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Kim Temple

ACCT11081

Introductory Financial Accounting

Assignment – Step 7-10

Step 7

Embarking on Step 7, I diligently began watching the short videos to gain further understanding of

inventories. Being something of a visual person and given these were quite short videos, I felt they

gave me a brief enough understanding to pique my curious nature. Enough for me to want more,

not enough to bore me. So off I went. Initially I went through my 3 annual reports and conducted

word searches. I was initially surprised by how many pages contained either the word inventory or

inventories. I have read these reports perhaps a couple of times and have never really paid much

thought to how much a word appears.

I knew my company, Headlam Group plc would contain substantial inventory given the work and

understanding of the initial parts of the assignment. Being Europes largest distributor of

floorcoverings would certainly result in having a substantial inventory and I am a quite looking

forward to uncovering the ways in which they manage and measure the inventory.

On the first page of the guide, it stated Dell Computers had zero inventory and only purchased the

parts when the order was received and I knew immediately this was certainly not the case for

Headlam as I recalled watching the video where the new distribution centre was built housing

possibly hundreds of thousands of metres of floorcovering. This also got me thinking about the

differences between assets and inventory. Where they the same, or different? Was the carpet

being purchased an asset or inventory item or where they the same? And were the delivery trucks

considered an inventory item or an asset? So many question… so much reading!

Starting at 2015, I was shocked to see the inventory value being a staggering £119.6m up from

£116.59m from 2014. I then went to my Cost of Sales in the Income Statement and it showed

£453.4m. Suddenly, it seemed in context and I began to think about the actual turnover of the

business. I compared it to the example in the study guide. Wesfarmers has $6.5b inventory and

sales of $49.1b which is 8 times greater, whereas Headlam is only 3 times the amount. But

comparing these two items is like comparing apples with pears. Headlam Groups sole business is

floor covering where Wesfarmers is a much more diverse industry. This then got me considering

the construction company I work for and if we would hold an inventory. The project I am currently

working on is building a pipeline from the Murray River to Broken Hill. Whilst we require a lot of

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items to build the said pipeline and the facilities associated with it, similar to Dell, we purchase the

items as required either through suppliers or subcontractors.

On reviewing Headlams inventory for each year there is a distinctive upward trend, which is positive.

More interesting however was in 2016, the format of the annual report had changed, displaying

much more detail with restated values dating back to 2014. I recall from Acct11059 that this often

happens once the actuals are realised. The actual inventory value for 2014 (£115.5) and 2015

(£118.1) were both showing different numbers. When considering the reason this may be, I recalled

from reading the original annual report from 2015, repeated throughout the document in regard,

“…..Inventory is held across a broad and diverse product range which is subject to a risk that changes

in consumer tastes and demand resulting in some inventory lines becoming slow-moving or

obsolete, such that the recoverable amount is less than the carrying value.” With this in mind, it

makes sense that the values would be restated given the unknown value of these older ranges being

sold. With several acquisitions happening over the 3 year period, it seems only natural the inventory

value would continue to grow, reaching £131.5m in 2017.

Headlam Group have declared in their annual report under ‘Notes to the Financial Statement’ they

operate under the FIFO principle, meaning their cost is based on the first-in first-out principle. It was

noted in the 2017 report as an improvement item that the reordering system to be moved from

manual to a computerised algorithm leading me to conclude the company had adapted the

perpetual method of accounting for the cost of goods rather than conducting an annual stocktake

(period). This method was further concluded given the volume of inventory. Headlam did not advise

of any write downs within the annual report. A thorough search of the most recent report found no

reference to either theft or wastage which I felt was neither a good or bad thing. It is not good as it

may not be being reported, or it is not bad as the company is able to account for all the inventory

with no theft nor wastage to note which again leads back to the introduction of a computerised

recording system.

Headlam states they have over 22,000 units and pride themselves on an extensive and rapid delivery

network and the consideration this is reordered manually while staying ahead of flooring market

trends in Europe is quite impressive. The company has also stated they are eagerly awaiting the

2018 results due to the introduction of stock reordering trials and from other initiatives regarding

the delivery fleet.

It is also often noted through the annual report there are associated costs with the inventory and

these are to be expected given the company is a distribution company with 63 subsidiaries. The

annual report has stated it includes the acquisition of the inventories and bringing them to their

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existing location and condition. It also includes all estimated costs of completion and costs to be

incurred in marketing, selling and distribution.

