Category: Accounting

Accounting at Enron
1. What responsibilities did David Duncan owe to Arthur Andersen? To Enron’s management? To Enron’s stockholders? To the accounting profession?

2. What are the ethical responsibilities of a corporate attorney, such as Nancy Temple, who works for an “aggressive” client wishing to push the envelope of legality?

3. Understand what conditions should an employee such as Sherron Watkins blow the whistle to outside authorities? To whom did she owe loyality?

4. To whom does the BoD owe their primary responsibilities? Can you think of any law and regulations that would help ensure that boards meet their primary responsibilities?

5. What responsibilities do government regulators owe to business? To the market? to the general public?

6. Are accounting and law professions or businesses? What is the difference?

 

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WAL-MART CHAIN STORES

 
Research and choose one international corporation to discuss (Wal-Mart). You may use the Fortune Global 500 to help you choose a corporation (http://money.cnn.com/magazines/fortune/global500/2009/). The corporation you choose may be headquartered in either the United States or a foreign country.

1. Provide a company overview, and identify the countries in which the corporation operates.

2. Identify the types of market systems and types of legal systems that exist in the countries where the corporation operates. What effect do these have on the company’s operations?

3. Discuss the possible sources of political risk for: (a) the countries in which the company has a presence and (b) the basic nature of their products and operations. If you were a political consultant for the company, how would you suggest the company approach its political risk given trends in international political systems?

4. Identify the stakeholders the company must satisfy. Why is this process more difficult for companies operating internationally?

5. Summarize the company’s code of conduct. State the reasons why it is in the company’s best interest to follow its code of conduct when operating in foreign countries.

6. Does the company have any social programs in the country/countries where it operates? If so, briefly describe one.

7. What are the indicators the company might monitor to guide their investment and actions in the future?

 

 

Wal-Mart is a retail store that operates more than four thousand outlets in the world. It is the largest retail store in the United States of America and is largest retail chain in the world as well. It also dominates the retail store market in Mexico, Canada and the United Kingdom. Its sales include general merchandise such as household needs, family apparel, electronics, shoes, jewelry and beauty aids. The store also runs a photo processing center, tire and lube express and a department of pharmacy. Wal-Mart operates in twenty eight countries and employs more than two million people globally. In other countries other than the United States, Wal-Mart uses different names. The stores are called Welmex in Mexico, Toda Dia in Brazil, Seiyu in Japan, Asda in the United Kingdom, Supercentre and Discount Store in Canada, Trust-Mart in china, Econo in Chile, Pari in Costa Rica, Dispensa Familiar in Guatemala, Dispensa Familiar in El Salvador, Pali in Nicaragua, Dispensa Familiar in Honduras, Changomas in Argentina and Best Price in India. Most recently, Wal-Mart acquired fifty one percent of Mass-mart stores in South Africa, a retail store with two hundred and eighty eight outlets operating in fourteen countries in the southern Africa region (Pereira, 2002).

In the United States where Wal-Mart has its greatest presence, the market system is a free market economy under a capitalistic setting. The consumers relate to the economy by seeking the best value at the lowest prices with free political beliefs and protected rights. Wal-Mart is succeeding by appealing and supporting the consumer needs while striving to remain efficient in its business aspects and offering the lowest prices possible (Courser, 2005). In operating in the other countries, Wal-Mart had to adjust in order to remain flexible and adapt by showing local understanding. Being a typical American store it had to change many of its ways in order to reach out to the suspicious German consumers and the British consumers who are seen as being reserved. Generally, consumer tastes and preferences vary in different countries and therefore Wal-Mart was aware of the fact that selling the same products it sold in the United States in the same way would lead to failure. In the Chinese market for instance, Wal-Mart realized the customers had preference for leafy vegetables than anywhere else where it had outlets. Due to the strict government regulation in China, Wal-Mart could only source for some products such as tobacco and alcohol locally (Towers, 2004).

When venturing into Germany, Wal-Mart acquired more than one hundred of two chain stores which were already operating in Germany. It opted to rebrand due to the low levels of customer care and service that had been dominating the German market. Changing the culture of the consumers in Germany was however not easy and some strategies which had worked well in many other countries were received suspiciously in Germany, for instance, the culture of having Wal-Mart greeters at the store entrance was perceived by the customers as being superficial. The success of Wal-Mart in the global market can majorly be attributed to the way it has been implementing its business culture by tailoring it to local tastes, politics and legal frameworks. Wal-Mart also has a culture of obtaining ideas from its staff for example the successful singles shopping nights held on every Friday nights in its outlets in Germany (Towers, 2004). Given its global presence and success, Wal-Mart can succeed in many other places in the global market provided it tailors its operations to fit the local political and legal needs.

