CARIBBEAN SECONDARY EDUCATION CERTIFICATE (CSEC)

SCHOOL BASED ASSESSMENT (SBA)

PRINCIPLES OF ACCOUNTS

AN INVESTIGATION OF THE IMPACT OF ADVERTISING ON THE

PERFORMANCE OF LADIES’ EXCLUSIVE SHOES MART

BY
CAANDIDATES:
 SELINA FRASER (0081)
 ANDREW SAUNDERS (0197)
 ANDREW BROWN (0057)
 KEVIN RAMCHARRANN (0170)
 JAVASHANA GONSALVES (0090)

TERRIRORY: GUYANA
SCHOOL: THE GUYANA EDUCATION TRUST COLLEGE
CENTRE CODE: 090086
TEACHER: MR. ALVIN BOWEN
DATE: JANUARY 31, 2020.

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ACKNOWLEDGEMENTS
The group would like to express sincere thanks to those persons who assisted in the completion
of this SBA Accounts project. Thanks to our Principal, Mrs. Lake who gave timely advice,
support and encouragement throughout the period of the research. Thanks to our parents who
supported and encouraged us. Thanks to our Principles of Accounts teacher, Mr. Alvin Bowen
who supervised and advised us. Thanks also to all other persons who, in some way assisted in
helping us to complete this project.

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TITLE

AN INVESTIGATION OF THE IMPACT OF ADVERTISING ON THE

PERFORMANCE OF LADIES’ EXCLUSIVE SHOES MART

3
Contents
ACKNOWLEDGEMENTS................................................................................................................................2
TITLE............................................................................................................................................................3
INTRODUCTION...........................................................................................................................................5
SECTION 1: TOPIC/ISSUE/PROBLEM............................................................................................................6
SECTION 2: OBJECTIVES...............................................................................................................................7
SECTION 3: BACKGROUND TO THE TOPIC...................................................................................................8
SECTION 4: METHODOLOGY & INSTRUMENTS............................................................................................9
SECTION 5: PRESENTATION AND ANALYSIS OF DATA................................................................................10
CONCLUSION.............................................................................................................................................21
RECOMMENDATIONS................................................................................................................................22
BIBLIOGRAPHY...........................................................................................................................................23
APPENDICES..............................................................................................................................................24

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INTRODUCTION
This School Based Assessment (SBA) in Principles of Accounts is designed to investigate the
impact of advertising on the performance of Ladies’ Exclusive Shoes Mart. This project is a
partial requirement for Caribbean Secondary Education Certificate (CSEC) examination.

The paper is conveniently divided into the following sections: topic/issue/problem; objectives;
background to the topic; methodology & instruments; presentation and analysis of data;
conclusion
and recommendations.

The group will use accounting ratios to assess the performance of the business in three key areas:
profitability, liquidity and efficiency. Also a questionnaire will be used in a survey to find out the
views of the participants in a survey about how advertising can affect the business performance.

After collecting and analysing the data, the group will draw some conclusions and make some
recommendations.

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SECTION 1: TOPIC/ISSUE/PROBLEM
An Investigation of the Impact of Advertising on the Performance of Ladies’ Exclusive Shoes
Mart

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SECTION 2: OBJECTIVES
There are three classifications of objectives in this SBA Principles of Accounts project:
profitability, liquidity, and efficiency.

Profitability objectives:
 To operate the business profitably:
 To make a net profit of $20,000
 To make a net profit margin of 60%
 To obtain a return on investment of 65%

Liquidity objectives
 To operate the business in such a way in order have the ability to pay its debts
comfortably:
 To obtain a working capital ratio (current asset ratio) of 2:1
 To obtain a acid test ratio (liquid asset ratio) of 3: 1

Efficiency ratios
 To use the business’s resources efficiently:
 To obtain a rate of inventory of 3 times
 To obtain a collection receivable period of 7 days
 To obtain a payable payment period of 10 days

