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BTMC-138: Managerial Accounting and Finance in Tourism

BTMC-138: Managerial Accounting and Finance in Tourism

IGNOU Solved Assignment Solution for 2021-22

If you are looking for BTMC-138 IGNOU Solved Assignment solution for the subject Managerial Accounting and Finance in Tourism, you have come to the right place. BTMC-138 solution on this page applies to 2021-22 session students studying in BAVTM courses of IGNOU.

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Assignment Solution

Assignment Code: BTMC-138/2021-22

Course Code: BTMC-138

Assignment Name: Managerial Accounting and Finance in Tourism

Year: 2021-2022

Verification Status: Verified by Professor

Assignment A

Answer the following in about 500 words each.

Q1) What is Balance Sheet? Describe different methods of arranging assets and liabilities. 20

Ans) A balance sheet (also known as a statement of financial position or a statement of financial condition) is a summary of an individual's or organization's financial balances, whether it's a sole proprietorship, a business partnership, a corporation, a private limited company, or another entity like the government or a not-for-profit entity. The assets, liabilities, and ownership equity of a company are listed as of a specific date, such as the end of the fiscal year. A balance sheet is frequently referred to as a "snapshot of a company's financial situation." The balance sheet is the only one of the four basic financial statements that applies to a single point in time during a business' calendar year.

In the Balance Sheet, the various assets and liabilities should be listed in the correct order. This is referred to as 'marshalling.'

The assets may be arranged in the following two ways:

  1. In the order of liquidity.

  2. In the order of permanence.

Cash and assets that can be easily converted into cash are shown first, followed by assets that cannot be easily converted into cash. As a result, the most liquid asset appears at the top of the list, while the most permanent asset appears at the bottom. The above sequence is reversed according to permanence. In other words, the most permanent asset is displayed at the top, while the most liquid asset is displayed at the bottom.

The total of assets and liabilities should always be the same. If they don't add up, however, it's possible that some errors were made while preparing the final accounts. You must double-check the treatment of all items, including the arithmetical aspect, and make any necessary corrections so that the Balance Sheet adds up.

The Trial Balance is used to prepare the final accounts. The Trading and Profit and Loss Account receives all items of expense and income that appear in Trial Balance. The Balance Sheet displays the remaining items, which represent the balances of personal and real accounts. Assets are represented by debit balances, while liabilities are represented by credit balances.

Assets: The term 'assets' refers to the company's economic resources (property), which include both current and fixed assets. You're probably aware that current assets are assets that are likely to be realised within a year's time, such as cash, stock, debtors, bills receivable, short-term investments, and so on. Fixed assets, on the other hand, are those assets that are acquired for long-term use in the business. They can be tangible, such as machinery and furniture, or intangible, such as goodwill, patents, and other intellectual property. Certain expenses and losses that have not been fully written off are also included in the assets.

Liabilities: The term 'liabilities' refers to all claims against a company's assets, whether they are made by outsiders (creditors) or by the company's owners. The claim of the outsider can be divided into two categories: I current liabilities and (ii) long-term liabilities. In the Balance Sheet, these are shown separately. Current liabilities are obligations that are expected to be paid within a year (or during the normal operating cycle). Long-term liabilities are items such as loans that are not expected to be paid off soon. After adjusting for net profit and drawings during the year, the owner's claim is shown as capital.

Q2) Define a computerised accounting system. Distinguish between manual and computerised accounting system. 20

Ans) A computerised accounting system is an accounting information system that processes financial transactions and events in accordance with Generally Accepted Accounting Principles in order to generate reports that meet the needs of the users. There are two aspects to every accounting system, whether manual or computerised. To begin, it must adhere to a set of well-defined principles known as accounting principles. Another advantage is that there is a user-defined framework for maintaining records and producing reports.

The operating environment of a computerised accounting system is the framework for data storage and processing that consists of both hardware and software in which the accounting system operates. The operating environment is determined by the accounting system used. Hardware and software are inextricably linked. The hardware structure is determined by the type of software. Furthermore, the type of hardware chosen is determined by a number of factors, including the number of users, the level of secrecy required, and the nature of various functional departments' activities.

Manual Accounting System

A manual system is less expensive because it eliminates the need to purchase computers and software, as well as train employees. A manual system can also be more secure because data transfer to the IRS or accountants does not have to be done over the internet. Unlike a computer system setup, the manual accounting system has no drawbacks because it can work even when there is no electricity.

When using the manual accounting system, however, human errors such as figure transposition, omission of a transaction, and so on can occur.

