Pork Inn’s Small Business Accounting

Introduction

Pork Inn is one of the most popular sausage joints in Ohio. It is located in an upmarket area. Pork inn is a popular place for customers who live pork products, especially young people who come from well to do families. The restaurant is housed at HZ Towers, an ultra-modern green building near the junction between Rolls Avenue and Skyrise Way. This unique and strategic location gives it an added advantage as it is a major destination for wealthy people who like to be associated with the high class. The major business activity is buying meat from local farmers and making sausages and other meat products which are then sold.

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However, it is widely associated with its tasty pork sausages. Beef sausages, snacks, and black coffee are also sold although not very popular. It is a sole proprietorship form of business operated by J. C Smith, a renowned entrepreneur in the locality. It is operated as a family business but the owner has some plans to incorporate it after he fully captures the market. It started operating some five years ago although the first six months it was below capacity due to cash flow problems. However, there are a few problems which the company has been experiencing which are fully covered by the report below.

Assumptions

This report is to be based on a number of assumptions. First, the business is assumed to be a going concern, that is it will continue with its operations up to an unknown future. This will enable the entrepreneur to plan well as he has no intention of ceasing operations. Second, the business has complied with all statutory rules and regulations hence it is operating legally (Elliot 100). All the fees required by both the national and the state governments have been paid and the necessary documents acquired. Thirdly, the prices it charges to its customers are fully determined by the interaction between forces of demand and supply.

There are no government price controls or arbitrary fixing of prices by any person hence no one can dictate the price. Fourthly, all expenses for the period are recognized and properly accounted for after being incurred whether they have been paid or not, and revenues are accounted for when either cash or credit sales are made irrespective of whether the payments have been received(Rathbone 68). This will enable us to assess the real profit. The business is a private enterprise is assumed to be profit-motivated hence it is offering the best services and prices at its disposal in order to maximize profits.

Another assumption is that all its transactions are properly recorded and proper books of accounts are maintained. This will enable us to detect and investigate any abnormalities like an increase in prices of inputs, decreases in sales, bad debts, what the business owes suppliers so that the general movement can be established. We also assume that the business is subjected to the same economic conditions as other businesses as this is an assurance that it engages in fair competition. The business is engaging in a legal activity. Also, all the accounts are in dollars and the owner has a separate bank account with that of the business(Elliot 100).

Controls

The business is well organized in such a manner that raw materials are sourced from suppliers and then inspected by a registered health practitioner. These products are then passed over to the factory where they are processed into their respective products. In the whole process, high levels of hygiene are observed until when they are put on the table for the customers to enjoy. The transactions are properly recorded and the invoices are well kept (Elliot 100).

Challenges and Solution

The biggest challenge that is faced by pork inn is the ever-rising cost of input such as meat and labor during the past six months. This problem can be traced to the high cost of production on the part of the livestock farmers and the high cost of living in the country brought about by the debt crisis in the European economies hence workers are demanding more wages. Secondly, the café is associated with pork which may not sound to be appealing to some religions such as Islam. Most of the people who would be customers for other products such as meat sausages and snacks from these religious groups tend to keep off the place due to its association with pork (Oldroyd 27).

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Pork inn is a relatively young business and new compared to others in the areas and hence its market share is still limited as most people are not used to it. Another threat is that this venture is not spared by competition which is rampant in any market. This has sometimes forced it to reduce its prices and use high-quality inputs which are expensive considering the fact that this is not matched with a corresponding increase in income. The high rate of staff turnover also increases the operating expenses as new ones must be hired and trained. Cash flow problems are also common due to different means of payment used by the customers (Farag 102).

This delays purchasing of necessary inputs. The main aim of preparing this report is to find lasting solutions to these problems so that the firm can be turned to be a profit-making enterprise that can be incorporated and subsequently be listed in the stock exchange market. The owner has acknowledged that he is operating in a highly dynamic and competitive environment hence he has to keep adequate measures otherwise he can be locked out of the market. This includes sourcing other suppliers who are cheaper than the previous ones. Also, the salaries of the staff have been increased and ensuring promotion based on merits so as to maintain them.

Another branch is in the process of being opened up which will not deal with pork but will operate under the mother’s name so as to cater to the divergent religious habits. The enterprise has started hiring the services of a financial consultancy firm which will help it strategize its financial operations hence maximizing its profits. Thus the amount of time spent by employees outside work-related a task was to be reduced significantly, especially during times when there several jobs.

This was mainly due to the finding that most employees spent more time on their cell phones or computers doing activities that were not related to the job description (Farag 112). Employees’ morale was also to be boosted by identifying exemplary performance and rewarding it. In addition, productivity incentives were to be created within the company.

Balance Sheet

Assets USD

Non – current assets 40000;

Current assets 20000;

Total assets 60000.

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Equity and Liabilities

Owner’s contribution 10000;

Retained earnings 14000;

Loan 24000;

Current liabilities 12000;

Total equity and liabilities 60000.

Best Management Practises

The business should ensure conformity to International Financial Reporting Standards (IFRS) if it has hopes of incorporation and expansion in the future. It should hire a qualified and experienced accountant who is supposed to maintain the following books of accounts: Statement of Financial Position, Income Statement, Cashbook, Cash flow Statement, and petty cashbook. All the accounts should be regularly audited by a registered auditor. The auditor and the accountant will be of much importance as far as International Financial Reporting Standards (IFRS) are considered (Elliot 47).

Works Cited

Elliot, Barry. Financial accounting and reporting. London: Prentice Hall, 2004.

Farag, Shawki. The accounting profession in Egypt: Its origin and development. Illinois: University of Illinois, 2009.

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Rathbone, Dominic: Economic Rationalism and Rural Society in Third-Century AD Egypt: The Heroninos Archive and the Appianus Estate. Cambridge: Cambridge University Press, 1991.

Oldroyd, David. “The role of accounting in public expenditure and monetary policy in the first century AD Roman Empire.”Accounting Historians Journal, 22(2005): 345-440.

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StudyCorgi. (2021, January 26). Pork Inn's Small Business Accounting. Retrieved from https://studycorgi.com/pork-inns-small-business-accounting/

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"Pork Inn's Small Business Accounting." StudyCorgi, 26 Jan. 2021, studycorgi.com/pork-inns-small-business-accounting/.

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StudyCorgi. 2021. "Pork Inn's Small Business Accounting." January 26, 2021. https://studycorgi.com/pork-inns-small-business-accounting/.

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StudyCorgi. (2021) 'Pork Inn's Small Business Accounting'. 26 January.

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