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SECTION 3: BACKGROUND TO THE TOPIC
The topic of this SBA Principles of Accounts project is: “An Investigation of the impact of
Advertising on the Performance of Ladies’ Exclusive Shoes Mart.”
The business is classified as a Sole Trader (or Sole Proprietorship) business. It is owned,
operated and managed by Thomas Carey. This is a “simulated “business and it is intended to
give the group an opportunity to apply their knowledge in Accounting to the operation of a
business in order to assess the impact of advertising on the performance of the business.
The group decided to select this topic because it is a common view that advertising is one of the
main ways in one of the main ways of increasing market shares, sales and the profitability of the
business. Also the group believes that advertising can also help to give the business a
competitive advantage.
The business will be operated for a period of one month (August 1, 2019 to August 31, 2019).
The product is exclusive ladies’ shoes. The target market (potential customers) would comprise
of ladies who just prefer to look exclusive or unique in their footwear. The main competitors of
the business are Sharon’s Executive Ladies Shop and Liza’s Ladies’ Shoe Mart.

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SECTION 4: METHODOLOGY & INSTRUMENTS
With regard to the methodology, the group will use two measures/tools – accounting ratios and
the questionnaire. The accounting ratios will be used to analyze the performance of the business
in terms of three key areas: profitability, liquidity and efficiency. The group will use the Trading
and Profit and Loss Statement and the Balance Sheet to calculate the accounting ratios.

The questionnaire will be used to investigate the impact of advertising on the business
performance in terms of market shares, sales, net profits, competitive advantage and long term
benefits. Also, the group will be able to get the views of the participants in the survey regarding
the type of advertising (informative or persuasive) that is best suited for the business.

There are several benefits for using the questionnaire in the research. First, they are really
inexpensive when they are handled properly. They can be cheaper than taking surveys which
require a lot of time and money. Second, they can be of different types, written, postal, telephone
and many other methods. Third, a single question or a topic can be asked to many at the same
time without any delay.

However, there are some disadvantages. First, limited response. Second, there is a lack of
personal contact. Third, in some cases, there is a poor response rate. Fourth, the information can
be unreliable.

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SECTION 5: PRESENTATION AND ANALYSIS OF DATA
The main purpose of this section is collect and analyze the data in order to determine the results
of the study. With respect to the performance of the business, two tools/devices will be used.
These include accounting ratios and a questionnaire.
The accounting ratios will be used to assess the performance of the business in terms of
profitability, liquidity and efficiency. The questionnaire will be used to assess the impact of
advertising on the performance of the business in terms of market shares, sales and net profit
competitive advantage and long term benefits. Also, the group will be able to get the views of the
participants in the survey regarding the type of advertising (informative or persuasive) that is
best suited for the business.
Accounting ratios
Copies of the Trial balance, Trading and Profit and Loss Account and the Balance Sheet are
shown in the Appendices. These will be used to prepare the following financial ratios.

Accounting ratio Formula Calculation

Profitability:
Net profit margin Net profit x 100 $21,630 x100 = 16.60% = 17%
Sales $130,350
Return on investment Net profit x 100 $21,630 x 100 = 55.23%
Capital employed $39,165

Liquidity:
Current asset ratio Current assets: $43,185:$14,370 = 3:1
Current liabilities
Liquid asset ratio Liquid assets: ($43,185 - $27,475)
Current Liabilities $39, 165
= $15,710/$14,370 = 1.09: 1 = 1:1

Efficiency:
Rate of inventory Average inventory ($23,910 + $$27,475)/2
turnover Sales $130,350
= 0.20 times
Collection receivable Accounts receivables x 30 $10,000_____ x 30
period Credit sales $130,350 - $10,000
= $10,000 x 30
$120,350
= 2.49 days
= 2.5 days

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Payable payment\\ Accounts payables x 30 $9,730_____ x 30 =
period Credit purchases $92,009 - $9,370
= $9,370 x 30
$86. 636
= 3.24 days
= 3 days

