Good Report About Accounting For Business Decisions

Type of paper: Report

Topic: Banking, Increase, Money, Percentage, Finance, Segment, Equity, Investment

Pages: 9

Words: 2475

Published: 2020/10/18

1.0 Part A 1
1.1 Executive Summary
This research paper discusses accounting in business decisions and it focuses on a company that trades in the ASX (Australian Stock Exchange) that is Bank of Queensland (BOQ).BOQ operates in the Banks sector and the Financials industry. The Bank segment offers banking and other services that are related to finance such as personal; banking, private banking, everyday banking, travel money, savings and investment, small business lending, treasury,, margin lending, credit cards , home loans, personal loans and credit cards (BOQ, 2014).The insurance segment offers income protection insurance and life insurance services. The bank’s fiscal year comes to an end in August 31st.The Bank trades in ASX (Australian Stock Exchange) and it is among the best regional banks in Australia.BOQ offers financial and insurance services to both business and individuals (Bank Of Queensland Limited and its controlled entities interim financial report,2014). The research paper is divided into two major parts. Part A focuses on; balance sheet review for the years ended 2013 and 2014; income statement review; review of cash flows statements and review of stakeholders' equity. Part B presents a case study on business and accounting decisions.
2.0 Part A 2
2.1 Balance sheet review for the years ended 2013 and 2014
2.1.1 Current assets
The total consolidated current assets (Liquid assets and Cash) for the year concluded August 2014 were $ 1,033.6 million whereas for the year ended August 2013, they were $ 873.2 million (BOQ Annual Report, 2014). The percentage increase in the groups' consolidated assets is computed as follows: $1,033.6-$ 873.2/873.2x 100%=18.37%.
The total current assets owned by the Bank segment as at August 2014 were $ 397 whereas in August 2013, they were $ 242.2 million (BOQ Annual Report, 2013). The percentage increase in the banking segment's noncurrent assets is computed by $ 397- $242.2/242.2x 100%=63.91%.This percentage increase implies that the banking segment and the entire group have strong financial positions.
2.1.2 Total non-current assets
The total consolidated noncurrent assets as at August 2014 was 45,871 million whereas as at August 2013 they were $41,655.1 million (BOQ ASX Release, 2014). The percentage increase in the group’s noncurrent assets is computed by: $ 45,871-$41,655.1/41,655.1x100%=10.12%.
The bank segments non-current assets as at August 2014 were $ 40,017.4 million whereas as at August 2013 they were $ 38,797.8 million (BOQ Annual Report, 2013). The percentage increase in the banking segment’s noncurrent assets is calculated as follows: $ 40,017.4-$ 38,797.8/38,797.8x 100%=3.14%.The percentage increases show that the bank and the entire group are effective in maintaining the level of its non-current assets.
2.1.3 Total current liabilities
The consolidated current liabilities as at August 2014 were $ 207.5 million whereas as at August 2013 they were $201.1 million (BOQ ASX Release, 2014). The percentage increase in the consolidated current liabilities is computed by $207.5-$201.1/$201.1x100=3.18%.
The banks current liabilities as at August 2014 were $ 207.5 million and as at August 2013 they were $ 201.1 million (BOQ Annual Report, 2014). The banking segment’s increase in current liabilities is calculated by $ 207.5-$201.1/$201.1x100=3.18%.The percentage increases of 3.18 depict that the group and the bank can meet their obligations when they are due.
2.1.4 Total non-current liabilities
The consolidated non-current liabilities as at August 2014 were $ 43,356.6 million while as at August 2013, they were $ 39,509.4 million (BOQ, 2014). The percentage increase in the group’s non-current liabilities is calculated as follows: $ 43,356.6-$ 39,509.4/39,509.4x 100=9.7%
The bank segment’s non-current liabilities as at August 2014 were $3,355.7 million whereas as at August 2013, they were $ 2,560 million. The percentage increase in the banking segment’s noncurrent liabilities is shown by $3,355.7-$ 2,560/$2,560 x100%=31.08%.The percentage increases in the non-current liabilities depict an average financial position.
2.1. 5 Total stakeholder’s equity
The total consolidated stakeholders’ equity as at August 2014 was $ 3,340.5 million while in the year ended August 2013; it was $ 2,817.8 million (BOQ ASX Release, 2014). The percentage increase in the consolidated stakeholders’ equity is $ 3,340.5-$ 2,817.8/2,817.8x 100=18.55%.
The total equity in the Bank section for the year concluded August 2014 was $3263.2 million whereas in the year concluded August 2013, the total equity was $2,761.1 million (BOQ Annual Report, 2013). The percentage increase in the banking segment’s stakeholders’ equity is: $3263.2-$ 2,761.1/2,761.1 x100=18.18%.The increased percentages in the stakeholders’ equity depicts a strong financial position for the entire group.