As mentioned in the annual report, the introduction of a computerised ordering system with

perhaps the introduction of the serial numbers, this would be of huge benefit and further support

the assumption the perpetual method is used for recording inventory.

I recall many years ago working for a labour hire agency and attending some stocktakes of some

plant companies. They were conducted each weekend and we were all armed with printouts of

items in each of the rows with the part number and the number of items held in stock. I can still

vividly recall counting hundreds of small nuts, bolts and screws which had been tipped out of boxes.

Sometimes the items were within close range, sometimes there were no items at all and sometimes

there were part numbers not recorded and many items. I had initially concluded the company was

preferring to use the periodic method however I feel now they were possibly utilising a perpetual

method, given we had data reference sheets and were undertaking a stocktake to assess if it was to

assess if there were to be any ‘write-downs’ for the period. In hindsight, this has given me a much

clearer visual of an inventory and how it can be accounted.

When receiving feedback from my peers, it was suggested, and also noted once I reviewed the

assessment notes again, inventory turnover ratio would be a good way to identify ways Headlam

could improve its inventory management.

000's 2014 2015 2016 2017Cost of Goods $ 444,702 $ 453,567 $ 481,068 $ 487,683 Beginning Inventory $ 115,591 $ 118,165 $ 126,037 End Inventory $ 115,591 $ 118,165 $ 126,037 $ 131,566 Inventory Turnover Ratio 0.26 0.25 0.26Inventory Turnover Days 1416 1438 1382

Based on the results identified, Headlams turnover is not what I expected at all however it has

helped understand the business and put it into clearer perspective. It is showing an improvement in

the time in inventory is in stock however I can now fully understand the need for such big

distribution centres. To improve the inventory management, the introduction of the algorithm

ordering system will assist with reordering those items of low stock and also assist with recognising

slow moving stock and if there is actually a need to reorder.

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Step 8

I found the concept of my Step 8 challenging and confusing. Initially I had difficulty obtaining

permission to download the program to enable me to complete this step and believed I may have

been required to forfeit the marks. A colleague came to my rescue (I believe she may have muttered

the words ‘not all superhero’s wear capes’) and I was off and running…. Or so I thought.

I found I was a little lost in relation to what was required in this section and it wasn’t through a lack

of trying nor understanding. I wasn’t sure when to stop and what was enough and even though we

were asked to take screen shots, I was even more confused about what I was actually taking a screen

shot of. I also read Marias comment about seeing what was opened and what we were working on

but I wasn’t sure at which point. I can only assume it was the point before I uploaded. With the set

up I found myself becoming snap happy as I entered my company details and there entered and

performed quotes but then wondered if I had surpassed the set up and was now in training.

AAAAAARRRRRRGGGGGGHHHHH!!!!!

Therefore I have screen shotted many, many screens. I felt this was simply because I am someone

who likes structure, with a specific end game. In this circumstance, the uncertainty of what that end

game was had me overthinking quite a bit and struggling to find an off button or conclusion. After I

had completed this and began receiving feedback, I feel I may not have completely understood what

was required and followed the screenshot example of my peers.

Initial Set Up of Company

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New Company Set up for Reports

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Online Training

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Results from Online Test

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Step 9

Business Transactions for Headlam

No. Transaction Details Value

1 Phone Connections/IT

Action - Calling ‘Lifestyle-floors’ to place an

order for some on-trend luxury vinyl tiles.

(Pay Telstra)

$1,500 per month

2 Bulk Purchase of Item – 300sqm

Action - Purchasing sqm of on-trend luxury

tile for distribution through Headlam

including freight (Pay Supplier)

$4,500 – Bulk Purchase

3 Consumer online purchase of item – 5 sqm

Action - Purchase of luxury tile by

consumer in Ireland through one of the

distribution stores in Ireland (Receive

Customer Payment)

$225

4 Delivery Charge for online purchase

(Receive Customer Payment)

$75.00 for order

5 Lease of Delivery Van 01-08-18 to 31-08-18

Action – Delivery van to transport items

from suppliers, from Headlam distribution

centre and to customers, full day charge -

delivery of additional 15 product lines to

consumers in area (Pay Supplier)

$30.00 per day

6 Fuel Consumption 01-07-18 to 31-07-18

Action – Fuel for delivery of items for

month of July (Pay Supplier)