Analysis: Profitability Ratios

The net profit margin of 17% means the for every $1 of sales revenue, Ladies’ Exclusive Shoes
Mart only make $0.17 in net profit.
The return on investment of 55% means that Ladies’ Exclusive Shoes Mart gets 55% of every
$100 invested in the business. Of the $139, 165 invested in the business, the business gets back
$76,540.75
Analysis: Liquidity Ratios
The current asset ratio of 3:1 implies that for every $1 of short term debts, Ladies’ Exclusive
Shoes Mart is able to find $3 to pay off the debt
The liquid asset ratio of 1:1 means that for every $1 of short-term debts incurred, Ladies’
Exclusive Shoes Mart is able to find $1 in liquid assets (assets that can be readily and easily
converted into cash) to pay off the debt.
Analysis: Efficiency Ratios
The rate of inventory turnover of 0.20 times means the during the 31-days accounting period
(August, 2019), the inventory was sold 0.20 times.
The collection receivable period of 2.5 days means that in the 31-days period in August 2019, it
takes Ladies’ Exclusive Shoes Mart 2.5 days to receive payments from its credit customers.
The payables payment period of 3 days means that Ladies’ Exclusive Shoes Mart will pay its
credit suppliers within 3 days given that the accounting period is only 31 days.

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Questionnaire
Gender
Gender Amount Percentage (%)
Male 5 50
Female 5 50
Total 10 100

Gender

Male
Female

The data set shows that 50% of the participants were males while 50% were females.

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Age
Age (years) Amount Percentage (%)
18 – 23 4 40
24 – 29 3 30
30 – 35 2 20
36 and above 1 10
Total 10 100

Age
45%

40%

35%

30%

25% Age

20%

15%

10%

5%

0%
18-23 24-29 30-35 36 and above

40% of the participants were classified in the age group 18 – 23 years. 30% were in the age
group 24 – 29years. 205 were in the age group 30 – 35 years. the age group 36 years and above
accounted for 10%.

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Income range
Income Amount Percentage (%)
$50,000 - $100,000 5 50
$101,000 - $150,000 3 30
$151,000 - $200,000 1 10
Above $200,000 1 10
Total 10 100

income Range
60%

50%

40%
income Range
30%

20%

10%

0%
$50000-100,000 $101,000-150,000 $151,000-200,000 above $200,000

The data set indicates that 50% of the participants receive an income of $50,000 - $100,000,
while 30% of them receive an income of $101,000 - $150,000. The other remaining 20% receive
an income of $151,000 - $200,000 and above $200,000 respectively.

Advertising & Market share

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 Response Amount Percentage (%)
Agree 7 70
Undecided 1 10
Disagree 2 20
Total 10 100

market share

Agree
Undecided
Disagree

With respect to the impact of advertising on market shares, 70% of the participants agreed that it
had a positive effect. 10% were undecided, while 20% disagreed.

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Advertising & Sales
Response Amount Percentage (%)
Agree 10 100
Undecided 0 0
Disagree 0 0
Total 10 100

advertising and sales

120%

100%

80%
advertising and sales
60%

40%

20%

0%
Agree Undecided Disagree

As shown in the data set, all of the participants in the survey agreed that advertising can increase
the sales of the business.

Advertising & Net profit

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 Response Amount Percentage (%)
Agree 9 90
Undecided 1 10
Disagree 0 0
Total 10 100

Adverising and Net profit

100%
90%
80%
70%
60%
Adverising and Net profit
50%
40%
30%
20%
10%
0%
agree undecided disagree

90% of the respondents in the survey agreed that advertising can help the business to increase net
profits, while only 10% were undecided.

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Advertising & Competitive advantage
Response Amount Percentage (%)
Agree 5 50
Undecided 3 30
Disagree 2 20
Total 10 100

Advertising and Competitive advantage

agree
undecided
disagree

50% of the participants agreed that advertising can give the business a competitive advantage in
the market for ladies’ exclusive shoes. Three participants (30%) were undecided, while two of
them (20%) disagreed.