Wal-Mart has two categories of stakeholders: market and non-market stakeholders. Among the market stakeholders that Wal-Mart has to satisfy are stockholders who are interested in the market performance and dividends paid thereof, the Wal-Mart executives who are also interested in market performance since their compensation depends on it, the employees who earn their livelihood from Wal-Mart. Good market performance means they can retain their jobs. The other market stakeholders are the community where Wal-Mart operates and the consumers who are interested both in good performance of the store to benefit from employment and low prices respectively and the non-profit organizations which benefit from funding through the Wal-Mart good Works foundation. Another group of market stakeholders are other retailers (Pereira, 2002).

According to Pereira (2002), Wal-Mart must also satisfy a number of non-market stakeholders such as labor unions. Wal-Mart has it that they can take care of their employees and provide good compensation plans and therefore should not join labor unions. However, Wal-Mart was once charged by the national board on labor relations for violating federal laws by not allowing the employees to hold elections and join the United Food and Commercial Workers International union. The other two non-market stakeholders are international retail stores and politicians. Politicians may be for or against new advancements of Wal-Mart into their districts and some depend on Wal-Mart for campaign funding.

Wal-Mart has a code of conduct on which it has established its culture based on the philosophy ‘respect for the individual, service to customers and striving for excellence’. The code of conduct has been instilled and perpetuated through its employees in all its outlets globally. Some aspects of the code are adjusted in order to attain ‘service to customers’ in new market segments (Pereira 2002). Wal-Mart also operates social programs in the countries it operates by funding non-profit organizations in those countries through the Wal-Mart good Works foundation. For example in Chile and El Salvador, the foundation has successfully funded education, children and environmental programs (Zimmerman & Hudson, 2006).

The actions and investment decisions of Wal-Mart in the future are guided by their strong desire to dominate the global retail store market while providing the locally needed goods and services at the lowest market prices possible. The store venture into new market areas based on the customer base and consumer needs it can satisfy (Sobel & Dean, 2007).

 

References

Courser, Z. (2005). Wal-Mart and the Politics of American Retai. Washington DC: Competitive Enterprise Institute.

 

Pereira, M. (2002). Wal-Mart: Staying on top of the fortune 500. The Graduate School of Political Management, George Washington University.

 

Sobel, R. S. and Dean, A. M. (2006). Has Wal-Mart buried mom and pop?: the impact of Wal-

Mart on self-employment and small establishments in the united states. Western Economic

Association International

 

Towers, D. (2004). Wal-Mart: A glocalised company. Managing Global Business. Lyon: University of Jean Moulin

 

Zimmerman, A. and Hudson, K. (2006), Managing Wal-Mart: How U.S. Store Chief Hopes to

Fix Wal-Mart. The Wall street Journal, Monday Extra.

 

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83

 

Accounting at Enron
1. What responsibilities did David Duncan owe to Arthur Andersen? To Enron’s management? To Enron’s stockholders? To the accounting profession?
2. What are the ethical responsibilities of a corporate attorney, such as Nancy Temple, who works for an “aggressive” client wishing to push the envelope of legality?
3. Understand what conditions should an employee such as Sherron Watkins blow the whistle to outside authorities? To whom did she owe loyality?
4. To whom does the BoD owe their primary responsibilities? Can you think of any law and regulations that would help ensure that boards meet their primary responsibilities? 5. What responsibilities do government regulators owe to business? To the market? to the general public? 6. Are accounting and law professions or businesses? What is the difference?

 

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Introduction to Business accounting

Question 1
The following is the trial balance of Dave Brown a retailer.

Trial Balance as at 31st December 2011

Dr Cr£
Sales

 
190,200
Purchases
84,300
Trade debtors
28,0
Trade creditors
17,000

Advertising
1,650
Wages and salaries
42,000
Insurance
1,300
Heating and lighting
1,800
General expenses
13,450
Motor vehicles at cost
20,000
Accumulated depreciation – motor vehicles
8,000

Computer equipment at cost
14,000
Accumulated depreciation – computer equipment
7,000

Provision for doubtful debts
700

Drawings
24,000
Bank account
3,000
Capital account
31,600

Inventory as at 1st January, 2011
21,000

254,500
254,500

Additional information

(i) Inventory at 31st December, 2011 is £70,000.