$65.00 per day

7 Wages -23-07-18 to 29-07-18

Action – Delivery Drivers, Sales Personnel,

AP, AR – Combined (Pay Wages)

$87.50 per hour

8 Installation

Action - Installation costs of luxury tile for

consumer in Ireland to Customer (Receive

Customer Payment)

$50.00 per item

9 Subcontractor Invoice $35.00 per item

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Action – Invoice from subcontractor for

installation of goods (Received Invoice

Supplier)

10 Subcontractor Payment

Action – Payment to subcontractor for

installation of goods (Pay Supplier)

$35.00 per item

When initially entering these transactions, they seemed quite logical however the amount of time

and effort put into processing each and every one of them is not reflected in the reports produced.

Each individual transaction was much more than a single line item, satisfying the requirement to

understand how each transaction forms a much bigger part in capturing transactions.

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ID No. Account No. Account Name Debit Credit Job No.SJ 10/09/2018 Jane, Bardon

00000002 1-1310 Trade Debtors $322.5000000002 4-1000 Sales Income #1 $225.0000000002 4-6000 Freight Income $68.1800000002 2-1210 GST Collected $29.3200000002 1-1110 Headlam Group plc $78.0000000002 5-1000 Cost Of Sales $78.00

CD 15/09/2018 Lifestyle-floors Pty Ltd2 1-1110 Headlam Group plc $4,500.002 1-1330 Deposits To Suppliers $4,500.00

PJ 17/09/2018 Purchase; Delivery Vans R Us00000004 2-1510 Trade Creditors $930.0000000004 1-3010 Leased Equipment At Cost $845.4500000004 2-1220 GST Paid $84.55

PJ 22/09/2018 Purchase; Lifestyle-floors Pty Ltd00000002 2-1530 A/P Accrual - Inventory $4,090.9100000002 1-1110 Headlam Group plc $4,090.91

CD 22/09/2018 Telstra Australia Pty Ltd1 1-1110 Headlam Group plc $1,500.001 6-2000 Telephone Expenses $1,363.641 2-1220 GST Paid $136.36

CD 22/09/2018 Telstra Australia Pty Ltd1 1-1220 Electronic Clearing Account $1,500.001 6-2000 Telephone Expenses $1,363.641 2-1220 GST Paid $136.36

CD 22/09/2018 Delivery Vans R Us2 1-1220 Electronic Clearing Account $930.002 2-1510 Trade Creditors $930.00

CD 22/09/2018 Fiona, Smith3 1-1220 Electronic Clearing Account $3,937.503 6-4100 Wages & Salaries Expenses $3,937.50

CD 22/09/2018 Jodie, Brown4 1-1220 Electronic Clearing Account $3,937.504 6-4100 Wages & Salaries Expenses $3,937.50

CD 22/09/2018 Peter, Jones5 1-1220 Electronic Clearing Account $3,937.505 6-4100 Wages & Salaries Expenses $3,937.50

CD 22/09/2018 We Lay It Right6 1-1220 Electronic Clearing Account $35.006 2-1510 Trade Creditors $35.00

CR 22/09/2018 Jane, BardonCR000001 1-1210 Undeposited Funds Account $322.50CR000001 1-1310 Trade Debtors $322.50

CR 22/09/2018 Jane, BardonCR000002 1-1210 Undeposited Funds Account $50.00CR000002 2-1520 Customer Deposits $50.00