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Advertising & Long-term benefits
Response Amount Percentage (%)
Agree 9 90
Undecided 1 10
Disagree 0 0
Total 10 100

advertising and long-term benefits

100%
90%
80%
70%
60% advertising and long-term
benefits
50%
40%
30%
20%
10%
0%
agree undecided disagree

With respect to the impact advertising in producing long-term benefits for the business 90% of
the participants agreed while 10% of them were undecided

Type of advertising

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 Type Amount Percentage (%)
Informative 2 20
Persuasive 2 20
Both 6 60
Total 10 100

types of advertisibg

informative
persuasive
both

As shown in the table and graph above 40 % of the participants in the survey indicated that
informative advertising and persuasive advertising are most suitable for the business (20% each).
However, 60% of them indicated that both types of advertising would be most suitable for the
business.

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CONCLUSION
This SBA project in Principles of Accounts was designed the assess students’ ability to apply
their knowledge of Accounting principles and concepts to the performance of an identified
business (Ladies’ Exclusive Shoes Mart). The project was conveniently divided into the
following sections: topic/issue/problem; objectives; background to the topic; methodology &
instruments; and the presentation and analysis of data.
With respect to the performance of Ladies’ Exclusive Shoes Mart in the area of profitability. The
following conclusions can be made:
Profitability performance: Profitability rations
The first objective of making a net profit of $$20,000 was exceeded by $1,630 as the business
made a net profit of $21,630 The second profitability objective of making a net profit margin of
60% was not achieved. Ladies’ Exclusive Shoes Mart fell below the mark by making a net profit
margin of 17%. The third objective of a 65% return on investment as also not achieved. Ladies’
Exclusive Shoes Mart’s return on investment was 55%. The business fell below this mark by
10%.

Liquidity performance: Liquidity ratios

The current asset ratio was 3:1, the liquid asset ratio was 1:1. In the case of the current asset
ratio, Ladies’ Exclusive Shoes Mart performed very well. The had the ability to repay their short
debt three times. However, in the case of the liquid asset ratio, the business was just able to repay
it short-term debts from its liquid assets.

Efficiency performance: Efficiency ratios

The rate of inventory turnover was 0.20 times. Ladies’ Exclusive Shoes Mart did not perform
well in this area. Performance was well below the projected level of 3 times. There is need for
improvement in this area. Ladies’ Exclusive Shoes Mart had excellent collections receivable
period and payables payment period of 2.5 days and 3 days respectively.

Questionnaire
Bases on the analysis of the data obtained from the questionnaire, it can be concluded that
advertising can indeed contribute to the improved performance of Ladies’ Exclusive Shoes Mart.
For example, 70% of the participants agreed that adverting had a positive effect. market shares.
All of the participants (100%) agreed that advertising can help to increase sales while 90%
agreed that advertising can help to increase net profits. 50 percent of the participants agreed that
advertising had a positive effect on helping Ladies’ Exclusive Shoes Mart to gain a competitive
advantage. 90 % of the participants agreed that advertising was an investment which can help the

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business to gain long-term benefits. 60% of the participants agreed that both informative and
persuasive advertising should be used by Ladies’ Exclusive Shoes Mart.

RECOMMENDATIONS
Based on the conclusions of this SBA Principles of Accounts project, the group would like to
give the following recommendations:

In terms of improving profitability performance, Ladies’ Exclusive Shoes Mart should:

- increase sales (example, lowering prices)
- reduce costs (example, finding cheaper suppliers);
- make the best use of its resources; use all resources efficiently.

In terms of improving liquidity performance, Ladies’ Exclusive Shoes Mart should:

- increase profits through increased sales and cost controls;
- reduce drawings;
- increase non-current liabilities;
- delay expenditures on non-current assets.

