Forms of Business

Liam and Helen can enter into a partnership form of business as there is two or more than two person involved. An internet business is of less complexity and can be managed by the partners. Further, they can operate the business as per their own sense of understanding and little interference will happen in this form of business.

However, going by the overall scenario and the concern regarding the personal liabilities the best form of business will be a private company. This is due to the fact that the private company has a separate legal entity that is distinct from that of the members and hence, personal liabilities will not occur because the owners and the company are two different persons (Levine & Prietula, 2013).

A small painting business will come under the ambit of sole proprietorship as the business is managed by the owner and he wishes to employ his wife. Hence, it is a clear-cut indication that the business is small and intended to run on a small scale. Further, no outside party is involved hence; it will be suited for a sole The level of risk is less and can be easily managed by the owner. A sole proprietorship is best recommended for this business.

However, if the owner wants to expand the business or bring another party to the business then partnership business can be formed. This will help in expanding the business to another level.

Partnership form of business is best suited as three friends are coming together and sharing their expertise pertaining to the area of accounts, investment, and tax returns. Hence, the combined effort of three will fetch better reward in the partnership form of business. As two or more persons are present and will run the business on their own, therefore, it will be easy to create and maintain partnership and fees are less as compared to another form of business (Alter, 2013).

Another form of business that can be suitable is the private company but the business needs to be on a grand scale. It can be done once the partners decide to form a company and invite public for the deposits. However, the recommended business type is the sole proprietor form of business.

New vaccine development is an area that demands a lot of investment and since it needs listing on the Australian Stock Exchange it needs to be a company. Therefore, going by the operations public limited company is best suited and recommended for the medical researchers. It needs to have huge investments in research and development and this can be done by grants and aids from the government as it is engaged in the development of a vaccine. If it is established as a public company it will fetch many advantages including the benefit of taxation.

Variable Costs and Contribution Margin

However, it can even be formed under the concept of the private company and can attract money from the public at large (Olsen, 2012). This will provide them with the necessary funds and after complying with the listing requirements, the company can get listed.

As the case relates to providing tutoring to the undergraduate student with a friend it implies two or more person are engaged in this activity and hence, partnership form of business is the best form of business available to them. Felicity wants to keep a stern control on the activities and this can be done under partnership form of business. With two people operating the entire activity there will be more transparency and hence, control will be maintained (Hemmer & Labro, 2013). Hence, partnership form of business is best recommended for Felicity.

However, if Felicity is operating entirely in her own way and taking charge without much indulgence of her friend then she can vouch for sole proprietorship as a single person takes the entire control and management

Judgment – The achievements of Paula Kensington is by dint of her caliber of judgment. Though there were many backdrops yet she posed a strong self. Her judgment was accurate that led her to the current position. Her selection to join a printing company in a finance team proved to be a major success. Her insights were accurate and based on optimism.

Knowledge – Paula Kensington had immense knowledge and this is the sole reason why she has been successful. Both her father and brother were ACCA qualified and hence that skill was present in the blood somewhere.  She discovered the power of the network. Her knowledge helped the loss-making company in the transformation of the share price from 4 percent to 53 percent a share.  She created a finance function and implemented a financial system of robust nature.

The application skill of Paula Kensington was exemplary in nature.  Her role as a CFO is praiseworthy. This is the main reason why 12 sales people report to her. Being endowed with application skills she helped the salespeople in telling what they want to do. Her application skills help both male and female students in understanding the approaches to be confident (Williams, 2016).

Communication –  Paula Kensington has shown the immense result when it comes to communication.  The leadership flourished by dint of strong communication. To keep the tempo she hired at her own cost a virtual assistant so that the brand can be highlighted in social media (Williams, 2016). Moreover, the presence of LinkedIn profile is two-dimensional meaning if anyone wants to know her and her values then the blogs can be referred. She has set a strong tone when it comes to communication and being a strong communicator she has inspired allot. Further, other steps include speaking at conferences once every quarter and involved in twice a year for a press coverage.

Fixed Costs and Break-even Point

As per employability skills, communication is a vital factor and is done through speaking clearly, written communication like text, emails, etc. The power to negotiate and sharing of information is another consideration.