Grand Total: $26,071.41 $26,071.41

1/09/2018 To 22/09/2018

Headlam Business

All Journals

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AssetsCurrent AssetsBank AccountsHeadlam Group plc $358,012.91Total Bank Accounts $358,012.91Clearing AccountsUndeposited Funds Account $2,872.50Electronic Clearing Account ($12,477.50)Total Clearing Accounts ($9,605.00)Other Current AssetsInventory $540,000.00Deposits To Suppliers $73,500.00Voluntary Withholding Credits $4,500.00Total Other Current Assets $618,000.00Total Current Assets $966,407.91Non-Current AssetsPlant & EquipmentPlant & Equipment At Cost $92,000.00Accum. Depr. Plant & Equipment $6,700.00Total Plant & Equipment $98,700.00FurnitureFurniture At Cost $7,800.00Accum. Depr. Furniture $1,300.00Total Furniture $9,100.00Office EquipmentOffice Equipment At Cost $35,000.00Accum. Depr. Office Equipment $4,500.00Total Office Equipment $39,500.00ComputersComputers At Cost $5,600.00Accum. Depr. Computers $2,400.00Total Computers $8,000.00Motor VehiclesMotor Vehicles #1 At Cost $45,000.00Accum. Depr. Motor Vehicles #1 $4,500.00Motor Vehicles #2 At Cost $65,000.00Accum. Depr. Motor Vehicles #2 $6,500.00Total Motor Vehicles $121,000.00BuildingsBuildings At Cost $475,000.00Accum. Depr. Buildings $15,000.00Total Buildings $490,000.00Warehouse EquipmentWarehouse Equipment At Cost $94,000.00Accum. Depr. Warehouse Equip. $7,500.00Total Warehouse Equipment $101,500.00ImprovementsImprovements At Cost $42,500.00Accum. Depr. Improvements $1,500.00Total Improvements $44,000.00Leased EquipmentLeased Equipment At Cost $9,745.45Accum. Depr. Leased Equipment $1,299.00Total Leased Equipment $11,044.45

As of 22/09/2018

Headlam Business

Balance Sheet

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Total Non-Current Assets $922,844.45Total Assets $1,889,252.36LiabilitiesCurrent LiabilitiesCredit CardsVisa #1 $10,000.00Visa #2 $10,000.00Total Credit Cards $20,000.00GST LiabilitiesGST Collected $4,529.32GST Paid $1,214.37Total GST Liabilities $5,743.69Other Tax/Withholding Liab.Voluntary Withholdings Payable $430.00ABN Withholdings Payable $4,500.00Company Tax Instal. Payable $230.00Fuel Tax Credits Payable $8,900.00Sales Tax Payable $2,500.00Total Other Tax/Withholding Liab. $16,560.00Payroll LiabilitiesPAYG Withholding Payable $46,722.00Superannuation Fund #1 $53,559.00Total Payroll Liabilities $100,281.00Other Current LiabilitiesTrade Creditors $176,515.00Customer Deposits $45,750.00A/P Accrual - Inventory $91,090.91Lease On Equipment $45,000.00Total Other Current Liabilities $358,355.91Total Current Liabilities $500,940.60Non-Current LiabilitiesBusiness Loan #1 $864,500.00Total Non-Current Liabilities $864,500.00Total Liabilities $1,365,440.60Net Assets $523,811.76EquityOwner's/Shareholder's Capital $540,000.00Current Year Earnings ($16,188.24)Total Equity $523,811.76

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Headlam Business

Statement of Cash Flow1/09/2018 To 22/09/2018

Account Name

Cash Flow from Operating Activities Net Income ($14,324.60) Deposits To Suppliers ($4,500.00) GST Collected $29.32 GST Paid ($357.27) Trade Creditors ($35.00) Customer Deposits $50.00 A/P Accrual - Inventory $4,090.91 Net Cash Flow from Operating Activities -$15,046.64Cash Flow from Investing Activities Leased Equipment At Cost ($845.45) Net Cash Flow from Investing Activities -$845.45Cash Flow from Financing Activities Net Cash Flow from Financing Activities $0.00Net Increase/Decrease for the period -$15,892.09Cash at the Beginning of the period $364,300.00Cash at the End of the period $348,407.91

When initially analysing, I regret doing 2 things. Firstly, I wondered why I would have entered so

much fabricated information putting little thought into how I wanted to present my company which

would have made my analysis a much easier process and the second was why I created so many

different transactions when I could have applied more straightforward transactions. We reap what

we sow so onward onwards and upwards….

When I was processing payments in MYOB especially as there were so many layers from creating the

card, to creating the quote, transferring to the order and then processing the payments, I found it

confusing as I understood and knew the process as these are items conducted each day in my

current role, however entering the information into a new, unfamiliar system, I found at times I was

a little out of my depth. I believe this to be reflected in the All Journal. When I first printed it and

saw within there were items which appeared to be incorrectly processed, my initial instinct was to

amend them so my work could be presented perfectly, however I decided against it as I felt it told a

more interesting story.

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The information I entered is indeed reflective of what has been produced. It helped to further

appreciate the double entry book keeping concept and in consideration of it being used daily, it

would be easy for a business to keep track of the daily transactions as they occur to product the

business reality of the company. The All Journal was perfect as it showed the daily transactions. The

Balance Sheet was perfect to show the ledger with all the different accounts like the assets, liability

and equity in my business.

