,953Research & Development enhanced deduction (97,500) (75,124)Prior year adjustment and interest - Tax expense 125,761 115,010

Comments on blogs: Monal Ghosal , Kate , Donna ,Liz63975

Comments in Forum Grace Lynam , April Thomson

Top Three Blogs: As this question was in the ‘Know Your Firm’ step I started to judge the blogs of those who had the best blog of step 3. Then as I read other students favourites I saw it was on the entire blog so I’ve got a bit of both in my judging.

Montana – I found the style Montanna presented her Step 3 in was very easy to read, I much prefer those who have put everything on the blog rather than a word document. Montana has gone into a good amount of detail for readers to understand her company and not too much detail to bore them, leaving the full details to go into assignment 1. She has provided images, videos and links to further resources.

Jessica Fitzgerald I found Jessica's blog easy to navigate, she used her own photo on the main page using the assignment of the unit, which I liked. The blogs are large with great images and it’s easy to scroll down to find all her posts. I enjoyed Jessica’s step 3, her company is fun and she gave a good introduction and linkage to the financials.

Billy Van Moolenbroek Billy has a great sense of humor and I like his funny images. The layout of his page ‘You Can Account on Me!’ is easy to follow. I like that his posts are brief and to the point that keeps the readers entertained. Billy even has a poll for our unit.

Step 4

Company Financial Statement Spreadsheet uploaded to https://nicnelsonblog.wordpress.com/2017/03/18/best-of-the-best-acct11059/

Step 5

Ideas, reflections and reactions to reading Chapter 2 and Chapter 3 (Sections 3.1 and 3.2) in the Study Guide.

Reading Chapter 2 of the Study Guide I was first introduced to the concept that financial statements are not just for the firm, many people could be interested in them. I know that the taxation office would be interested in the firm’s financials as they need to ensure the amount of tax the firms pay is correct however I hadn’t fully understood that possibly the employees of a firm would be interested in them, it could provide them with an insight into the stability of their employer, they may see the huge turnover of their employer,

however not realise the expenses that are incurred before the profit is made. The competitors; a competing company could find some valuable information in the financials, they could see an investment in a subsidy or a purchase of an asset before it was announced in the media. If there was a large firm in a small town, the activities of that businesses would interest the entire town, the supermarkets, the families that lived there, the employees, the Real Estate Agent. If that businesses was to close down it could close the town. In the north of our state the Pilbara region is really feeling the effects of the downturn in mining, in the current economic climate. The area consists of some fairly decent sized regional cities and towns that have been built around one industry, and when that industry is in a downturn, or the resources run out, what is left for those towns? This article gave a glim outlook on the future back in 2014 http://www.abc.net.au/news/2014-05-21/mining-boom-bust-could-leave-pilbara-littered-with-ghost-towns/5465836 and this article highlights the loss to the property market less than six months ago http://www.heraldsun.com.au/news/national/property-values-in-parts-of-was-pilbara-fall-75-per-cent-after-mining-boom/news-story/e10d38fdbc03eb3b85900ddb0ec7c571 Double entry accounting does not tell that story, but I think if you understand how to read them you can get hints of the future for that business, on occasions. Sometimes events such as the Terrorist Attacks on 9-11 or the Bali Bombings, can have an immediate effect that no one could have predicted. However, if the current Management weren’t running the business well and making poor decisions this could be picked up. Personally, I have looked at a firm’s financials when I was considering purchasing a business. I requested the last three years, this gave be a better view compared to just the last year, with economics there are always ups and downs. I was open to moving for the right business, so I looked at the financials of Travel Agencies in Broome, Denmark and Geraldton in Western Australia, eventually choosing the Geraldton business. I was keen to ensure the business was making enough to cover wages for the employees and that these businesses were not only surviving because the owner did all the work in the business (I believe to be a successful business the owner needs to work on the business not just in it). When I received a copy of these financials I took them in good faith, I believed they planned on continuing operations (going concern) and that everything within those statements were relevant of that time.

What really shocked me in the readings was that the Management of a firm is responsible for putting the financials together and presenting them to the public, I really would have thought this responsibility would have been the owners. Sure, they would delegate it to Management but I thought the Australian Accounting Standards Board (AASB) Conceptual Framework would hold the Directors/Owners responsible not the workers.

As the world is full of a huge array of businesses trading in various business markets, it is difficult to have one set of rules for producing financial statements. In Australia, the standards are set by the AASB these are based on the International Standards developed by the International Accounting Standards Board (IASB), why reinvent the wheel right? This makes complete sense, as companies don’t just trade and exchange on their doorstep, and markets can have a worldwide influence. It is the task of the Australian Securities and Investments Commission (ASIC) to ensure Australian companies adhere to these standards as stated in the Corporations Act. This is why, if you had the responsibility of producing these financial statements, you should ensure you or your supervisor has the appropriate qualifications, or better yet hire an accountant.

They are registered in one of the three main bodies who agree to take all reasonable steps to ensure that the statements produced comply with the standards. However, no one rule could apply to all these businesses and their activities, so the AASB has a conceptual framework which generally accepted accounting principles or GAAP for short, there are minimum standards which can be used because keeping up-to-date with all of them would be impossible.