Critical thinking – This aspect is best described from the fact that Paula Kensington first job after school was in retail, however, as it did not meet the expectation. This did not let here down and she joined ACCA. The critical thinking aspect helped her in many areas of her professional career. She has mastered much business and her stint indicate that she has efficiently worked with the team.

a. Social media and employability go hand in hand. The presence of technology is an important consideration as it helps the employment in their conduct and ensures a better practice. It leads to better transfer of knowledge and information. Paua Kensington uses social media for enhancing the brand at social media. Secondly, she can update her followers with writing and blogs (Williams, 2016).

Self-management goes a long way in planning and organizing. Paula Kensington backed herself with a strong will power and ensured that the adverse situation is in his favor. When she was named as the CFO of the year she carried on a personal analysis through SWOT analysis that provided a better answer.

Academic performance hardly matters because the only things that need to be done are to be a graduate. There is hardly any effect of academic performance because the only thing that keeps being in mind is the smooth flow of the journey. This should be done because it helps in the subject matter and leads to a better course of action It can be done in a strong manner and helps to ensure a better practice.

Given Information
Hire of kitchen in local area including electricity	300 per week
Charge to client per cooking lesson	210
Additional food to be used per session during lesson	30
Cost of additional items required by actress – music/wine etc.	80 per lesson
Cost of cleaners (2 hours of cleaning required after each session)	15 per hour
Cost of feeding actress’ minders and entourage	60 per session
Hire of music equipment for four weeks	200

1	Calculation of the variable costs per cooking lesson session (unit)
	Additional food to be used per session during lesson	30
	Cost of additional items required by actress – music/wine etc.	80
	Cost of cleaners	30
	Cost of feeding actress’ minders and entourage	60
	Total variable costs per cooking lesson session	200
2	Calculation of the contribution margin per cooking lesson session (unit)
	Charge to client per cooking lesson	210
	Variable costs per cooking lesson session	200
	Contribution margin per cooking lesson session	10
3	Calculation of the fixed costs of the proposed lessons
	Hire of kitchen in local area including electricity	1,200
	Hire of music equipment	200
	Total fixed costs	1,400
4	Calculation of the profit or loss of the proposed lessons
	Charge to client per cooking lesson (210*5*4)	4,200
	Variable costs per cooking lesson session (200*5*4)	4,000
	Fixed costs	1,400
	Net Profit / (loss)	(1,200)
	Nigel should not accept the proposal as this will result in net loss of $1200 to him.

If Nigel expects the publicity from teaching the actress to be so positive that he will not need to advertise his other business this year, which will save him $1,000 in advertising, even than he should not accept the proposal as the net loss from the propsal is $1200 in current scenerio, even if the advertisement cost is not incurred, than Nigel will have to incur a net loss of $200.

	PART-B
	Given Information
	He would need to hire the kitchen for the entire year (annual rent)	$15,000
	He would charge	$50 per person per lesson
	Food per lesson will be	$5 per person
	Cost of cleaners	One cleaner to be paid a salary of $12,000 per year
1	Calculation of the contribution margin per cooking lesson per person
	Charge to client per cooking lesson	50
	Variable costs per cooking lesson session	5
	Contribution margin per cooking lesson session	45
2	Calculation of the fixed costs of the proposed lessons
	Hire of kitchen in local area including electricity	15,000
	Cost of cleaners	12,000
	Total fixed costs	27,000
3 (a)	Calculation of break even
	Break Even	Fixed costs / contribution margin pu
		27000/45
		600
	Nigel requires to take 600 classes to achieve break even
	No. of students required to achieve break even	600/(30*3)
		7
3 (b)	Calculation of break even to make a target profit of $30,000
	Break Even	(Fixed costs +target profit) / contribution margin pu
		(27000+30000)/45
		1,267
	Nigel requires to take 1267 classes to achieve break even with a target profit of $30,000
	No. of students required to achieve break even	1267/(30*3)
		14
4	Calculation of the profit or loss from these lessons for the year if his class size was 15 students per class
	Charge to client per cooking lesson (50*15*30*3)	67,500
	Variable costs per cooking lesson session (5*15*30*3)	6,750
	Fixed costs	27,000
	Net Profit / (loss)	33,750
	Nigel will earn a total profit of $ 33,750 from these classes.