I again started to regret creating so many subsidiary accounts rather than just focusing on a general

ledger and again reminded myself this was to fully engage with what I was learning.

and Cashflow statement is only for period to date in September. With the initial outlay of a product,

it is interesting to see all the other costs for one product. With Headlam, to purchase a luxury

floorcovering and then to also add a high mark up, there was still a lot of additional costs to consider

rather than the straight forward distribution of floor coverings.

My initial thoughts were of a company that appeared to be well established with a solid amount of

assets compared to the liability. I also found, while I was looking at my statements, Ifelt I needed

more information and realised the benefit of comparison when reviewing the las 3 years annual

reports to really gain a full understanding of movements within the company. It wasn’t until

undertaking this exercise I fully appreciated the value of assessing consecutive years.

The current ratio between the assets and liability is quite stable at 1.93. However, it is showing a

minus for income which, regardless of the size of a business, would not be a good indicator of a

forecast profit (and I don’t feel I need a ratio for that). The relevance of entering the information in

and having that personal connection to it and then seeing it reproduced and used to reflect what is

happening within the company has become more ‘real’. Based on the current transactions, the

revenue has decreased.

The balance sheet is also identifying the perpetual method of recording the inventory is being used.

While I did look for this in the balance sheet, I was not surprised as I recall entering the information

to build the inventory and checking the box to state I wanted it included.

With the statement of cashflow, in a more realistic environment, there would have been more than

one customer which would reflect the decrease for the period. It was a good indication for where

the revenue was coming from and where it was going to be distributed in a quite simplified version.

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Regarding the discussion for the Journals, I had opted to use the ‘or MYOB help’ functions regarding

the All Journal report as I have not been successful in making any connections with others from the

group, either on facebook or through personally messaging them. While I do not feel this has

hindered my study, I have felt more reserved than normal to interact online or to even reach out to

my peers. Like other aspects of my life which seem clearer since beginning university, the statement

‘the silence is deafening’ has much more profound meaning than ever.

MYOB is the same but different to the accounting system my workplace currently use.

Predominately, I am responsible for entering information in, mainly in relation to purchase orders,

invoices, contracts only for accounts payable. I also assist with preparing end of month forecasting

values through estimating and entering accruals. I find using MYOB, my mind is unable to

differentiate between the two, possibly taking me longer than normal to complete. I have spoken to

our Project Cost Reporting (PCR) Team and been advised the program is loosely based on MYOB so I

am sure, if I was to continue to use on a regular basis it would become much more familiar to me. I

did find, the more I used the programme, the more information I could see, especially in the reports.

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Step 10

When initially reviewing the Property Plant and Equipment, I assumed it was going to be a

straightforward exercise. I mean, how hard or confusing can it be. I watched the videos from Week

8, took notes and then when I watched the videos linked to the assessment, I had assumed I was all

over this as my notes were the same as Martins highlight reels. I had made a note regarding the

confusion in what people think is depreciation (a decline in value) to what it actually is, being items

that wear out and no longer providing economic benefit. However, as I have discovered,

depreciation is a much more complex issue and it required a great deal of understanding and

concentration on my behalf.

Headlam Group were quite consistent with the approach of calculating depreciation with easy to

understand table showing the same percentages for all 3 years running.

Asset type Tax depreciation rate %

Freehold and Long Leasehold Properties 2

Short leasehold properties Period of Lease

Motor vehicles 25

Office and computer equipment 10 - 33

Warehouse and production equipment 10 - 20

Land is not depreciated

As depreciation rates are often provided through the Government, I was interested to see the rates

indicated in the UK however found the following for Ireland which was noted in the accounting

practices within the notes. Price Waterhouse Cooper identified Ireland operates an eight year tax

depreciation life on most assets as follows;

On further examination of the United Kingdoms depreciation rate, it was interesting to note when

searching

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Headlam has many accounting policies and they cover a broad range of items regarding

depreciation. These refer to property, plant and equipment and how these are recorded, the rates

which are being applied and investment properties with listed annual rates also being applied.

“Property, plant and equipment are stated at cost less accumulated depreciation and impairment

losses. The cost of self-constructed assets includes the cost of materials, direct labour and any other

costs directly attributable to bringing the asset to a working condition for its intended use. Self-

constructed assets begin to be depreciated from the date they become available for use.”