3.0 Part A 3
3.1 Income statement review
3.1.1Total operating revenues
BOQ’s total consolidated revenue as at the year ended August 2014 was $938.6 million whereas the operating income (consolidated) for the year ended August 2013 was $855.9(BOQ, 2014).The percentage increase in the consolidated operating revenue is: $ 938.6-$ 855.9/$855.9 x100=9.66%
The Bank segment’s operating income in the year concluded August 2014 was $ 822.5 million whereas the operating income for the bank subsidiary for the year ended August 20213 was $ 744.3 million. The percentage increase in the banking segment’s operating revenue is $ 822.5-$ 744.3/$744.3 x 100=10.51%.The increase in the group’s and banking segment’s operating revenue shows that the company’s financial performance is sustainable and impressive (BOQ ASX Release, 2014).
3.1.2 Total expenses
The consolidated expenses for the year ended August 2014 were $469.4 million whereas the consolidated expenses for the year ended August 2013 was $465.5 million (BOQ, 2014). The percentage increase in the consolidated expenses is $ 469.4- $ 465.5/465.5x 100=0.84%.
The total expenses for the banking subsidiary for the year concluded August 2014 was $421.4 whereas for the year concluded August 2013, the total expenses were $418.9.The percentage increase in the banking segment’s expenses is $ 421.4- $ 418.9/418.9 x 100=0.6%. The percentage increases in the total expenses are low and this implies that the group and the banking segment are efficient in managing their total expenses (BOQ Annual Report, 2013).
3.1.3 Earnings per common share
The consolidated basic EPS (Earnings per Share) for the year concluded August 2014 was 77.4 cents per ordinary share. The consolidated basic EPS for the year concluded August 2013 was 57.6 cents per ordinary share. The percentage increase in the EPS is $ 77.4-$ 57.6/57.6 x 100=34.38%.
The consolidated diluted EPS for the year concluded August 2014 was 75.9 cents per ordinary share whereas for the year concluded August 2013, the Diluted EPS was 56.5 cents per ordinary share (Bank Of Queensland Limited and its controlled entities interim financial report, 2014) . The percentage increase in the diluted EPS is: $ 75.9-$ 56.5/56.5 x 100=34.33%.The percentage increase in the basic and diluted EPS show that the bank is financially stable.
4.0 Part A 4
4.1 Review of cash flows statements
4.1.1 Operating activities
The consolidated Net cash flow from the operating activities as at August 2014 was $ 456.7 million whereas as at August 2013, it was $220.6 million (Bank Of Queensland Limited and its controlled entities interim financial report, 2014). The percentage increase in cash from operation activities is: $ 456.7-$ 220.6/$220.6=107.02%.
The total amount of cash from the bank’s operating activities as at August 2014 was $1, 236.7 million while as at August 2013 it was $ (218.9) million meaning that it was a negative cash flow (BOQ Annual Report, 2014).The percentage increase in the bank’s operational cash flow is $1,236.7-(218.9)/218.9 x 100=664.64%.The percentage increase in the cash from operation activities show that the entire group is efficient in raising cash from operation activities.
4.1.2 Financing activities
The consolidated net cash flow from the financing activities for the year concluded in August 2014 was (63.8) million whereas at August 2013, it was $ 28.9 million. The percentage decrease in cash from financing activities is $ 28.9-(63.8)/28.9x 100=320.76%.
The bank segment’s cash flow from financing activities for the year that ended in August 2014 was $ (471.7) million whereas for the year that ended in August 2013 was $ 277.8 million. The percentage decrease in the banking segment's financing cash flow is $277.8-(471.7)/277.8 x 100=269.8% (BOQ Annual Report, 2014).The large percentage decreases in the cash flow from financing activities imply that the entire group and the banking segment were not effective in generating cash from the various financing activities in the financial year ended August 2014.
4.1.3 Investing activities
The consolidated cash flow from the investing activities as at August 2014 was $ 232.5 million and in the year concluded August 2013, it was $46.8.The percentage increase in the consolidated cash flow from investments is $ 232.5- $ 46.8/46.8x 100=396.8%.
The amount of cash flow for the bank’s investing activities as at August 2014 was $ $ 610.2 and for the year concluded August 2013 it was $ 44.4.The percentage increase in the banking segment’s cash flow from investing activities is: $ 610.2-$44.4/$44.4=1,274%.The high percentage increases in cash from investment ventures shows that the company invests in viable ventures thus they strengthen the company’s financial position.
4.1.4 Net cash increase or decrease
The consolidated net cash increase for the year that concluded in August 2014 was $ 160.4 million whereas for the year that ended in August 2013, the net cash increase stood at $202.7 million (BOQ, 2014). The percentage decrease in the consolidated net cash increase is: $ 202.7- $ 160.4/202.7x 100=20.87%.The decrease indicates that the company’s cash position was weak in the year concluded in August 2014.
