Management Accounting and Finance – Case Study Analysis

Question 1

This question examines how management accounting supports business operations in a real-world organisational context. You will analyse the practical application of management accounting information using the organisation where you are currently employed or have previously worked (referred to as “your organisation”).

The term “business operations” refer to the primary activities or core functions that generate value for your organisation, such as the sale of apparel or electronic products, furniture manufacturing or the provision of logistics and transportation services.

Required: 

• Provide a concise description of your organisation’s core business operations.
• Identify and explain three specific examples where management accounting information is applied in your job role or your management’s job role. For each example, describe how this information supports decision-making, planning, or control activities within your organisation.

Question 2

William Chan is a 49-year-old Singaporean who has spent his career working for others. Being single and without dependants, he has been able to build up savings over the years. He has long aspired to become his own boss in the next phase of his career before retiring and is interested in venturing into the silver economy, which he finds personally relevant and beneficial.

While attending a business conference in Malaysia last year, William met an entrepreneur, Michelle Tan, through a mutual business contact. Michelle had recently established a retirement village in Malaysia. Through their discussions, he gained valuable insights into the strong market demand for senior living and care services in the region. Michelle shared with William that her first retirement village is performing extremely well, and she has identified an opportunity to establish a second retirement village in Johor Bahru. Given Singapore’s proximity to Johor Bahru, she believes there is significant potential to attract Singaporean retirees who are looking for more affordable yet well-supported living options. Hence, she is seeking a Singapore-based partner to help drive this expansion.

After several meetings with Michelle, William is persuaded that this is a worthwhile business opportunity with the potential to generate further expansion opportunities. Although he has no prior experience in business management and limited understanding of Malaysian regulatory requirements, he is committed to learning these aspects as the venture progresses.

Before advancing with this business opportunity, William must decide between establishing a company or sole proprietorship as his business entity. Knowing that you are currently studying Management Accounting & Finance, he has turned to you, his cousin, for advice.

Required: 

As William’s trusted advisor, analyse and evaluate the key considerations that should guide his decision between company and sole proprietorship registration.

In your answer, you should:

• Compare and contrast the implications of setting up the business as a company versus a sole proprietorship (e.g. legal liability of owner).
• Recommend whether William should establish a company or a sole proprietorship as his business entity and provide clear justification based on his speci

Question 3

Research and identify one real-life example of a rights issue of shares announced and executed from 1 January 2022 to 31 December 2025.

Note: DO NOT choose rights issues by real estate investment trusts (REIT) such as Ascendas REIT or other business trusts such as Asian Pay Television Trust.

Answer the following questions regarding the rights issue:

Required: 

a) Attach as Appendix A your research findings showing the relevant portions that support your answers in your submission.

b) With regards to the rights issue, state the following:

i) Name of the company offering the rights issue

ii) Year of the rights issue

iii) Rights entitlement

iv) Rights issue price

c) How much funds did the company plan to raise from the rights issue?

d) Assume that you currently own 40,000 shares in the company prior to the rights issue. You wish to purchase all the new shares to which you are entitled under this rights offering. However, your available funds are limited to S$4,A00 (Refer to Note below).

Note:

Amount of available funds is S$4,A00. (A is the 7^th digit of your Student ID).

E.g. if your Student ID is 2012345B, the amount of available funds that you have is S$4,500.

Determine the total number of shares that you will own after the rights issue is finalised. Justify your answer with a clear explanation and include all relevant calculations.

Question 4

Your tutor would have informed you the name of the listed company allocated to you for this assignment. Please approach your tutor if you were not notified yet.

Access your allocated listed company’s Annual Report for the year 2024 from the online website of Singapore Exchange (http://www.sgx.com) and answer the questions below.

Please refer to page 11 for instructions to access an Annual Report from Singapore Exchange website.

Notes:

a) For figures required, please use the data in the “Group” column for the current year (i.e. 2024) only.

a) When stating the currency amount, please indicate the currency and symbol (e.g. US$ or S$). The amount should be also stated in full (e.g. US$1,000,000 should not be stated as US$1,000).

Required: 

a) Attach as Appendix B the relevant pages of the Annual Report to support your answers in your submission.

b) State the following:

i) Name of the company

ii) Financial year end of the Annual Report (e.g. 31 January 2024)

iii) Sales (or Turnover or Revenue)

iv) Gross Profit (Loss) – to indicate profit or loss

v) (Loss) Profit before tax – to indicate profit or loss

vi) (Loss) Profit after tax – to indicate profit or loss

c) Explain how the group’s operating expenses are classified.

d) Fill in the numbers for the group’s Accounting Equation.

