ASSESSMENT 1
READING REVIEW # 2
Weighting: 10%
Type: Individual
Length: 750 words (excluding reference list)
Submit to: Turnitin (instructions on Blackboard)
REQUIRED:
Watch the following videos:
www.youtube.com/watch?v=baXfuBK-YjA
https://www.youtube.com/watch?v=vNnxCxbKkDw
Read the following article:
http://www.nzherald.co.nz/small-business-sme/news/article.cfm?c_id=85&objectid=11892098
Textbook resources:
Chapter 3, Learning outcomes 2, 3, 4: pages 77 -96
Chapter 8, Learning outcomes 1, 2: pages 253 – 261
Using the above resources, answer the following questions:
- What items would be included in ‘cost of sales’ for Fallenfront?
- Explain the importance of gross profit to this business.
- What other expenses are they likely to have?
- What depreciating assets would they own?
- How could trend and ratio analysis help their business?
How could Steve Crowhurst use profitability ratios to manage his business?
Solution
Accounting for Decision Making
- What Items would be included in ‘cost of sales’ for Fallenfront?
Fallenfront online merchandise shop cost of sales would cover all the cost of all the items in its beginning inventory of both its online and physical concept store plus all the net value of all items sold, minus the cost of the items or goods in its final inventory. Fallenfront’s cost of sales does not include administrative, general and selling expenses (Shaw, 2017). Therefore, their total cost of sales comprises of beginning inventory plus purchases minus ending inventory.
- Explain the Importance of Gross Profit to this Business.
Calculating Gross Profit is crucial for all businesses. Fallenfront is an example of one such company whose Gross Profit can assist the business owner in analyzing and assessing the financial performance and profitability of the online store. Gross Profit will indicate how Fallenfront is fairing in the web business arena. Through Gross Profit,……………………………..To access the rest of the solution for $5, please click on the purchase button.