In manual accounting, you'll need a strategy for quickly correcting errors. To ensure that the totals in the general ledger and journal are correct, use a calculator tape on each page.

Computerized Accounting System

Computer systems and software make up a computerised accounting system. The software is intended to track a company's accounting transactions in order to generate monthly financial reports, tax return information, annual financial statements, and other financial report configurations that analyse the efficiency, profitability, and operations of the company.

The following are the two primary requirements:

  1. Operating procedure: The correct way to operate the system in order to store and process data.

  2. Accounting framework: This consists of a grouping structure and record-keeping principles.

Companies that use computerised accounting software can tailor it to fit the needs of their various business entities, multiple currencies, and branches that sell a variety of products.

Minimal errors, improved efficiency, lower operating costs, and higher-quality work are all advantages of computerised accounting.

Main Differences

Speed: The speed difference between manual and computerised systems is the most significant difference. Accounting software is much faster than manual systems at processing data and creating reports. Software programmes perform calculations automatically, reducing errors and increasing efficiency. Once data has been entered into the system, reports can be generated by pressing a button on a computerised system.

Cost: Cost is another distinction between manual and computerised systems. A paper and pencil accounting system are much less expensive than a computerised system, which requires a machine and software. Training and programme maintenance are two other costs associated with accounting software. Costs for printers, paper, ink, and other supplies can quickly add up. Manual accounting, on the other hand, necessitates more personnel. As a result, in the case of manual accounting, more money is spent on salaries and wages.

Backup: A third distinction between manual and computerised systems is the ease with which a computerised system can be backed up. In the event of a fire or other disaster, all transactions can be saved and backed up. With paper records, you can't do this unless you make copies of all pages, which is a time-consuming and inefficient process.

Assignment B

Answer the following questions in about 250 words each.

Q3) State the main objective of accounting. 10

Ans) Accounting's primary goal is to provide users with information. Because accounting information is used by a large group of people, including customers, employees, investors, creditors, and the government, accounting is also required to fulfil some broad social obligations.

The objectives of accounting can be stated as follows:

To Keep Systematic Records: Accounting is the process of keeping a systematic record of financial transactions such as purchases, sales, cash receipts, and payments. A systematic record of the company's various assets and liabilities is also required.

To Ascertain the Net Effect of the Business Operations i.e., Profit or Loss of Business: The primary goal of business is to make money, and the businessman is keen to learn more about this. The preparation of the profit and loss account is made easier by keeping accurate records of income and expenses (income statement). The profit and loss account shows the profit or loss made by a business during a specific time period.

To Ascertain the Financial Position of the Business: The businessman is interested in knowing not only the operating results, but also the financial position of his company, i.e., where it stands. In other words, he wants to know when the company owes others money, what it owns, and what happened to his capital – whether it grew, shrank, or stayed the same. The preparation of a 'balance sheet' (position statement) that answers these questions is made easier by keeping a systematic record of various assets and liabilities.

To Provide Accounting Information to Interested Parties: Apart from the owners, there are a number of other parties who are interested in learning more about the company, including management, the bank, creditors, tax authorities, and so on. The accounting system must provide the necessary data for this purpose.

Q4) List the functions of Financial Management. 10

Ans) "The function of financial management is to review and control decisions to commit and recommit funds to new and ongoing uses," according to Ezra Solomon. Financial management is directly concerned with production, marketing, and other functions within an enterprise, regardless of decisions made about the acquisition or distribution of assets, in addition to raising funds."

In a business, the two most important decisions are:

Investment Decision

Any project can be funded with the funds available. Financial management establishes a framework for making wise investments. The following are factors to consider when making an investment decision:

  1. Management of working capital

  2. Capital budgeting decision

  3. Management of mergers, reorganization, and disinvestment

  4. Buy or lease decisions

  5. Securities analysts and portfolio management

Major investment-related issues in a company include fixed asset investment and current asset management. Assets are funds that have been invested (or used). Investment decisions primarily concern asset composition, which includes both fixed and current assets.

Financing Decision

The firm's financing pattern is the second function of financial management. Identification of sources of finance, determining financing mix, cultivating sources of funds, and raising funds are all important aspects of the financing decision. Shareholders' funds (owners' equity) and borrowed funds are the two main sources of funds. The cost of funds, debt equity mix, tax implications, depreciation, control and financial strain, interest rate, and inflation are just a few of the factors that influence the financing decision. Owners' funds and outsiders' funds, as well as long-term and short-term funds, must be kept in balance. In most cases, a company uses both internal and external funds. 'Financial leverage' refers to the use of these sources in various combinations. For this decision, various types of analysis are required, such as leverage analysis and EBIT – EPS analysis.