(ii) At 31st December, 2011 rates owing of £2,000 and prepaid insurance of £400.

(iii) Depreciation on Motor vehicles and computer equipment is charged at rate of 25% on cost.

(iv) Bad debts of 10% of trade debtors are to be written off and it is decided to adjust the doubtful debts provision to 5% of trade debtors.

Required:

Prepare Dave Brown’s Income Statement for the year ended 31st December, 2011 and Balance Sheet.

50 marks

Question 2

(a) What are the potential problems and limitations of financial ratio analysis? 20 marks

(b) Explain what information the Income Statement (profit and loss account) provides? 15 marks

(c) Explain what information the Statement of Financial Position (Balance Sheet) provides? 15 marks

 

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Finatial Report

 

Discuss on Financial Report …………………..

TABLE OF CONTENTS PAGE

1. INTRODUCTION…………………………………………………………………………3
2. COMPANY INTRODUCTION…………………….……………………………………..3
3. FINANCIAL STATUS…………………………………………………………………….4
4. INTERNATIONAL TRADING STRATEGY…………………………………………………….6
5. EXCHANGE RATE RISK MANAGEMENT AND RECCOMENDATION……………..8
6. COUNTRY OR POLITICAL RISK MANAGEMENT AND RECCOMENDATION…..9
7. CONCLUSION……………………………………………………………………………10
8. REFERENCES…………………………………………………………………………..13
INTRODUCTION

The growth and expansion of any company is the best reward and it is mainly one of the main objectives of a firm at inception. However for a company to attain this it must employ good analytical methods of the financial data at the preparation stage and also at the reporting stage. Good data preparation skills and knowledge are essential so as to ensure the inferences drawn from such data is true and can be used by analysts in their forecasts and predictions of future performance. The analysis and conclusions drawn from any set of data from the company will assist the management in formulating policies and procedures that will optimize the operations and production processes in a company. It is therefore imperative for the management of a company to invest in good data collection and analytical techniques in order to arrive at logical conclusions.

COMPANY INTRODUCTION

Berendsenplc is a company in the textile service business and operates in fifteen countries in Europe. It was formed following the acquisition of the SophusBerendsen by The Davis Service Group in 2002 and its headquarters are in London.It is dominant in its markets of operation especially in linen rentals, work wear rentals and laundry services. It had a turnover of 992 million pounds as at December 2011 (Peter, n.d). It is listed in the London stock exchange and had a market capitalisation value of 909 million pounds as at December 2011.Their main brands include berendsen, sunlight, and spring grove which have more than 100 years of experience each. They provide service solutions in sourcing, cleaning and maintaining textiles required by their customers. Their business is divided into three main lines; Workwear, facility and linen (Grens ,n.d).

FINANCIAL STATUS

The company has been stable financially since 2007 as shown by key variables summarised in table1.

YEAR 2007 2008 2009 2010 2011
TOTAL REVENUE 822.1 953.9 970.9 986.1 992.0
NET PROFIT 63.6 42.1 45.8 22.4 57.5
EPS(EARNINGS PER SHARE(pence) 38.4 39.3 39.4 41.7 48.4
DIVIDENDS(pence) 19.4 20.0 20.0 21.2 23.4
NET ASSETS 460.1 496.1 475.8 467.9 458.5
Table1 (All figures are in millions of pounds unless stated)

Total revenue

Quality products and services ensure that a company is able to maintain and increase its customer base and also the market share (Collins, 1993). Its products remain relevant and competitive when compared with those of competitors. However many of the subsidiaries experienced financial shifts mainly due to changes in exchange rates in their markets of operation and this affects the consolidated figures.

Risks: The Company will need to monitor the commodity price changes of their raw materials because an increase in the price of raw materials will require the company to increase commodity prices so that they can realise set targets on revenue and profits.

