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BSBFIM601 Manage finances

Assessment Task 1 - Assignment


Question 1
a) Explain in one paragraph what is the purpose of conservatism?
A policy created to anticipate the possible future losses but not future gains. The policy
tends to understate than overstate net assets and net income thus lead companies to
play safe.

b) What are the two key accounting that are directly relevant to gathering revenue
data for statutory recording and reporting?
The profit and loss account which is a summary of business transactions given in certain
period and balance sheet which is a statement of financial position of the business
(usually at the end of the year)

c) According to the AASB, what does a set of financial statements comprise?


Financial Statement consist of the summarise phase of accounting. It comes with Income
Statement, Statement of changes in equity, Balance Sheet, Statement of Cash Flows and
Notes to Financial Statements.

d) Review the features of off-the-shelf business management and accounting


software products.
Off the shelf business management is software that has been made and available for sale
to the general public. For example: Microsoft Office is packaged software solution for
business. As for accounting software products is customize according to the company
needs which also offer accounting, inventory management, accounts receivable, general
ledger, billing accounts payable and other standard components.

e) Imagine you are running a retail business, selling products via a bricks and mortar
site and online. You need to manage inventory, point-of-sale and payroll, and
would like a cloud-based system to work on financial planning and management
at your warehouse, retail space and home on a variety of devices. Which product
would you purchase? Why?
I would purchase full-features of accounting programs that has financial functions to
track business such as point of sale, inventory control, customer relationship
management (CRM), billing and purchasing which help to boasts everything that is
needed in running a business.

Question 2
a) Calculate the revenue, gross profit and net profit margins for these products

Product COGS/unit Fixed Selling Gross Units Revenue Gross Net


costs/ price/ Profit/unit sold Profit Profit
unit unit Margin Margin
Front $27.00 $16.00 $89.00 $62.00 40 $3560
Pocket
Wallet
Compact $29.00 $17.00 $99.00 $70.00 37 $3663
smart
phone
wallet
b) What is the formula for calculating the contribution margin?
Contribution Margin is the sales price of a product minus its variable costs.

c) When calculating the contribution margin, why are only variable costs considered?
The contribution margin represents the portion of a product's sales revenue that isn't
used up by variable costs, and so contributes to covering the company's fixed costs. The
concept of contribution margin is one of the fundamental keys in break-even analysis.

d) In what three ways does horizontal analysis look at the change in each item of the
financial statements?

- allows investors and analysts to see what has been driving a company's financial
performance over a number of years, as well as spotting trends and growth
patterns such as seasonality
- Analysis of critical measures of business performance, such as profit
margins, inventory turnover and return on equity, can detect emerging problems
and strengths
- Makes it easier to compare growth rates and profitability among different
companies.

Question 3
Explore the ATO’s website, visiting the sections for business, non-profit organisations
and superannuation.
a) What are the due dates for lodging and paying an organisation’s business activity
statement (BAS) online?
Due date for monthly BAS is 21st day of the month following the end of taxable period.
For example; monthly BAS have a due date 21st day following the BAS period.
Due date for quarterly BAS is 28th day following the respective BAS period. If you’re using
services of BAS or Tax Agent, you will be entitles extension to due date of 25th day two
months following BAS period.

b) What are the due dates for an organisation’s lodgement of their income tax
return?
All organisation lodgement for their income tax should be done by the end of July

Question 4
a) What three budgets and budgeted statements should an organisation’s matter
budget include to ensure effective decision-making and probity and to meet
statutory and legislative requirements?

b) Explain the difference between incremental and zero-based budgeting methods.

Zero-based budgeting is a budgeting method where current year’s budget is prepared


from the scratch i.e. taking the base as zero.