Chapter 2 also states that financial Statements are put together using accrual accounting, this concept allows the business to include every financial activity it conducted on that day, not just cash. For example, when I go to our local IGA supermarket, I will pay for everything on my credit card, because I like my frequent flyer points (that’s my families free holiday every three years). That business would not receive those funds from the bank for a day or two. When I go to the same supermarket, but on behalf of my work, I charge the expenses to my employers account. This account is summarised each month then paid. Accrual accounting allows that supermarket to include my transactions for the day’s activities when I purchase them not when they receive the cash. It is up to the Managers of that supermarket to ensure my employer pays the account monthly and the bank pays the correct the amount for the credit card takings on that day. It’s also the Manages responsibility to ensure those financial records are in order, tallied, balanced and presented in the financial statements and can afford to carry on with that business without those funds being immediately received.

Chapter 3 gave me a great brief, straight to the point, definition of each of the reports contained within Financial Statements. I was glad for this as I believe everything the CEO writes up in the opening of the document and normally just skim over the details. This unit will help me understand that detail and not be convinced by their marketing techniques. Martin explains one reports is the Income Statement, also known as the Profit and Loss Statement, this is a summary of a firm’s revenue and expenses for a particular time, generally one year. This can be used to see what really happened in a firm’s activities over that year and when compared to previous years can tell a story of why and how their income has increased, how their profits have increased or if their expenses have increased or decreased. The after-tax profit or loss stated on this report would in turn affect the equity of the owners or investors.

Also included is a Balance Sheet, together with the Income Statement, Martin states they represent all five elements of accounting: assets, liabilities, equity, revenue and expenses. The Balance Sheet or Statement of Financial Statement is a summary of the financial balances on that day it is prepared. It includes the assets and liabilities which in turn affect the equity of that firm on that day, accrual accounting. The assets are listed as current assets which is cash, any money owed to them from their debtors and any stock which could be quickly sold. Current liabilities is the opposite to current assets, so the cash the firm expects to pay out in the year such as invoices, interest, dividends and taxes. Non-current assets are things that can’t be turned into cash quickly like plant and equipment and non-current liabilities are bills that are not due within a short period or year, such as a long-term loan.

Next is the Cash Flow Statement which first opens with the balance carried over from the previous year’s statement then it works through everything a firm has brought in in sales revenue and everything it has spent in expenses. The Financial Statements may come out annually however a Cash Flow Statement should be

produced each month, to keep a tight eye on what is happening in that firm. Generally, these are produced with the columns of previous years balances on one side and the current amount on the other, giving you a good indication on the firms cash. The final balance is the firms cash listed in the balance sheet.

Lastly is the Stakeholders Equity which shows what the investors own in assets or their loss. The firms profit or loss is transferred to equity at the end of that period also included are any dividends paid or share issues.

In summary, these two chapters have explained to me why firms need to produce and present financial statements. I can’t say it was ‘can’t take my eyes off’ type of reading however very important when being introduced to accounting as I am in this unit.

Step 6

Provide (and receive feedback) to three other students in our unit on their draft assignment.

PEER FEEDBACK SHEET: ASS#1

Feedback From: Nicole Nelson https://nicnelsonblog.wordpress.com

Feedback To: Natasha Hodgson https://accountingwithtash.wordpress.com

My Comments

Step 1

KCQs

Great job on this step, I love the way you explained the joy of learning with the story about your son, it’s life changing. You have a great understanding of accounting with thanks to your work experience and it shows, your explanation of the farm purchase shows a great understanding of the accounting principles. I especially liked the articles you linked of the Census and the ATO, I hadn’t read that about the ATO. I save all my Uni work in the Cloud, love it. You also took on board the feedback from others from your Draft into your final which ended in a fantastic final submission.

Step 2

Introductory words in Description boxPhoto and description Link to your blog/Set up blog

Your introduction in Moddle is great and you have a linked your blog, added a photo and put a description on your photo.I enjoy your blog and love the Retro style. I always enjoy reading your latest additions.

Step 3 Background information on company

Comments/KCQs

Comments on other’s blogs

Your company McBride plc’s tab on investors is great, has heaps of information in there. There is an ‘a’ missing at the start ‘Initially I was tad disappointed’. Lucky you that this company produces such clear and award winning Annual Reports, I LOVE that they put comparisons in as images. Under the Revenue and Adjusted Operating Profit there is a t missing ‘My initial though was that they’. I too immediately noticed the reduced revenue and increase in profits so I was so glad that you provided a really good explanation as to why and your ‘tipping point theory’. You

have done a fabulous job on your ‘know your company’ step, I’d recommend adding a closing summary paragraph to end it nicely. You have commented on many blogs, helped lots of people on Facebook and on Moddle, great effort when also working full time and juggling a family.

Step 4 Input company’s financial statement

This is easy for you and I’m not sure us non-accountants can recommend much. Maybe you could put the formula in from closing balance of the year to the opening balance of the next year under Equity rather than just typing it in, this is how I noticed mine were different one year.