Net Profit

The net profit for the period has reduced especially in 2010. This is because from 2007 the company has carried out an ambitious expansion strategy which includes acquisition of Permaclean Group in Germany and also acquisition of UK clinical solutions and decontamination business in 2007, entry into the Baltic States in 2008 and there was also the opening of a processing plant in Czech Republic in 2008. These are projects that involved large capital outlays and many operational expenses which usually eat (Berger, 2008) into the company’s profitability. The company also experienced several transactional risks due to various currency exchanges regimes it had to encounter.

Risks: The Company must operate optimally because any failure to realise net profits will create panic among the shareholders and other stakeholders.

Earnings per share

These have continued to increase over the years. This is because the company has continued to make profits over the years and the confidence of the investors has been high. The continued expansion of the company especially in overseas markets promises a bright future to the investors who have continued to hold on to their shares as they expect higher returns in the future.

Risks: The continued retention of earnings may make the investors dispose their shares and seek other stocks of companies that pay more dividends. This is especially to the short term investors.

Dividends

The company has been paying dividends to the shareholders every year. This is because the company has been making profits in every year. However most of the earnings from the shares have been retained by the company to finance its expansionist strategy. These retained earnings have also been used to hedge against the exchange rate risks that the company has been exposed to during expansion (Howard, 2007).

Risks: The Company’s dividend policy should be enhanced to benefit the short term investors. But this will require the company to reduce their retained earnings which may affect the firm’s expansion strategy.

Net Assets

These represent the assets of the company less the liabilities. They have experienced some decline due to the increase in liabilities. The firm’s expansion has made it incur many liabilities but in the long run the full benefits of the expansion will be realised.

INTERNATIONAL TRADING STRATEGY

The firm’s management has resolved to trade through wholly owned subsidiaries in the foreign markets. Each of these subsidiaries has its own Board of Directors and management team that is answerable to the overall Chairman in the UK. The firm wants to be strategically placed and be a global leader in the textile industry. Through its wholly owned subsidiaries the company will incur low per unit costs of production.The company will do most of its production locally through the use of local suppliers and subcontractors. This will help the company hedge against import tariff shifts (Michael, 2004). The elimination of importation costs, transport and warehouse charges that the company would incur if it was relying on imports will improve the profitability of the company. This is because the company will own the premises and the production process. The company will also able to centralise all its operations and be able to cut on the lead time (Sergio, 2000) required for planning and strategising for production processes to start. There will also be higher sales volumes of its productsandhigh market penetration. Due to low production costs the company will have enough capital to invest in aggressive marketing of its products in the new markets through sales promotions, branding and audio adverts. The company will also have great potential to grow both in market share and profitability in the long run. This is because it will enjoy economies of scale in the production and distribution of its products. The company should also negotiate an investment agreement with the host government. This agreement will help the company to know the policies of the host government on matters concerning payment of remittances like royalties, dividends and also its stand on the company’s bid to export to other markets.According to Fred (2003) the company will also be able to know from such an agreement the taxation methods and rates that will be applicable to its operations and how they are determined. This is important for the forward planning in the company’s business. The firm will also state its corporate social responsibility and its obligation in provision of social amenities like schools, health centres and public toilets.

However the strategy of trading with these wholly owned subsidiaries has its pitfalls of risksand obligations that the company will be required to adhere to. The Company will spend a lot of capital in the acquisition and setting up of the business. These set up costs may take a long time to recover and the subsidiaries could go for long periods without realising profits( Davies,2007). This will mean low returns to the shareholders and this may lead to panic selling in the stock market. This will eventually reduce the market capitalisation of the company and also reduce the capital available for investment activities. This strategy also calls for high level of commitment by the firm’s management in implementing decisions. The management will have to come up with very efficient management models and procedures. The company will also face stiff competition from the established operators in the foreign markets who will guard against their market share. Berendsenplc will therefore have to invest a lot in advertising and marketing activities to be able to penetrate the market.