Incremental budgeting is a budgeting method where current year’s budget is prepared


by making changes in the past year’s budget. The changes are in the form of addition or
reduction of expenses to last year’s budget.
c) Is zero–based Budgeting a more appropriate method of allocating resources for
organisations with new strategies requiring new organisational activities? Explain
your answer.
In zero-based budgeting, the budgets are prepared by allocating maximum resources to
those activities which benefit the organization. The activities which are revenue
generating and critical to the survival of the business, get the top most priority,
Incremental budgeting is done without giving any priority to vital activities of the
business and last year’s budget is simply adjusted considering the inflation factor.

Question 5
a) What is the formula to calculate an organisation’s net cash position?
The net cash formula is cash minus the liabilities. It is often used in business much like the
current ratio. It determines a company's ability to pay off its obligations. You can also use
it to determine the amount of cash remaining after different transactions

b) During the budget development processes, when are qualitative methods more
commonly used?

c) Conduct research into appropriate qualitative and quantitative forecasting


methods.

(a) Provide two examples of qualitative analysis techniques or tools.


Some examples of qualitative data include transcripts from interviews, audio/video
recordings and notes from an observation

(b) Provide two examples of quantitative analysis techniques or tools.


Example of quantitative data, surveys, questionnaires, and evaluations that include
multiple choice items and ratings (e.g., Likert scale) provide quantitative data for analysis

d) In preparing the expenses budget, should the variable costs be excluded? Why or
why not?

Variable costs should be included in expenses budget because it is expenses that


changes according to the production and somewhat unpredictable. For example: water
and electricity bill of the company.

Question 6
Explain in one paragraph, why it is essential that budgets are clearly explained to all staff,
and why managers must use active listening techniques to do so.

Budget must be set by staff members with accurate and updated information. Thus, it is
important to explain it to the staff about budget to prevent staff went over budgeting
which caused more expenses to be made. Managers should be actively listening so that
he/she could deliver the draft budget to higher management and could also give a
feedback to staff if any changes of budget need to be made.

Question 7
a) Conduct research on ‘due diligence’. Explain the difference between supplier due
diligence and customer due diligence.

Supplier due diligence involves carrying out some research into prospective supplier
before agreeing in transaction or contract while customer due diligence involves facts
information about customer that enable organisation to assess which customer exposes
to range of risks, include money laundering and terrorist financing.

b) Explain the value of supplier due diligence in managing procurement risk.

Due diligence in procurement is basically managing risks in your supply chain and process
of independently verifying a supplier capability to delivery fully against their contract,
usually done at final stage of negotiation. By checking that your supplier calim to be,
financially sound, capacity, capability to deliver, systems and process to deliver and
strong understanding of contract deliverables and requirements under the contract.

Question 8
a) What measures might you implement if your analysis of the payables ageing
summary identified that the organisation is consistently late in paying bills?

By having Account Payable Aging Report to have lists account payable in chronological
order and generally group accounts that are less than 30 days old, 30-60 days old and 90
days old. It includes vendor name, purchase details, purchase date, payment due and
other payment terms.

Report of finances
Question 9
a) According to the ‘AASB Standard 101 Presentation of Financial Statements’, what
is the purpose of a supporting note?

It is the standard which sets out a number of key principles around disclosure, all of
which are intended to assist a user of a set of financial statements in understanding the
performance of that entity. The purpose is to ensure comparability both with the entity
financial reports of previous periods with financial reports of other entities.

b) Access the Standard Business Reporting website at: www.sbr.gov.au, then


explain what the Australian Reporting Dictionary is.

Australian Reporting Dictionary is a resource to assist users when receiving data from the
ABR. It contains data field group, field names, business descriptions and bulk data
specification. The Australian Business Register (ABR) is a resource to assist users when
receiving date from ABR.

Question 10
In one paragraph explain the importance of reviewing and improving internal financial
controls
Reviewing and Improving internal financial controls help to guard organization from
financial loss. It also could assist in maintaining reliable financial reporting and effective
operations. Improving the process will help to achieve great efficiencies and become
more effective in each organization.

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