Q5) Describe different flooring in the Retail Store. 10

Ans) The Flooring in a Retail Store: The flooring in a retail store is an important part of the overall look and feel of the store. Different types of materials are used by various retailers to create the desired store environment for their customers.

Nothing transforms the retail commercial environment like a contemporary finish, which combines colours, texture, functionality, and a variety of designs. According to studies, the look and feel of a retail environment can influence the amount of time a customer spends browsing and even the desire to buy. And, of course, colour has been shown to influence their moods. Floor polishing services, particularly when it comes to flooring, will have a significant impact due to the sheer surface area they cover.

To make an impact, high-end stores use very expensive materials such as granite. Carpets are used by some retailers, while ceramic tiles are used by others. Store managers should become familiar with the various types of flooring materials used in stores and ensure that they have a clear understanding of the types of maintenance that these floors require, such as regular polishing to keep the shine off the floor. When customers walk into a store with dirty and poorly maintained flooring, they get a sense of untidiness, and many are turned off. As a result, management will need to determine the frequency of cleaning or polishing flooring in consultation with housekeeping experts, either from within the company or from outside, and devise a preventive maintenance plan so as not to disrupt the store's regular operations.

Assignment C

Answer the following questions in about 100 words each.

Q6) What is profit? 6

Ans) Profit, also known as net income, is the difference between earnings and expenses for a given period. In other words, it's the remaining income after all of the period's necessary and matched expenses have been deducted. It's worth noting that I didn't mention all of the expenses that were paid during the time period. In the period in which the revenue is earned, all expenses that were incurred to produce the income must be recognised. As a result, some expenses that aren't paid during the period are still deducted from income to arrive at the period's net income. The basic profit formula is calculated by subtracting all expenses from total revenues earned in the same accounting period.

Q7) What is the significance of an Accounting period? 6

Ans) Accounting periods give business owners a long-term view of their company's profitability and assist them in making informed business decisions. The periodicity concept was developed by accountants to enable this. The ongoing and complex undertakings of the business are divided into short time periods and reported in monthly, quarterly, and annual financial statements using this concept. The company prepares and publishes financial statements for each period. In the financial statement's heading, the date is indicated. For business owners, investors, creditors, and government agencies, this information is critical. The time assumption provides stakeholders with accurate and timely financial data, allowing them to make informed business decisions.

Q8) What is debit note? 6

Ans) A debit note, also known as a debit memorandum (memo), is a commercial document issued by a buyer to a seller in order to request a credit note in writing. The Purchase returns journal's source document is the debit note. In other words, it is proof of the occurrence of a cost-cutting measure. To adjust the amount of an invoice that has already been issued, the seller may issue a debit note instead of an invoice. In most business-to-business transactions, debit notes are used. An extension of credit is frequently used in these transactions, which means that a vendor will send a shipment of goods to a company before the goods have been paid for. Although real goods are being exchanged, no real money is being exchanged until an actual invoice is issued. Rather, debits and credits are recorded in an accounting system to keep track of shipped inventory and payment. When a price appears on a debit note, it refers to the price that the customer paid for the goods.

Q9) What is flow of funds? 6

Ans) The net of all cash inflows and outflows into and out of various financial assets is known as fund flow. On a monthly or quarterly basis, fund flow is typically measured. Only share redemptions, or outflows, and share purchases, or inflows, are considered, not the performance of an asset or fund. Excess cash for managers to invest is created by net inflows, which theoretically creates demand for securities such as stocks and bonds. The total amount of money flowing in and out of various financial assets is referred to as fund flows. Investors can use the direction of cash flows to gain insight into the health of individual stocks and sectors, as well as the overall market.

Q10) Distinguish between Fixed Cost and Variable Cost. 6

Ans) The differences between fixed cost and variable cost are listed below:

Fixed Cost

Fixed costs are those that remain constant regardless of the level of output. Fixed costs include the rent of the factory building, property taxes, insurance, and depreciation on plant and machinery. These costs arise as a result of capacity creation and are unaffected by activity variation. They only tend to change over time. When a fixed cost is expressed as a per unit cost, it varies depending on the level of activity.

Variable Cost

In the normal production range, variable costs typically change in direct proportion to the level of activity. When output levels increase or decrease, costs increase or decrease in lockstep. The variable cost per unit basis, on the other hand, remains the same. Direct materials, direct labour (wages), power, royalties, commission to salesmen, and so on are all examples of variable costs.

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