 

EXCHANGE RATE RISK MANAGEMENT AND RECOMMENDATION

The company will be required to devise good tactics because most of the buyers prefer trading in their local currencies even though most of the raw materials were purchased using hard currency. This calls for efficient market studies to analyze the volatility of the market in order to minimize any potential losses that may stem from use of currency.The company in its pursuit of foreign markets will encounter various exchange rates because the currencies involved in the various jurisdictions are different (Richard, n.d). The company will identify whether the country of operation uses hard or soft currency. Hard currencies like the dollar, pound and euro are widely acknowledged internationally and can be used to perform transactions across boarders. But where the country’s local currency is not recognised internationally, the company will be exposed to transaction risks as any changes in exchange rates will affect receivables, payables and even repatriation of profits (Horcher, 2005). The firm will also be exposed to translation risks that will affect the valuation of subsidiaries and eventually the consolidated balance sheet of the organization. During the end of a trading period consolidation can be done at the prevailing exchange rate at the time or at the average rate for the period. Translation risks of the foreign subsidiaries are measured by the level of exposure of the net assets (assets less liabilities) to any potential exchange rate shifts. In dealing with exports, the company can solve the problem of exchange rates by pricing the export goods using the current exchange rate. The recipients of the goods will be required to pay spot on for the goods and the company will be sure there are no losses that stem from exchange rate shifts. The company can also decide to net all foreign exchange receipts with foreign exchange payments so that if they export to a particular country and also import may be raw materials from the same country, all those transactions can be conducted using one currency.

In countries where the local currency is not recognised internationally, the company will be required to negotiate a Futures contract with local financial institutions in the country of operation (Zhao, 2005). This contract will guarantee the supply of a specific amount of foreign currency at a known exchange rate in the future. The company should factor in the time-value of money when it is assessing the risk of currency exchange fluctuations. It can then consider insuring against losses that may be incurred later when buying the futures. The company can also sign a forward contract with a financial institution which will assure the supply of any amount of foreign currency in the future at a known rate. The company can also hedge against currency fluctuations by opening a local bank account in the country of operation. All the revenues that will be earned in that country should be banked in that account. All the purchases that are made in that country should be paid through that account. If there are any foreign payments, the company can make the transfers through the account and this will minimise the exchange fees to the company. The company can also acquire a loan in the currency which it mostly uses; the interest paid on that loan can cancel out with the returns it will get from not being affected by the daily shifts. This is because it will no longer be required to buy these hard currencies on a daily basis as it will have enough in stock. The company can also negotiate fixed rate exchange contracts and then all the income can be priced at an exchange rate equal to or greater than the fixed rate. The country can also guard against potential exchange risks by providing a line item in its financial reports of maybe 10% of overall expenses. This will always check any shifts that will occur on the financial statements and the shareholders and other interest groups should be notified on this.

COUNTRY OR POLITICAL RISKS MANAGEMENT AND RECCOMMENDATION

These are risks of loss that the company is exposed to when investing in a country due to changes in the political structure or the policies of the country (Beulig, 2006). These include internal conflicts, business setbacks like contract renegotiation or cancellation by host country, terrorism, restrictions on repatriation of profits and politically driven increases in taxation. The company needs to assess carefully the government’s attitude towards foreign investors in the countries they seek to invest. This can be done by carrying out surveys of the foreign investors operating in those jurisdictions. Also before the signing of the investment agreement the management should ensure it has engaged all the relevant government departments so that they can get assurances on the part of government. This is essential so that when there are acts of for example civil disobedience the government can have a responsibility on protecting the premises of the company from damage and vandalism. This is in recognition of the advantages the foreign investor brings to the country such as employment of locals, payment of tax and also the potential of encouraging other foreign investors to come. The company can use integrative techniques to become like one of the indigenous firms. This can be done by cultivating good relations with the host government through corporate social responsibility initiatives like building schools, health centres and other social amenities. The company should also undertake to adhere to the set labour regulations to avoid being blamed for abuse because this will give it a negative publicity which can affect its future engagements with the state especially on license renewals.Also most of the products can be produced locally as much as possible using local suppliers and subcontractors. Also any capital required should be raised through the local financial institutions. The company can also diversify the production of its goods in a number of countries so that if there is political turmoil in one its operations do not become grounded. It will be easy to direct its activities to the other without suffering stock outs. Country and political risks should be managed from the top of the organization (Class notes on slide). The board and management should communicate the firms risk tolerance levels to the other employees and it should also be known which business unit will handle those risks. This is because managing political risks will directly impact on the company’s performance both in the short and long run. Managing political risks can make the company analyse the impact of impending social, regulatory and economic changes (Brenson, n.d). This will especially be of great importance if the company is in a highly regularized business zones. The company can rely on the prevailing political environment to make crucial decisions of expansion and more investment in their production processes. In many business environments political risks usually have a very big impact on the supply chain, their reputation and this can even affect their market share. The evaluation of political risks by the firm’s management will help optimize decision making. High political tensions in a country will put away investors and also reduce productivity. Insurance companies will price their policies very highly due to the high chances of unrest. This eventually makes business undesirable and very expensive. The portfolio view of these risks will assist the management in viewing their risks globally and assess their relationship. This will help them view whether the risks in one geographical region cancel out with those in another. This can help in making decisions that help the company maximise operations in those areas that are seen to be favourable to the business. The analysis of these risks has a very big impact on the continuity of operations in one region as compared to another. Business investment decisions heavily rely on the analysis of how friendly the policies of a country are when compared with the operational procedures of the company. The There should therefore be an established framework in the company for reporting political risks because they will affect future operating and investment decisions of the firm.

