Harbour Cycles (HC) sells electric bicycles. HC’s accountant has provided selected information for the end of the financial year, 30 June 2025. The owner wants to check whether the business’s balance sheet balances.

Table 2: Selected financial information for HC as at 30 June 2025, all figures in USD 000s

Alpine Bottlers (AB) purchased a specialist bottling machine. AB believes that the machine loses value mainly through the number of bottles it produces, so it is considering the units of production depreciation method.

Table 7: Information about AB’s bottling machine

Willow & Reed Ltd (WR) is a private limited company that designs and sells sustainable wooden furniture through two showrooms and an online store. WR wants to open a third showroom and has asked a bank for a medium-term loan. Its latest final accounts show that sales revenue has increased after online promotion, but gross profit has fallen because certified timber has become more expensive. Net profit before interest and tax has also fallen because WR hired more sales staff and paid higher warehouse rent. WR’s balance sheet shows a valuable delivery van, workshop machinery, inventory of finished furniture, cash, trade debtors, trade creditors and a long-term loan used to buy the workshop machinery. Employees are asking for higher wages, suppliers are considering whether to offer longer trade credit and the owners want to know whether to pay dividends or retain profit for expansion.

LumenLearn Ltd (LL) creates online revision courses for schools. Its balance sheet shows few fixed assets because most tutors work remotely and the business rents cloud storage rather than owning servers. However, LL owns a registered trademark for the name LumenLearn, copyright for thousands of video lessons and a patented method for adapting practice questions to each student’s progress. LL has also built strong relationships with schools, leading to repeat subscriptions and positive reviews. A large educational publisher has offered to buy LL. The publisher argues that LL’s tangible assets are limited, so its offer should be modest. LL’s founders believe that the business is worth much more because of its intangible assets and future earning potential.

FreshBite Meals Ltd (FBM) prepares healthy ready-meals for supermarkets. FBM’s directors must decide whether to use retained profit and a new long-term loan to open two additional production kitchens in 2026. Some shareholders want higher dividends instead, while employees want reassurance about job security after a recent increase in creditors.

Table 1: Selected final account information for FBM, all figures in USD 000s

Note: This is selected information, not a complete statement of financial position. Other asset, liability or equity items are omitted, and the specific omitted items are not specified, so the listed figures may not balance. For 2025, the listed assets total 846, whereas listed liabilities plus equity total 918.

CycleWorks Youth (CYW) – a social enterprise

Read the resources and answer the questions that follow.

Resource 1 — Background of the social enterprise

CycleWorks Youth (CYW) repairs donated bicycles and sells affordable refurbished bicycles to commuters. It also trains unemployed young people as bicycle mechanics. CYW’s social impact is strong, but managers are concerned that suppliers may reduce trade credit because the latest balance sheet shows weak short-term finances.

CYW is considering replacing some workshop-based repairs with mobile repair vans that would visit schools and workplaces. Demand for mobile repairs is expected to be seasonal, with much higher usage in warmer months.

Resource 2 — Extracts from CYW’s final accounts for 2025, all figures in USD 000s

Resource 3 — Information about proposed mobile repair vans

Monetary amounts are in USD 000s; useful life is in years and repair-visit figures are counts.

Resource 4 — Quotation from a parts supplier

“We support CYW’s work with unemployed young people, but we may shorten the credit period unless CYW’s final accounts show that it can meet current liabilities.”

Resource 5 — Social-impact statistic

In 2025, 70% of trainees who completed CYW’s programme moved into employment or further training within six months. A city council grant for future training depends on CYW publishing clear annual accounts.

BluePeak Outdoor Ltd (BO) manufactures premium backpacks for hikers. BO plans to issue new shares to finance expansion into overseas markets. Its latest draft final accounts show lower net profit before interest and tax because marketing expenses increased; some large retailers have also delayed payment, weakening BO's cash flow and liquidity. The balance sheet also shows high inventory, trade debtors, trade creditors, a five-year bank loan and a registered trademark for the BluePeak logo. The finance director suggests increasing the reported value of inventory and recording routine advertising expenditure as an intangible asset so that both profit and net assets appear stronger before the share issue. The operations director argues that this would mislead potential investors, employees, lenders and suppliers. The chief executive is worried that showing weaker accounts may reduce the share price and make overseas expansion more difficult.

EcoPrint Textiles Ltd (EPT) prints customized designs on organic cotton for fashion brands. On 1 January 2025, EPT purchased a new digital printing machine. Demand is seasonal because many customers place large orders before summer and winter fashion launches. The finance director wants to choose a depreciation method for the machine before preparing the 2025 final accounts. EPT is also applying for a bank loan in 2026, and the finance director is aware that the depreciation method will affect reported profit and net book value.

Table 1: Information about EPT’s digital printing machine

Table 2: EPT forecast profit before depreciation and interest, all figures in USD 000s

RefillHope (RH) – a social enterprise

Read the resources and answer the questions that follow.

Resource 1 — Background of the social enterprise

RefillHope (RH) is a social enterprise that installs water-refill stations in low-income urban areas where many households rely on expensive bottled water. RH charges a small fee per refill and uses any surplus to subsidize free water for schools. RH owns filtration kiosks, delivery tricycles and a registered trademark for its refill-station logo. Its mission is to reduce plastic waste and improve access to safe drinking water.

RH is preparing final accounts for 2026. The operations director expects demand to vary significantly between wet and dry seasons. The finance director wants RH’s final accounts to be transparent because RH is applying for a five-year loan from an ethical bank and a grant from a health charity.

Resource 2 — Extract from RH’s profit and loss account for 2026, all monetary figures in USD 000s

Resource 3 – Information about new filtration kiosks bought on 1 January 2026 (monetary amounts in USD 000s; output quantities in refills)

Resource 4 — Quotation from the ethical bank’s lending officer

“We support RH’s social mission, but the final accounts must show a realistic view of profit and the net book value of the filtration kiosks. We are concerned when depreciation policies appear to be chosen only to improve reported profit.”

Resource 5 — Social-media statistic

A campaign showing RH’s reduced plastic waste reached 850 000 users. However, 38% of comments asked whether RH’s low prices could continue if filtration equipment needed frequent replacement.

BrightBridge Learning (BBL) – a social enterprise

Read the resources and answer the questions that follow.

Resource 1 — Background of the social enterprise

BrightBridge Learning (BBL) is a social enterprise that provides low-cost online lessons for displaced teenagers. Paying schools in high-income countries subscribe to BBL’s platform, and the surplus funds free access for refugee centres. BBL’s main assets are non-physical: its learning software, lesson videos, brand name and relationships with refugee education charities.

BBL has grown quickly but has limited cash. A potential impact investor has offered funding to develop an artificial-intelligence tutoring feature, provided BBL’s final accounts are reliable and its intangible assets are clearly explained.

Resource 2 — Extracts from BBL’s final accounts for 2025, all figures in USD 000s

Resource 3 — Board proposal

One board member has suggested adding 150 (USD 000s) of "community reputation" to the balance sheet as goodwill. The member argues that this would make BBL look stronger to the impact investor.

Resource 4 — Quotation from the impact investor

“BBL’s software and educational content are valuable, but we will not invest if the final accounts overstate assets. We need evidence that the brand, copyright and goodwill have been reported ethically.”

Resource 5 — Social-media statistic

A campaign featuring former BBL students reached 600 000 users. Nine percent of these users registered for a free trial, and 2% of those free-trial registrants became paying subscribers.