Podcast
Questions and Answers
How many restaurants does Volare have in the UK and Ireland?
How many restaurants does Volare have in the UK and Ireland?
What is the average gross profit margin for the restaurant sector?
What is the average gross profit margin for the restaurant sector?
What is one of Volare's short term plans to improve competitiveness?
What is one of Volare's short term plans to improve competitiveness?
What is the target year for Volare to become carbon neutral?
What is the target year for Volare to become carbon neutral?
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Which of the following is a potential area for review concerning Volare’s going concern assumption?
Which of the following is a potential area for review concerning Volare’s going concern assumption?
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What is included in Volare's long term plans post-pandemic?
What is included in Volare's long term plans post-pandemic?
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What is a potential benefit of Volare reducing food waste?
What is a potential benefit of Volare reducing food waste?
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What approach is part of Volare's new environmental actions?
What approach is part of Volare's new environmental actions?
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What has been a significant benefit for Jaguar Land Rover in making their manufacturing warehouses energy efficient?
What has been a significant benefit for Jaguar Land Rover in making their manufacturing warehouses energy efficient?
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What is the primary goal of Natasha’s Law?
What is the primary goal of Natasha’s Law?
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What is greenwashing?
What is greenwashing?
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Why should Volare consider creating an environmental impact report?
Why should Volare consider creating an environmental impact report?
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What are the regulatory bodies responsible for in relation to financial reporting?
What are the regulatory bodies responsible for in relation to financial reporting?
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What does IAS 8 address regarding accounting policies?
What does IAS 8 address regarding accounting policies?
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What is a consequence of inconsistent financial reporting for users?
What is a consequence of inconsistent financial reporting for users?
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What type of financial statements are required for subsidiaries within a group?
What type of financial statements are required for subsidiaries within a group?
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What is the benefit of implementing interim financial statements quarterly?
What is the benefit of implementing interim financial statements quarterly?
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Which of the following is a reason to examine a company's financial stability?
Which of the following is a reason to examine a company's financial stability?
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What do guidelines in financial reporting aim to promote?
What do guidelines in financial reporting aim to promote?
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How does acquiring a new subsidiary help Volare’s environmental goals?
How does acquiring a new subsidiary help Volare’s environmental goals?
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What might increased supply in a business context lead to?
What might increased supply in a business context lead to?
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Which financial standard is primarily used in the UK?
Which financial standard is primarily used in the UK?
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Study Notes
Volare Practice Questions - Study Notes
- Q1 Restaurant and Delivery Kitchen Count: Volare has 130 restaurants and 220 delivery kitchens in the UK and Ireland. A competitor, Nando's, has 430 restaurants that also function as delivery kitchens.
Q2 Going Concern Audit Review
- Going Concern Assumption: A company is considered as operating continuously for the foreseeable future, and will not be liquidated. External auditors review this assumption in their audit.
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Areas Requiring Further Review (for Volare): Volare is in a competitive restaurant sector, plans to expand by acquiring another struggling chain, and prepared forecasts. The group accountant must review:
- Strategic Plan Assumptions: Identify the assumptions made when creating strategic plans, including expansion plans.
- Forecast Suitability: Evaluate the validity of financial forecasts; compare gross profit margins (42% average for the sector) to net profit margins (32% average) to competitors. Compare these to Volare's figures. Analyze cash flow forecasts to assess profitability
- Short-Term Plans: Examine how short-term plans aiming to reduce overheads (via sustainable packaging) will impact profitability and competitiveness.
- Long-Term Plans: Review plans involving the acquisition of a struggling chain, and assess the potential impact on the company's financial position.
Q3 Environmental & Sustainable Disclosures
- Briefing Note for Board of Directors (Draft): This note focuses on incorporating sustainable disclosures into financial statements, demonstrating Volare's commitment to sustainability.
- Sustainability Actions: The company aims to reduce cost of sales and achieve carbon neutrality by 2030 through various initiatives.
- Attainable Target: Carbon neutrality is attainable through methods like reducing food waste, avoiding plastic packaging, and improving energy efficiency.
- Industry Best Practices: Companies like Jaguar Land Rover have reduced costs and carbon footprints by implementing energy-efficient manufacturing processes and materials recycling.
- Avoiding Greenwashing: Prevent misleading consumers about environmental impact. Transparency and adherence to regulations are essential.
- Relevant Regulations and Laws:
- Natasha's Law (UK Food Industry Transparency)
- Calorie Labelling Regulation (Out-of-Home Food in England)
- Food Standards Agency (UK Food Hygiene and Safety)
- Environmental Impact Report: Volare should consider creating an environmental impact report to demonstrate adherence to regulations, build customer trust, and increase repeat business.
- Implementing Initiatives: Incorporate policies similar to competing companies (Nando's and others), including reducing food waste, implementing circular energy practices, and acquiring sustainably-minded businesses.
- Potential Hinderances: Expanding operations (increased supply, deliveries, exposure) might negatively impact sustainability efforts
Q4 Financial Reporting Process Success
- Evolution of Financial Reporting: Financial reporting standards today rely on good practices, guidelines, and recommendations from various institutions and committees to produce useful financial statements.
- Success of Regulations: Regulatory bodies aim to promote transparency and integrity in business, which previous standards lacked, preventing large-scale business failures.
- User Perspectives:
- Investors: Interested in firm profitability (going concern).
- Employees: Seek stability and job security within the financial stability of the company.
- Suppliers: Examine the company's continuing financial health and ability to meet obligations.
- Banks: Assess debt repayment capabilities to determine lending viability.
- Good Practices, Guidelines, and Recommendations: These are exemplified by banks observing the repayment period to adjust interest rates, reflecting reliability and transparency. Consistency and truthfulness, user education, are also key aspects.
- Future Considerations: Ongoing progress should involve clearer, more accurate and actionable information when conveying financial statements.
Q5 Alternative Accounting Policies & Prior Year Statements
- IAS 8 Applicability: If an organization changes accounting policies, estimates, or corrects errors, IAS 8 outlines how such changes should be documented and applied to the statements.
- Changes in Estimates (Prospective Application): Changes in accounting estimates (e.g., depreciation) are applied from the reporting period of the change forward (prospectively).
- Reasoning for Change: Provide justifiable reasons for changes in policies, keeping financial statement comparisons consistent and eliminating misinformation.
- Impact of Changes: Users rely on these statements for decisions. Incorrect, misleading, or inconsistently changed statements can damage the company.
Q6 Financial Statement Consolidation Procedure
- Inconsistent Consolidation: A new procedure for consolidating financial statements (group financial statements consolidation) is needed for multiple subsidiaries due to issues with the current system.
- Management Tools: Implement interim financial statements (quarterly reports) to track financials more consistently and promptly.
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Description
This quiz focuses on key concepts related to Volare's restaurant operations and the going concern audit review. Questions cover aspects such as the number of restaurants and delivery kitchens, as well as the assumptions and forecasts necessary for financial audits. It is designed for students or professionals seeking to deepen their understanding of business operations in the restaurant sector.