Particular	Oct	Nov	Dec	Total
Sales (units)	44,000	35,000	38,000	117,000
Sales price (per unit)	12	12	12	12
Total sales	528,000	420,000	456,000	1,404,000

Particular	Oct	Nov	Dec	Total
Units purchased	33,000	50,200	50,800	134,000
Purchase price	6	6	6	6
Total purchases	198,000	301,200	304,800	804,000

Inventory on 1st Oct	25,000	–	–
Units sold	44,000	35,000	38,000
Desired Inventory on 31st Dec (40% of following month sales)	(40%*35000)        14,000	(40%*38000)     15,200	(40%*32000)  12,800
Units purchase	33,000	50,200	50,800

Desired inventory on 31^st December is computed as follows:

-Opening inventory = 25000 units

– Desired inventory = 40% of following month sales

Employability Skills

– For October = 40%*35000 = 14,400 (sales of 35000 of the following month)

-For November = 40%*38000 = 15,200 (sales of 38000 considered of the following month)

-For December = 40%*32000 =12,800 (sales of 32000 considered of the following month)

Budget refers to the estimation of income, revenues, production, sale, etc. for a future period. Normally, it is prepared for a accounting period and is always prepared in advance. It requires depth understanding of the organization structure and financials so that the appropriate estimations can be made. Budgeting is a technique of financial planning and thus serves as a financial tool for the management and helps in analyzing and decision making at various aspects (Brealey et. a, 2011).

Budget preparation responsibility lies with different departments for their respective areas, for e.g. direct material cost and volume estimation would be provided by procurement department, units sold and the price of sales estimation would be provided by sales department, etc.

Generally as a whole, high level management is involved in the preparation of budgets. But, 2 types of methods are prevalent for budget preparation namely, top down technique and bottom up technique. In top down technique the budget is prepared by the upper level management with the help of employees whereas in latter case, the budget is prepared by the employees and then reviewed by the management (Graham & Smart, 2012). Both the techniques have their advantages and disadvantages and the selection of appropriate technique depends upon the management policies and intention. If the management is of the view that employees can be involved in the preparation of the budget and confidentiality of the information is not of much relevance then bottom up technique can be followed otherwise the top down method can be considered.

Currently, the company is using top down approach for the preparation of budgets, however engagement of employees is also necessary for setting up a good and attainable budget. Hence, the management is advised, to engage the employees and take their inputs for preparation of budget, as they are the peoples who have to ultimately achieve the budget or perform it practically

		Assets	=	Liabilities	+	Owner’s Equity
Trans	Date	Cash	Accounts Receivable	Prepaid Rent	Supplies	Vehicle	Office Equipment	GST paid		Accounts Payable	GST collected		B. Swan Capital	Revenues	Expenses
Transfer of capital to business	01-Jan-17	25,000				12,000							37,000
Payment of Rent	04-Jan-17	(6,600)		5,000				600							(1,000)
Purchase of office equipment	05-Jan-17	(4,400)					4,000	400
Purchased supplies on credit	06-Jan-17				860			86		946
Received commission	14-Jan-17	5,500									500			5,000
Motor Vehicle expenses paid	18-Jan-17	(88)						8							(80)
Withdrawal for personal use	20-Jan-17	(60)											(60)
Earned sales commission	25-Jan-17		4,576								416			4,160
Paid for supplies purchased on 6/1	28-Jan-17	(946)								(946)
Total		18,406	4,576	5,000	860	12,000	4,000	1,094		–	916		36,940	9,160	(1,080)

Office Equipment	Dr	4,400
To Cash	Cr	(4,400)
(Being purchase of office equipment recorded)

Dupont Real Estate
BALANCE SHEET
For the month ended on 31st January, 2017
		(Amount in $)
Particulars		As at 31 Jan, 2017
Current assets
Cash and cash equivalents		18,406
Trade and other receivables		4,576
Inventories – Supplies		860
GST Paid		1,094
Prepaid Rent		5,000
Total current assets		29,936
Non-current assets
Property, plant and equipment
Vehicle		12,000
Office Equipment		4,000
Total non-current assets		16,000
Total assets – (a)		45,936
Current liabilities
Trade and other payables		–
GST collected		916
Total current liabilities		916
Non-current liabilities
Financial liabilities		–
Employee benefits		–
Total non-current liabilities		–
Total liabilities – (b)		916
Net assets (a-b)		45,020
Equity
Contributed equity		36,940
Reserves		–
Retained earnings		8,080
Total equity		45,020

GST collceted	Dr	916
To GST paid	Cr	(916)
(Being GST payable and receivable adjusted)

As per the General Accepted accounting principle, the company has a right to set off the similar liabilities and assets,

if the law permits them. Here, the company has both the liability and asset for GST collected and paid.