For example: Assets = Owner’s Equities + Liabilities

S$188,365,000 = S$21,450,000 + S$166,915,000

e) Identify and briefly explain two non-current liabilities of the group. This information can also be retrieved under “Notes to the Financial Statements” in the annual report.

f) In the “Financial Statements” topic, we studied the Profit or Loss Statement and Balance Sheet for sole proprietorships. With reference to your assigned listed company for this question, identify and briefly explain one difference in the Profit or Loss Statement and one difference in the Balance Sheet when comparing the listed company’s format to that of a sole proprietorship.

Note: You are required to use the specific terms and terminology shown in the financial statements of your assigned listed company where relevant.

Q4(g) and Q4(h) are not related to Q4(a) to Q4(f).

g) Describe a transaction that took place in your organisation (as identified in Question 1) which affected the following accounts:

i) 2 revenue accounts and 1 asset account

ii) 2 asset accounts and 1 expense account

h) Obtain two different source documents dated 1 March 2026 or later from two different business organisations, e.g. supermarket receipt, fast food receipt, telco bill, etc.

i) Insert a scanned copy or image of each source document into your report.

ii) Consider each transaction from the viewpoint of the business organisation that issued the document. Identify the accounts involved (e.g. debtors, creditors, sales, etc) and state whether each account balance increases or decreases as a result of the transaction.

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Experts Answer on Above Questions on Management Accounting & Finance

Analysis of business operations

My business is engaged in providing online assignment Help Services to students in Malaysia and Singapore. The core operations include handling student queries, accepting assignments, allocating them to the writers, managing the quality and timely delivery, processing customer payments and promoting the business to generate leads.
Three examples of management accounting information application – the first example is writer cost analysis whereby an assignment of SGD 100 includes a writer fee of SGD 60 and this type of information supports pricing and cost control decisions. Another example is a marketing performance report whereby the marketing expenses of $2000 generates revenue of $8000-$10000 and this type of information supports planning and resource allocation. The third example is deadline performance monitoring whereby assignments whose deadlines are missed requires hiring an additional writer and it helps in taking operational control and service quality improvement related decisions.

Company versus sole proprietorship

In case of sole proprietorship, the owner william has full control over the decisions and profits, and his liability is unlimited. This kind of business is considered as less credible by Banks and investors. A company is an illegal entity which indicates that the personal liability of William is limited to his investment. It is quite easy to attract investors, more suitable for high investment business and requires more compliance. It is recommended to William to establish a company instead of a sole proprietorship.

Example of rights issue

The company name is Sembcorp Marine Limited and the year of right issue is 2022. The rights entitlement indicates that 3 rights shares are issued for every 2 shares held and the right issue price is S$0.08 per rights share. The rights issue price is S$0.08 per rights share and the company planned to raise S$1.5 billion. The company owned 40000 shares which means the eligible rights share is 60000. The cost to subscribe is S$4800 (60000*0.08). The fund available is less than $4800 with William and hence, he cannot apply for the entire 60,000 shares.
The company selected is Singapore Airlines, and the financial year end is 31st March 2024. The revenue of the company is S$19013000000 and gross profit is not clearly indicated because the airline companies make use of operating profit. The Profit before tax is S$2778000000 and after tax profit is S$2675000000. The classification of operating expenses is done by function such as staff costs, fuel expenses, marketing expenses and other operating costs.

Two Non Current Liabilities

The two non current liabilities are lease liabilities and long term borrowings.

Differences between listed company and sole proprietorship

The difference is identified in respect to profit and loss statements such as in respect to Singapore Airlines, it clearly details the operating expenses but in respect to sole proprietorship, it uses a simple income statement. In respect to balance it, the difference is identified in terms of Singapore Airlines clearly reporting shareholders equity, retained earnings and non-controlling interest while a sole proprietorship makes use of owner’s capital and drawing accounts.
Transactions affecting two Revenue accounts and one asset account – the transaction involving a student purchasing assignment writing and plagiarism checking Services together. It leads to an increase in Revenue and the asset account also increases.
Two asset accounts and one expense account – the company makes payment of $2000 for advertising expenses using bank transfer.

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