Step 5

KCQs

Great work, I like your trust point with the banks, what if we had more choice? I also like how you have reflected and referred back to your Chapter 1 step. The Youtube clip on accrual accounting was good. You have understood Chapter 2 and described this well in your own works, giving an example of a farming transaction.

Step 6 Feedback to others

N/A

Overall ASS#1: Really great job, you have a very good understanding of what has been taught so far and I can tell you are really enjoying this unit.

PEER FEEDBACK SHEET: ASS#1

Feedback From: Nicole Nelson https://nicnelsonblog.wordpress.com

Feedback To: Helen Sternick https://helensternick.wordpress.com/

My Comments

Step 1

KCQs

I liked your summary, especially the concept that the variety of businesses in town create jobs. I thought you could have mentioned some KCQ about the introduction namely the on-line communication and Marin’s views on learning. Did you have an opinion or questions on that component? I liked how you explained your experience with accounts in Local Government however maybe you could have explained how this linked to Chapter one, which it did, just explain what the chapter is stating (in your own words) then apply it to your experience.

Step 2

Introductory words in Description boxPhoto and description Link to your blog/Set up blog

I like your photo and description in Moddle and you have given a description of your photo. You have linked your blog. Your Blog ‘A New Chapter’ is good, I’d suggest ensuring the main page relates to you as there is still the standard template in some sections. When adding blog posts, I’d recommend using a catchy image that makes people want to read it or a really good

heading.Step 3 Background information on company

Comments/KCQs

Comments on other’s blogs

Good work on this step, you have a good understanding of your company. In the opening sentence, you state ‘I found out that’s it is a leading’ just take out the ‘s. When you link the Youtube clip for the company I’d suggest writing a description as to what it’s about, make the reader want to click on it. Company KCQ the opening paragraph is missing the word dollar in between multimillion company. You have picked up some good points from the financial statements of your company. I believe you meant revealed where you state ‘footnotes relieved they have 42’. I liked your question about the Merger, is there a reason for their increase in income? With your favourite blogs could you provide any evidence? You have provided your reasons.

Step 4 Input company’s financial statement

Could you provide a link to your spreadsheet on your submission? This way Martin won’t have to go searching for it. Excellent work, you can tell this is what you do for a living. You have used the formula’s rather than just typing in each area

Step 5

KCQs

I’d recommend trying to write this section like a story. Introduce to Martin the section within the chapter than explain what it means to you in your own works. Do this in longer paragraphs rather than one or two sentence ones so it flows like a story. . I’d recommend stating what AASB and IFRS, the first time you use it and then abbreviate thereafter.

Step 6 Feedback to others

N/A

Overall ASS#1: Great work on the spreadsheet, definitely your strength. I hope this feedback gives you some suggestions you could make before submitting your assignment.

PEER FEEDBACK SHEET: ASS#1

Feedback From: Nicole Nelson https://nicnelsonblog.wordpress.com

Feedback To: Liz Childs https://liz63975.wordpress.com/

My Comments

Step 1

KCQs

Nice introduction, I’m glad you stuck with it and didn’t pull out. I too am Majoring in Management. Did you have any questions after reading Chapter 1? You made good reference to the on-line communications and learning section however I would recommend a few more KCQ on the ‘A Way of Viewing Business’ section just to tell Martin that you understand what is being explained or if you don’t.

Step 2

Introductory words in

I can’t believe you are from Gin Gin, I’m in Dongara, that’s pretty close. You have provided a description of yourself in Moodle, added a photo with a description and linked your blog. Your blog

Description boxPhoto and description Link to your blog/Set up blog

‘Seize the day whilst learning Accounting’ thank you for sharing part of your story about you, good for you to be so brave and want to make your life better. You have done a great job of setting up your blog, I’d recommend adding some images or exciting titles to your blogs if you would like others to stop at your page and comment. I don’t put my whole assignments up on the page just a summary so as not to bore the reader then I upload more to the word document assignment that I submit to Martin. This is not necessary, just a suggestion, everyone does theirs differently.

Step 3 Background information on company

Comments/KCQs

Comments on other’s blogs

As my comment on this step on your blog states ‘wow you did a fantastic job researching your company, I can’t believe how much history it has and how diverse it’s activities are during that time. There is one mistake on your blog where you state “There hasn’t being one incident” it should be ‘been”. I’d also recommend adding a link to your financial statements. Good work!Your top blogs are not yet listed nor are the comments you have provided to other blogs. (I haven’t yet done my top blog yet either.)

Step 4 Input company’s financial statement

I noted that this is still to come.

Step 5

KCQs

The opening sentence I believe you mean where ‘That’s were my’. I think this is not finished and that is what you state, maybe reading others and providing feedback will give you some ideas. Remember Martin’s comments to describe your understanding of the key concepts, provide some reasons for your opinions then support those with your experience.

Step 6 Feedback to others

N/A

Overall ASS#1: I especially like your Step 3, try to provide the time you spent on this to step five and you will nail it. Best of luck. Stay positive, you can do this.