Hence, the company can adjust them, and can show the only remaining balance of either asset or liability.

In the given case, after set off the net balance of GST paid will remain

Date	Particulars	Ref	Dr	Cr
04-Jan-17	Bank		15
	To Interest earned			15
	(Being interest earned recorded)
09-Jan-17	Bank		450
	To DC Morris Music			450
	(Being amount read)
26-Jan-17	Telephone exp		88
	To Bank			88
	(Being telephone bill paid)
27-Jan-17	Bank		150
	To Dividend received			150
	(Being dividend rec recorded)
27-Jan-17	Bank charges		8
	To Bank			8
	(Being bank charges debited by bank)

Munro Music Store – General Ledger
Cash at bank
Date	Particulars	Jnl Ref	Dr	Cr	Bal
01-Jan-17	Balance bd				14,200
06-Jan-17	Sales	CR1	550		14,750
06-Jan-17	Bella’s Bows	1253		2,400	12,350
06-Jan-17	Optus	1254		674	11,676
09-Jan-17	OZ Loans	Transfer		800	10,876
11-Jan-17	Careful freight Ltd	1255		3,125	7,751
12-Jan-17	Crisp & Co.	1001	363		8,114
13-Jan-17	Sales	CR2	880		8,994
16-Jan-17	RSCM	1256		345	8,649
18-Jan-17	Munro- Capital	1002	1,000		9,649
20-Jan-17	Sales	CR3	1,045		10,694
20-Jan-17	Wages	Transfer		4,650	6,044
23-Jan-17	Sundry exp	1257		200	5,844
23-Jan-17	Joe’s Organ Pipes	1258		1,055	4,789
24-Jan-17	Chen Pyt Ltd	1003	1,320		6,109
25-Jan-17	Brisbane City Council	1259		1,353	4,756
26-Jan-17	Toyota servicing	1260		750	4,006
27-Jan-17	Sales	CR4	3,410		7,416
30-Jan-17	Sales	CR5	825		8,241
04-Jan-17	Inerest earned		15		8,256
09-Jan-17	DC Morris Music		450		8,706
26-Jan-17	Telephone exp			88	8,618
27-Jan-17	Bank charges			8	8,610
27-Jan-17	Dividend recd		150		8,760

	Balance as per cash book		8,760
	Less: Amount debited by bank not recorded
20-Jan-17	Cheque number 2670 has been paid out from Munro Music Store’s account in error by the bank	(2,000)	(2,000)
	Less: Cheque not deposited/cleared in bank but recorded in cash book
27-Jan-17	Sales	(3,410)
30-Jan-17	Sales	(825)	(4,235)
	Add: Cheque issued but not yet cleared
16-Jan-17	RSCM	345
23-Jan-17	Joe’s Organ Pipes	1055
25-Jan-17	Sundry Exp	1353	2,753
	Balance as per bank statement		5,278

References

Alter, S 2013, Work System Theory: Overview of Core Concepts, Extensions, and Challenges for the Future, Journal of the Association for Information Systems, vol. 14, no. 1, pp. 72-121.

Levine, S. S., & Prietula, M. J 2013, Open Collaboration for Innovation: Principles and Performance, Organization Science, Harvard Press

Hemmer, T., & Labro, E 2008, On the optimal relation between the properties of managerial and financial reporting systems, Journal of Accounting Research, vol. 46, pp. 1209–1240.

Olsen, E 2012,  Strategic Planning Kit for Dummies, John Wiley & Sons.

Weistroffer, H.R, Smith, C.H and Narula, SC 2010,  Multiple criteria decision support software, Springer: Oxford University Press.

Williams, P. (2016). Eyes on the price, viewed 21 April 2017, https://www.accaglobal.com/an/en/member/member/accountingbusiness/2017/02/interviews/paula-kensington.html

Brealey, R, Myers, S & Allen, F 2011, Principles of corporate finance, New York: McGraw-Hill/Irwin.

Graham, J. & Smart, S 2012, Introduction to corporate finance, Australia: South-Western Cengage Learning.