In terms of improving liquidity performance, Ladies’ Exclusive Shoes Mart should:

- put measures in place to ensure that its credit customers pay their debts promptly;
- ensure that short-term are extended but paid but within the accounting period;
- use its resources efficiently

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BIBLIOGRAPHY
Austen, D. et al (2011), Principles of Accounts for CSEC, Cheltenham: Nelson Thrones Ltd
Wood, F. & Robinson, S. (2000) Principles of Accounts for CSEC Caribbean (4th Ed.), Kingston
Carlon Publishers (Caribbean) Ltd
Holdip, G. & Lamorell, C. (2005), Principles of Accounts f or Caribbean Examination (2nd),
Kingston: McMillan.

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APPENDICES
A1: Trial Balance: Ladies’ Exclusive Shoes Mart

A2: Trading & Profit and Loss Account: Ladies’ Exclusive Shoes Mart
Ladies’ Exclusive Shoes Mart
Trading & Profit & Loss Account for the Year ended August 31, 2019
$ $ $ $
Opening Inventory 23,910 Sales 130,350
Add: Purchases 92,008
115,918
Less: Closing inventory 27,475
Cost of goods sold 88,443
Gross profit c/d 41,907
130,350 130,350
Gross profit b/d 41,907
Wages 13,119
Rent expense 2,970
Advertising expense 1,630
Telephone expense 897
Miscellaneous expenses 1,661
20,277
Net profit 21,630
41,907 41,907

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 A3: Balance Sheet: Ladies’ Exclusive Shoes Mart
Ladies’ Exclusive Shoes Mart
Balance Sheet as at August 31, 2019
$ $ $ $

Non-current assets Capital

Cash register 6,250 Balance as at 1/8/19 25,955
Shoe racks 4,100 Add: Net profit 21,630
10,350 47,585
Current assets Less drawings 8,420
Inventory 27,475 39,165
Accounts receivables 10,000 Current liability
Cash at bank 3,000 Accounts payable 9,370
Cash in hand 2,710 Loan from friend 5,000
43,185 14,370
53,535 53,535

A4: Sample Letter (Questionnaire)

The Guyana Education Trust College
Carmichael street,
Georgetown,
Guyana.
August 10, 2019.

Dear Sir/Madam,

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 Please be informed that the researchers are students of The Guyana Education Trust
College. We are required to conduct a survey for the completion of a School Based Assignment
(SBA) which is a partial requirement for the Caribbean Secondary Education Certificate (CSEC)
examination.
We are inviting you to be a participant in the survey by completing the questionnaire.
Please place indicate your response to each statement by placing a tick in the appropriate box.
Please be assured that your all information provided by you will be treated with strict
confidence. Your name is not necessary.
Thank you in advance for your cooperation.

Yours respectfully,
Selina Fraser ______________________
Andrew Saunders ______________________
Andrew Brown ______________________
Kevin Ramcharrann ______________________
Ivashana Gonzales ______________________

A5: Questionnaire

1. Please state your Gender

Male ☐ Female ☐
2. What is your age range?

18to under23☐ 24 years-29years☐ 30years-35years☐ 36years and above☐

3) What is your religion? Christianity ☐ Muslim☐ Hinduism ☐ other ☐

4) Income Range

$50,000-$100,000☐ $101,000-$150,000☐ $151,000-$200,000☐ Above $200,000☐

For questions 5 to 8, select the option that represents your response to each statement.
5. Advertising can increase the market share of Ladies’ Exclusive Shoes Mart

Agree ☐ Undecided ☐ Disagree ☐

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6. Advertising can help to increase the sales of Ladies’ Exclusive Shoes Mart

Agree ☐ Undecided ☐ Disagree ☐

7. Advertising can help to increase the net profits of Ladies’ Exclusive Shoes Mart

Agree ☐ Undecided ☐ Disagree ☐

8 Advertising can help Ladies’ Exclusive Shoes Mart to gain a competitive advantage in the
market for ladies’ shoes.
9. Advertising is a short-term investment for long-term benefits.

Agree ☐ Undecided ☐ Disagree ☐

10. Which type of advertising is best for Ladies’ Exclusive Shoes Mart.

Informative advertising ☐ Persuasive advertising ☐

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