The choice not to have the amortisation and information listed is indeed a strategic one as it does

contain a footnote advising the company is taking advantage of the exemption in s408 of the

Companies Act 2006 not to present its individual income statement and then provides the profit

vale.

Profit before Tax

2017 2016 2015 2014

Depreciation

on property

plant and

equipment

4914

5276

Amortisation

of intangible

assets

931 0

In 2017, the value of the Non-Current assets is showing as £146.9m, inclusive of property plant and

equipment, intangible assets and deferred tax assets. A non-current asset is an item intended to be

used for many years and the depreciation value is calculated determining what the original cost is

and identifying a percentage of the declining value for the period.

Headlam Group were quite consistent with the approach of calculating depreciation with easy to

understand table showing the same percentages for all 3 years running. And to be honest, there

didn’t seem to be a great deal of movement.

Headlam Group has used the straight-line method for depreciation over the last 3 annual reports.

This is the method where the carrying amount is gradually reduced for the life of the asset.

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Note - KT – Describe the other types of methods and include

Depreciation is a significant cost for Headlam as property, plant and equipment is stated at cost less

accumulated depreciation and impairment losses. These could be considered a significant loss given

the company purchases and sells its own facilities. The depreciation, amortisation and impairment

value in 2014 was £4.9m and this grew to £5.8m in 2017. When recording these figures, I was

completely confused… Why was my Statement of Financial Position showing a different value? It

was time for me to take a step back and start again.

The following are possible journal entries of transactions for Headlam. The values are based on the

annual applicable rates.

Property, Plant or

Equipment

Cost (£) Depreciation (£) Debit (£) Credit (£)

Depreciation Expense –

Motor Vehicles

25,000 6,250 (25%) 6250

Accumulated

Depreciation - Motor

Vehicles

6250

Depreciation Account 95,000 9,500 (10%) Debit

Long Reach Forklift

(Warehouse

Equipment)

9,500 Credit

Depreciation Account 2,999 999.66 (33.3%) Debit

Multifunction Centre

(Office Equipment)

999.66 Credit

As amortisation is an intanglible asset, the company would be able to use their own value on an item

based on market value or fair price. If the item is something that is not physical, it would be much

more difficult to measure. As Headlam use straight-line for depreciation, this allows them to claim

the same value over the life of the products. Therefore even as the items is reducing in actual value

in resale, Headlam is still able to continue claiming the same amount for consecutive years. This is

obviously advantageous and not always entirely reflective of the current item.

Notes – KT

What effect would these journal entries have on my firms financial statements.

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Step 11

This, as always, is the section where I believed my learning really starts. While I do not provide as

much feedback as I review, I find each individual has a unique approach at relaying information.

Some assessments, I can completely relate to, where other times, I can get a little lost. I find a huge

amount of value in this step and go back and review the information I have completed in the hope of

achieving a couple of extra marks based on the feedback I have received.

Feedback To: Jacqui Watts

My Comments

Step 7Inventories

I found it interesting China Ting inventory included labour. Interesting enough that it has made me questioning what I thought I knew about inventories. I had a mindset of

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inventories covering only materials where China Ting seems to have included the ‘whole’ of the price in the final goods. Your breakdown was interesting especially in 2016 where the raw materials work in progress was lower than previous years however the finished goods were higher. Your analysis is very well thought out and thorough. I can not see any items you have not covered in your Step 7.

Step 8MYOB set upMYOB trainingMYOB quiz

CompletedCompletedCompleted

It would appear there is sufficient evidence to show you have completed the training

Step 9Business transactionsAll Journals reportFinancials and discussion

After reading your transaction and interpretations, I feel you have selected relevant transactions to generate the necessary reports.

Step 10Depreciation

The breakdown and information contained within the depreciation section is similar to the rest of your assignment, both detailed and thorough.

Overall The way you approach each of the steps is very considered and thorough. You ensure the reader understands the topic you are discussing and provides enough information to assist with the interpretation of the report. Interestingly, I wondered how I would feel reading our peer reports given I thought mine was boring and uninteresting however I found myself reading each page carefully and feel I too have gained a much greater appreciating for your company China Ting. The time and effort you have spent preparing and ensuring you understand and complete the topic is recognised in the completeness of your assessment.