CONCLUSION

The procedures adopted by a company to deal with the various risks in its business are very vital in the realisation of its profits and other strategies like expansion into other countries. During establishment, the company must identify all the risks that it will be exposed to and come up with ways of combating them. The risks must be tackled like any other management issue and structures must be put in place to mitigate their occurrence and there should be known methods that the company will adopt in solving them. The company should provide relevant insurance covers for the various risk levels. Such levels include firm specific risks like inconvertibility of the host currency to hard currency and expropriation risks involved in transfer of assets to home countries.

The identity of all these and ensuring the firm is adequately covered will be of utmost importance(Kennedy, 2009). The risks that the company is exposed to should also be prioritized. Those that seem very likely to occur should definitely be given priority. The choice of stake holders that the company will do business with is also very important. The choice of local suppliers and other service providers in the host market should be done competitively to avoid obstacles. The company should enter into clear contracts that have exit clauses to avoid any legal collisions with locals. However risk management is not a one off exercise, there must be continuous review and monitoring of the review management policy the company will adopt. This will ensure the correct identity and assessment of risks to ensure appropriate controls are put in place.Failure to identify the risks face a firm will be very detrimental to the business. The company will face enormous challenges that may even cripple its operations. The formulation of the risk management policy should be done in the initial stages when the company is being set up or when it is setting up the subsidiaries. This will enhance quick response to the challenges that will need immediate address and the company will not suffer much losses. Also the risk management policy will ensure the reports the company gives to its shareholders are accurate and can be relied upon in making future investment decisions.

References

Berger, K (2008) Elements of Financial Reviews. London: Pittman Books Ltd, P.56

Beulig, N (2006) General Economics. Mexico: Welsh Publishers Ltd,P.41

Brenson, H (n.d) “ Risk Management Standards” (Online ). Available from http://www.businessrisks.org/ (Accessed on 20th April 2012)

Collins, D (1993) Financial Reporting and Analysis. California: John Wiley and Sons, P.21

Davies, W (2007) Overview of Financial Risks. Sydney: Patmore Books Ltd, P.9

Fred , A (2003) Mitigating Financial Risks. New York: Keranson Publishers ltd, P.53

Grens, V (n.d) “ Berendsen Product lines” (Online ). Available from http://www.berendsenplc.com/ (Accessed on 20th April 2012)

Horcher, K (2005) Essentials of Financial Risk Management. London: Holmes Ltd, P.5

Howard , S (2007) Fundamentals of Financial Management. Stuttgart: Desarc Printers, P.33

Kennedy, D (2009) Essentials of Risk. London: Cambridge Press, P.77

Michael, K (2004) Managing and Measuring Risks.Warwick: Vantage Books Ltd, P.52

Peter, D (n.d) “Berendsenplc Performance” ( Online). Available from http://www.businesslink.gov.uk/ (Accessed on 20th April 2012)

Richard, N (n.d) “International Trading Strategy” (Online). Available from http://www.businessstrategies.com/ (Accessed on 20th April 2012)

Sergio , S (2000) Business Risks and Management. Edinburgh: Groag Educational Books, P.6

