ITS JUST LUNCH

A business case presented to the Accountancy Department

In partial fulfillment of the course requirements in ACTBAS1

Domingo, David Jove, D. Meridores, Keith Ivan, O. Sy, Adriel Johannes, H. Tan, Matthew Ross, C. C 37 August 20, 2008

I.

Introduction

This Business Case presented to the Accountancy Department is about a Woman named Adrea McGinty who started her own dating service after being frustrated by blind dates and personal ads, also it was the perfect time to start a business because her fiancee backed out on her five weeks before their wedding. She thought of a business that will help other people like her arrange dates and also prescreen them for their dates with busy and hectic schedules.

She ultimately started her business and it boomed. It was named Its Just Lunch, it was both a restaurant and a dating service so that everything is arranged for the customers, because the typical customers of this service are for people with long hours of work and are at the peak of their careers so they have only few time for their social lives.

The business she started was earning more than expected, the business netted over 2 million in profits, most probably earning back the capital she spent for her business and earning extra more.

The group can apply all of the things we have learned throughout the subject of Accounting Basic 1. From Accounting principles up to the adjusting of the Trial Balance. The aim of our group is to put ourselves in the position of Andrea McGinty and start our own business like hers. The group must make decisions like, where to put it up and other decisions that will affect the business. Also, the group is tasked to prepare made up statements that will support the transactions of the business.

II.

Body of Report

The decision the group will make will affect how the business will run, the group must decide everything for the business. The location is a crucial part of the business because putting up a business in a wrong place will likely generate low income and most probably bring losses to the business. The location for this type of business must be in a place where young professionals work, preferably somwhere near or inside business districts, since this type of business caters to these working class people, this is the most sensible location. Also, the location of the business must be readily accessible and somewhere familar to be compliant with the busy schedule and the limited time of the business target market.

The Structures of the business must be very contrast from their target markets place of work because usually, most offices have a stress inducing atmosphere and the business needs to provide their customers with a relaxing feeling so as to let them focus more on their purpose of visit to the business which is to have lunch and socialize with other people or their date perhaps. The place should not be crowded, it must have adequate air-conditioning and also be quiet as possible to relive the customers from the stress they encounter from constant rushing and other tiring activities.

The business should not only rely on their good location and their aesthetic characteristics. They must also advertise their business so as to let people know what their business has to offer for potential customers. The advertisment whether it be a mere flyer or a billboard, must be concise and must be direct to the point, their target market doesnt have the time to analyze and ponder upon the ad to know what

is it about. Also, advertisment is a crucial and deciding factor the business future growth.

The business target market are young professionals that are at the peak of their career. These are people who are called workaholics doesnt have the time to arrange dates or have the precious time and resources to waste on making reservations on fancy restaurants because most of these people after work are either too tired or still have some work to take home and finish. Poeple like these focus more on their career and their personal gain rather than their social lives, this kind of business is somewhat a help for their social life.

Focusing more on how the business will run, the first issue is the manpower. Manpower must neither be over nor less than the right number and combination of employees. The combination of employees is crucial on the efficiency of the business. For example, having an almost equal number of waiters or waitresses compared to the kitchen staff will create idle workers thus not fully utilizing their labor. The business must have the right type of employees that will show hospitality and courteousness towards the customer so as not to further increase their stress from work.

Their equiptment, and furniture and fixtures must all be themed with the place, also, proper equiptment ensures proper service for the customers. Their supplies will be like any other restaurants, the difference is that the food that they are going to prepare must be prepared quickly and properly. The customers doesnt have the time to wait even 10 minutes for the food to arrive since common office lunch breaks are usually 1 and a half hours or 1 hour depending on the company.

All the proper equiptment, perfect location or anything that will boost the business is useless without proper accounting. Proper accounting for the business will clearly state the gains or losses that the business may incur. Also, it will show if the business is ready for expansion, or if it still needs time to grow. All this is based on what the financial statements will be Stating at the end of the accounting period.

The business will have an accrual basis accounting. Because upon the preparation of a date for a customer the income will not be recognized until the customer comes in the restaurant and consumes whatever service he paid for, that is when the income should be recorded by the business. If the customer pays in advance, that will be acknowledged as unearned service revenue because cash is received even if services were not yet rendered to the one who paid the cash to the business.

The business will have a monthly accounting period as opposed to a annual accounting period because the recording and posting of transactions cannot wait for a year, the accumulation of unrecorded transactions at the end of the year if annual accounting period is used will most likely create a possibility for an error to occur while preparing the statements, adjusting and posting. It is necessary to constantly record updates on transactions and prepare the necessary statements each month to avoid confusion and prevent mistakes.

The significance of the income statement is to show how much income the business is making or how much it is losing for any given accounting period. It is the most important financial statement that this kind of business will need for its daily operations because the inflow and outflow of cash for this kind of business is fast, so constant monitoring is imperative for this type of business.

There is only one kind of income that will be recorded and that will be the service income, because this business is a service oriented entity. But, expenses include Utilities Expenses, this expenses cannot be neglected by any business because it is necessary for operation. Salaries expense is also another expense that is permanent for a business this kind. Supplies expense is needed for the business to earn income. Taxes and licenses expense is needed for the business to run legally.

The Balance Sheet is also an important Financial statement because although the payment for this type business is cash almost all of the time, the long-term asset of this business are used everyday and are exposed to wear-and-tear thus the depreciation of these assets must be constantly updated. Also, the liability of the business needs to be updated constantly to prevent overpayment of dues and cause unnecessary losses to the business.

The Statement of cashflow will show where the cash comes from, this statement is equally significant as the income statement for this business because where the cash goes to and where the cash comes from is as important as how it is earned and how it is used as shown in the income statement. It will show where the cash received by the business came from, whether it came from the payments of customers, the sale of assets, or financing from outside investors or creditors. This Financial Statement also shows where the cash is going, whether to the purchase of additional equiptment for the business or the payment of certain dues to lenders or financial institutions.

In conclusion, Accounting is as important as the physical aspects of the business, no matter how good the business operates, without proper accounting it would not last

and will eventually decline overtime. All the proper ethics and principles in accounting is relevant to how the business will be ran and it will decide the future position of the business. For any type of business this are the things that will and must remain constant.