Good luck with your studies Jacqui. You have assisted me with my own studies more that you realise. With many thanks

To: Rahul Singh

My Comments

Step 7Inventories

You have structured your step 7 in an easy to understand format. The Days in Inventory was certainly interesting as I recalled doing this the previous unit and it assists with understanding the company better. The detail provided is quire impressive.

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CompletedCompletedCompleted

I seem to have accessed the training from a different field which doesn’t show the format as in the one you pasted. It all makes much more sense now on what was to be provided


Like you, I have included wages in the transactions so it has been interesting to be able to compare and know what to expect. Reviewing your analysis of the transactions it was refreshing to be again transported back to ACCT11093 with the financial ratios used. It shows great consideration and solid foundations for the information being presented.

Step 10Depreciation

You have answered again in a structured format, addressing all the items in the assessment.

Overall Possibly the only real constructive feedback I could give Rahul is that I would have loved to have seen your interpretation of some of the items. Your interpretation of these items, like an introduction to the reader of the topic, in your own words, in a more generalised format to further engage the reader.

You have presented a very detailed and thorough report addressing all the necessary criteria. I really enjoyed how you have incorporated the ratios into your paper as it really does portray a much larger picture.

Your knowledge of each of the items are evident and you have again, made me go back and assess my own to provide a higher level of information.

Great work Rahul. For someone so young, you certainly have a real strength in the information provided.

Feedback Received

Feedback From: Jacqui Watts

Feedback To: Kim Temple

My Comments

Step 7 This is well done, and you have covered lots of really

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Inventories interesting points about your firm, and your experiences.


Like you, this step left me a little confused as to what to do, especially since the link to the training in the assignment guide didn’t work for me. I figured it probably didn’t matter as long as we showed an understanding of using MYOB, and you appear to have done this well by creating your own business account and getting 100% on the quiz. Well-done!


Business transactions look very good and should come out well when you do your journal report and financials. I only added purchases and sales in mine, which made for boring financials and your transactions have given me some ideas on how to do mine better.

Step 10Depreciation

You have made some good comments and raised interesting questions about your depreciation.With your journal entries, after watching Tutorial 8 (Mackay) from Week 8 I took it to mean that we choose some entries that were included in the notes to the financial statements. I notice others are getting confused with the XXXX numbers Step 10 suggests using. I took this to mean the journal numbers rather than the depreciation figures, but I’m not 100% sure. However, like MYOB I think as long as we show we understand the concepts it is all good. Also, add the word accumulated depreciation to your credit entry (contra-asset account). I used MYOB, for some more practice for the journal entries, as it created the journal for you, once you entered the depreciation accounts (Depreciation expense account, Individual accumulated depreciation contra-assets account for items of PPE).

Overall A great start, with just a few questions and parts left to answer. You have shown your developing understanding of the concepts well as you have studied the annual reports.

Feedback From: Rahul Singh

Feedback To: Kim Temple

My Comments

Step 7Inventories

1. You need to confirm which inventory system is being followed – if the firm follows the Periodic system it will record Purchases and Changes in Inventory rather records COGS in the Income Statement, but will record COGS if it follows the Perpetual System

2. An increase in inventories is not necessarily a positive

Kim Temple of 30

sign. Ratios of Days of Inventory and Inventory Turnover ratio are indicators of good inventory management and comment on the trend for Hedlam and possible causes of the trend.


1. While you may have gone through the entire MYOB training, you may like to provide evidence of about 15-odd modules of training

2. Perhaps you would like to show setting up your company with 10-15 transactions across a variety of assets, liabilities, Equity etc


1. You still need to enter the 10 journal entries into MYOB then generate the all journals report and the 3 financial statements. And finally comment on the financial statement implications.

Step 10Depreciation

1. “Headlam doesn’t have accumulated depreciation and amortisation listed in the income statement as a major expense account….” Accumulated Depreciation is a contra-asset and is a balance sheet item, not an Income Statement item. Not sure if you are getting confused with depreciation expense and accumulated depreciation.

2. On pg12 you mention depreciation, amortization and impairment expense does not match with the numbers in the Statement of Financial Position – it will not. The former is an income statement item (an expense for the year) and the number on the Balance Sheet will relate to Accumulated Depreciation (the sum total of all the depreciation of the previous years)

Overall You seem to know the issues, so I’m sure you’ll get there!

Kim Temple of 30

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