Zhao, X (2005) Credit Risk Management.Leeds: Khan Books Ltd, P.27

Class Notes on the slides

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TABLE OF CONTENTS

INTRODUCTION
1.1 DIGITAL NATIVES AND DIGITAL IMMIGRANTS…………………………3

AREAS TO BENEFIT FROM PROCESS OF IMPROVEMENT………………………,3
2.1 SALES………………………………………………………………………..3

2.2 ACCOUNT DEPARTMENT…………………………………………………3

2.3 STOCK CONTROL………………………………………………………….4

2.4 PURCHASES…………………………………………………………………4

2.5 PRESENTATION…………………………………………………………….4

3. JOB CHARACTERISTICS……………………………………………………………………5

3.1 SALES JOB………………………………………………………………………….5

4. WEB- ENABLED ORGANIZATION……………………………………………………….6.

4.1 ADVERTISING…………………………………………………………………….6

4.2 TABLE OF CONTENTS…………………………………………………………….6

5. DIGITAL DIVIDE……………………………………………………………………………7

5.1 IMPACT OF DIGITAL DIVIDE……………………………………………………7

6. REFERENCES………………………………………………………………………………..8

 

INTRODUCTION

DIGITAL NATIVES AND DIGITAL IMMIGRANTS

Digital natives are people born or brought up during the age of digital technology and are so familiar with computers and internet from the earlier age, while digital immigrants are people born or brought up before the widespread use of technology (Oxford University press, 2012). The two categories of technology users above, digital native and digital immigrants are a reality. The students of today are considered as digital natives because they are born and brought up in the information technology era. They use computers in their studies and can access internet. They have spent their entire lives surrounded by and using computers, video games, digital music players, video cams, cell phones and all other toys and tools of the digital age. As a result of this environment and their interaction with it today’s student think and process information fundamentally different from their predecessors.

The areas within the Snakehead organization which could benefit from the process of improvement brought about through the utilization of information technology include the following;

Sales; All the sales of Snakehead Company are channeled to the sales office. Through the use of information technology, different departments will be able to share their sales information promptly as they are executed. This will give sales manager easier time in gathering sales information from the different departments hence save time and cost.

Account department; All the sales and purchases details will from all the business units within Snakehead organization are require by the head of accounts for book entries purpose and hence through employment of web based system, information from various business units within the Snakehead organization regarding every business transaction will be made available to the central accounts office promptly (Ballou and Pazzer, 1995).

Stock Control; The use of web based as a means of information technology will ensure that stock within different business units are maintained efficiently using a formal stock control system. All information concerning orders will also be shared within the business units.

Purchases; Through the use of web based information technology, all the purchase of the Snakehead organization will be shared with various concerned departments. This will enhance efficiency within the organization.

Presentation

All around us information technology is moving from paper to digital (Edinburgh University Press, 2008). Information technology refers to the use of system for storing, receiving and sending information. Use of information technology has become a popular tool in the management of businesses across the world. Information technology is an important aspect in business of today. In the Snakehead organization use of information technology will be very essential to the different business units. Updating of the information system in Snakehead organization will increase the speed of information processing and hence service delivery within the organization. The company will therefore be able to provide immediate assistance to clients and thus improve their customer service. All orders received from different units within the Snakehead organization will be shared promptly by the various departments and action taken immediately to avoid any delay in the execution of an order. This will help customer satisfaction and help in winning of the customer’s loyalty. Efficiency within the Snakehead Company will be enhanced due to the increase in speed. Information technology will improve response time and this will enable Snakehead company get raid of unnecessary delays and the cost associated with it. Different departments within the Snakehead organization are interrelated hence the flow of information will increase when a web based information technology is adopted by the company.

Use of information technology will provide room for multi-tasking of some duties. Computers are able to perform multiple tasks simultaneously. This will help reduce the cost associated with employment of various employees toper form the tasks. This will eventually ensure the profitability of the company. Cost of operation within the organization will also be reduced. Computers have become more affordable, they can also replace other means of document storage and it can also enable certain jobs to be eliminated. For example the account department can only have one staff to do the entries and accounts since all the information will flow from all the business units thin the organization. This will eventually lower the cost of Snakehead Organization.

Sales job; Sale is a job which is important and vital in any organization. It can be regarded as the cornerstone of any business organization (Orvel, 1994). It is through sales that company receives revenues that enable to carry out their day to day business activity. Any business organization without a strong sales policy is likely to fail. In order for a sales person to be successful he or she must have the following characteristics. Sales people must invest heavily in technology, in people, and in themselves. They must constantly expand their horizon, training and constantly look out for anything that will give them a slight advantage. Sales people must be consistent in their work. Consistency of sales people will help in winning of customers thereby boosting sales of their respective organizations. Sales people must be confident in their work. They should believe in their products, their services and their people. Sales people should be patient in their work, they should always be in the look out for the next need cycle and strive tube there when need arises. Sales people should have a sense of a assortment, they should offer a wide variety of services and products and adapt their offering, their terms, and their delivery schedules to meet customers demand. They should look for the new, unusual, and unique and add to their offering. Sales people should be convenient; they should be enthusiastic and optimistic in their work. They should have good word for everyone and never complain about weather, economy or the people they work for. Sales people should be committed in their work; they should have no time for excuses and apologies and never argue with the result, they should treat every customer as if survivals of their business depend on them.