The bank segment’s net increase of cash for the year that concluded in August 2014 was $ 154.8 million whereas for the year ended in August 2013 the net increase of cash and its equivalents was $ 14.5 million (BOQ, 2014). The percentage increase in the bank’s net cash increase is: $154.8- $ 14.5/14.5 x 100=967.59%.The percentage increase depicts that the banking segment had a strong cash position in the year ended August 2014.
5.0 Part A 5
5.1 Review of stakeholders’ equity
For the year ended in August 2014, the consolidated amount issued capital was $ 3020.6 million whereas for the year that ended in August 2013, the consolidated amount of issued capital was $ 2562.6 million. The percentage increase in the issued capital is: $ 3020-$ 2562.6/2562.6 x 100=17.85%.
The banking segment issued capital for the year that ended in August 2014 was $ 3024.1 million whereas for the year that concluded in August 2013, it stood at $ 2564.2 million. The percentage increase in the banking segment’s issued share capital is: $ 3024.1-$ 2564.2/2564.2 x 100=17.94%
The consolidated amount of reserves for the year that concluded in August 2014 was $ 114.4 million whereas for the year that ended in August 2013, it was $ 111.1 million% (BOQ ASX Release, 2014). The percentage increase in the consolidated reserves is: $ 114.4-$ 111.1/$111.1 x 100=2.97%.
The bank segment’s reserves as at August 2014 were $ 99.0 million whereas as at August 2013, they were $ 95.3 million. The percentage increase in the bank reserves is: $ 99-$ 95.3/95.3 x 100=3.88%.
The consolidated retained profits for the company as at August 2014 were $ 205.5 million while as at August 2013, they stood at $ 144.1 million. The percentage increase in retained profits is: $ 205.5- $ 144.1/144.1 x 100=42.61%.
The bank segment’s retained profits as at August 2014 were $ 140.1 million and as at August 2013, they stood at $ 101.6 million (BOQ Annual Report, 2014). The percentage increase in the banking segment’s retained profits is $ 140.1- 101.6/101.6 x 100=37.89%.
The total consolidated shareholders’ equity as at August 2014 was $ 3,340.5 million and as at August 2013 they were $ 2817.8 million. The percentage increase in the consolidated shareholders' total equity is: $ 3,340.5- $ 2817.8/2817.8 x 100=18.55%.
The total shareholders’ equity at the banking segment by August 2014 was $ 3263 whereas in August 2013 it was $ 2761.1 million (BOQ ASX Release, 2014). The percentage increase in the banking segment’s shareholders’’ equity is $ 3263-$ 2761.1/2761.1 x 100= 18.18%.
At the commencement of the year that concluded in August 2014, the consolidated amount of ordinary shares was $ 2,562.6 million; The employee benefits reserve was $ 31.4 million; the equity reserve for credit losses was $ 70.2 million; The cash flow hedge reserve stood at $0.4 million; the translation reserve was 0.6million; the available-for-sale reserve was $ 8.5 million; the retained profits were $ 144.1 million thus the total equity at the beginning of the year was $2817.8 million ( BOQ Annual Report ,2014).
For the year concluded in August 2014, the consolidated amount of ordinary shares was $ 3,020.6 million and the increase is due to the increase in the owner’s distributions and the low distributions to the owners which amounted to $458.0 million. The employee benefits reserve was $ 33.3million and the increase is due to the equity-settled transaction that amounted to $1.9 million. The equity reserve for credit losses was $ 70.2 million; the cash flow hedge reserve stood at $(27) million due to the net losses taken to equity that amounted to $ 26.9 million and net gains that were taken to the P and L (profit and loss) which amounted to $ 0.5 million.
The translation reserve was 0.5million and the reserve (available for sale) stood at $ 37.4 million; the retained profits were $ 205.5 million thus the total equity at the yearend was $ 3,340.5 million.
At the commencement of the year that concluded in August 2013, the consolidated amount of ordinary shares was $ 2,464million; the preference shares (perpetual) were $ 195.7 million. The employee benefits reserve was $ 33.3 million; the equity reserve for credit losses was $ 70.2million; the cash flow hedge reserve stood at $(10.6) million; the translation reserve was 0.6million; the available-for-sale reserve was $ 12.7 million; the retained profits were $ 132.9 million thus the total equity at the beginning of the year was $2899.2 million.
At as at August 2013, the consolidated amount of ordinary shares was $ 2,562million; the preference shares (perpetual) were nil. The employee benefits reserve was $ 31.4 million; the equity reserve for credit losses was $ 70.2million; the cash flow hedge reserve stood at $0.4 million; the translation reserve was 0.6million; the available-for-sale reserve was $ 8.5million; the retained profits were $ 144.1 million (BOQ, 2014).
6.0 Part B:

Question 1

The alternatives available for recognizing revenues are cash and accrual alternatives. The accrual alternative recognizes revenue once it has been earned and once the revenues either realizable or realized. According to the accrual alternative, revenue is considered to be earned when the tickets are given to the customers and the cash for the tickets is received. Revenue is realizable if it is anticipated that cash from the sale of the tickets will be obtained in the near future.
The cash basis alternative recognizes revenue once cash from the sale of the tickets is received. The cash basis alternative is recommended in this case because it will offer the most appropriate picture on the amount of tickets that have been sold (Irwin, 2012).

Question two

If there is an allowance for returning the tickets within a period of one month if customers are satisfied, the answer will differ because they returned tickets will have to be deducted from the revenues. The deducted revenues will be similar to return inwards (Gårseth-Nesbakk, 2011).

Question three

If the organizers contract a selling agency that will be charge of marketing and selling the tickets, and the agency earns 10% commission and there is no returning of tickets once sold the organizers will recognize revenue once the selling agents have deducted their commission and remitted the remaining amount (Gårseth-Nesbakk, 2011).

Question four

Concerning the originality of signatures, the accounting profession has the skills to offer authentication services. The accounting and auditing profession use the computer as a major auditing and accounting tool thus it will be easy to apply it when verifying the originality of signatures. The authenticity can be ascertained by use of serial numbers that will be counter checked against those stored in the computer. Accordingly, the accounting profession can verify the authenticity by accounting through a computer (Davis, 2010).

Question five

The COGS (Cost of Goods Sold) refers to the costs that are incurred to purchase, convert and bring inventories to the required condition and the present location. Costs of goods sold include but are not limited to material, delivery and freight, labor, storage and overhead expenses. The COGS in this case is relevant because it will be applicable to the delivery costs, labor and the commission costs. The COGs will be computed by this formula (Opening stock of the tickets+ Additional tickets-Closing stock of the tickets).

Question six

If the signatories will earn a fixed commission for their efforts, then the organizers will recognize expenses once they have remitted the full amount of commission of 10% to the signatories (Andriani, Kober & Ng, 2010).

Question seven

If the signatories will earn a commission of 5% for each ticket they sell the organizers would recognize the cost once they have paid the total commission to the signatories (Christiaens, Reyniers & Rollé, 2010).

References

Andriani, Y., Kober, R., & Ng, J. (2010). Decision usefulness of cash and accrual information: public sector managers’ perceptions. Australian Accounting Review, 20(2), 144-153.
Bank Of Queensland Limited and its controlled entities interim financial report (2014).
BOQ (2014).The Wall Street Journal.
BOQ Annual report (2013).
BOQ Annual Report (2014).
BOQ ASX Release (2014).
Christiaens, J., Reyniers, B., & Rollé, C. (2010). Impact of IPSAS on reforming governmental financial information systems: a comparative study. International Review of Administrative Sciences, 76(3), 537-554.
Davis, N. (2010). Accrual accounting and the Australian public sector–a legitimation explanation. Australasian Accounting Business and Finance Journal, 4(2), 61-78.
Gårseth-Nesbakk, L. (2011). Accrual accounting representations in the public sector—A case of autopoiesis. Critical Perspectives on Accounting, 22(3), 247-258.
Irwin, T. (2012). Accounting Devices and Fiscal Illusions (Epub). International Monetary Fund.

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WePapers. (2020, October, 18) Good Report About Accounting For Business Decisions. Retrieved April 19, 2021, from https://www.wepapers.com/samples/good-report-about-accounting-for-business-decisions/
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