Web based organization in finding that they need to continually improve their web presence and maturity are doing the following; Advertisement, several of web based organization such as Google and Face book are doing vigorous advertisement through their website inured to increase client database and increase their productivity, this will enhance their productivity.

Table of contents showing advertising revenues from Google Inc. (Google Inc. 2012)
Year Ended December 31,
2009 2010 2011
Advertising revenues:
Google websites $ 15,723 $ 19,444 $ 26,145
Google Network Members’ websites 7,166 8,792 10,386
Total advertising revenues 22,889 28,236 36,531
Other revenues 762 1,085 1,374

Revenues $ 23,651 $ 29,321 $ 37,905

The above table clearly shows that advertisement contributes to significant revenue for the Google Inc. The advertisement is being done in their website. The reason for carrying out advertisement is to enhance sales and increase revenues of the company. The increased revenue will eventually increase the firm’s profitability. The advertisement carried out is obtained from different companies who use the website either to increase their popularity or to popularize their products. By doing this they pay Google Inc. the fee for carrying out the advertisement and this will generate revenue for the Google Inc.

The impact of digital divide on the web-enabled organization of today; Digital divide describe the fact that the world can be divided into people who do and people who don’t have access to and capability to use modern technology such as the telephone, television or internet (Ohms, 1999).

Impact of digital divide can impact negatively or positively on the web-based organization of today (Gary & Vernon, 2012). On positive note it will enable the organization goals reach a majority of people. This is because, those who have access to technology, will be to access information freely from the organization site. On a negative note it will hinder access of information from the organization websites. Lack of access to information technology will render web- based organization unprofitable since the overall sales will be reduced. People will not be able to relevant information regarding a particular product or service in the market. Hence access to information technology is very essential for the business operations.

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1.Discuss the irony othe statement “Beauty is only skin deep” from botha medical an physical aspect.

2.what are some ways that remessaging can help us to reach our goas in ad out of class?
3.Why refocus and reassure woul bst help someone to reace negative self-talk? Why? 4.State the difference between the CMS-1500 and UB-04(CMS-1450)? Why is the billing process important? explain?

5.List two reasons why the HIM Department reviews patent medial records.

6.Discuss the reltisip between patient accouts, data flow and charge capture.

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34
Introduction to Business Accounting
Question 1

The following is the trial balance of Dave Brown a retailer.

Trial Balance as at 31st December 2011
Dr

 

Cr
£

 

£

Sales
190,200

Purchases
84,300
Trade debtors
28,000
Trade creditors
17,000

Advertising
1,650
Wages and salaries
42,000
Insurance
1,300
Heating and lighting
1,800
General expenses
13,450
Motor vehicles at cost
20,000
Accumulated depreciation – motor vehicles
8,000

Computer equipment at cost
14,000
Accumulated depreciation – computer equipment
7,000

Provision for doubtful debts
700

Drawings
24,000
Bank account
3,000
Capital account
31,600

Inventory as at 1st January, 2011
21,000

254,500
254,500

Additional information

(i) Inventory at 31st December, 2011 is £70,000.

(ii) At 31st December, 2011 rates owing of £2,000 and prepaid insurance of £400.

(iii) Depreciation on Motor vehicles and computer equipment is charged at rate of 25% on cost.

(iv) Bad debts of 10% of trade debtors are to be written off and it is decided to adjust the doubtful debts provision to 5% of trade debtors.

Required:

Prepare Dave Brown’s Income Statement for the year ended 31st December, 2011 and Balance Sheet.

50 marks

Question 2

(a) What are the potential problems and limitations of financial ratio analysis? 20 marks

(b) Explain what information the Income Statement (profit and loss account) provides? 15 marks

(c) Explain what information the Statement of Financial Position (Balance Sheet) provides? 15 marks

 

………………

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