BSBFIMS501 Guideline Assessment 1 You are going to make a budget. For the format and contents of the budget, please refer to P40 of assessment book. Please be aware that the budget on Page 40 is a monthly one and you are going to make an annual budget, which starts from 01/07/2012 to 30/06/2013. As the budget reflects the business strategy and goal, you need include the profit target in your budget. The profit target can be found in page 44 of assessment book, which states that "Patrick's ultimate objective is to increase profit by 8%" If you want to achieve this goal, you have to either increase the revenue or decrease the expenses, or both. However, according to Appendix 6 on page 44, some assumptions are given relevant to potential revenue of next year, such as expected price and fish catch number:1. The sales price are expected to increase by 6% without affecting sales, 2. Fish catch will likely reduce by 10%, Based on the figures provided on page 39, Patrick's business caught 42,300kg of Murray Cod last year and sales revenue was $1,438,232. ‘According to assumption 2, next year potential fish catch will be 42,300*(1-10%)=?. Furthermore, if we divide the revenue $1,438,232 by the fish caught 42,300kg, we will get the average price sold last year. Then we would easily get next year potential average price by multiply the average price by (146%). As a result, we will easily calculate the next year's sales revenue by multiplying the new price and the new quantity. Have a look at the result and see what you need do to increase the profit. You may think about cutting the expenses to make it happen. Consider petrol cost cut. Please have close look at the third point on page 44. If you purchase an equipment to make the boat more efficient in petrol consumption. you need consider the depreciation of non-current asset when budgeting. Assume that the life span of the machine is 5 years and 2you use straight line depreciation. The residue value is zero. Therefore, the monthly depreciation starting from December 2013 is (84000-0)/(5*12). Compare this value with the petrol expense saved due to the use of the equipment to decide whether this is a good investment. The other scenario is that you can hire more staff to increase the fish catch, thus adding more to sales revenue. In this case, you need think the expenses incurred by doing so and the extra revenue you will have.Assessment 4 Please write in your own words. 3. | List the 5 types of accounts which underpin double entry bookkeeping * Assets © Liabilities © Owner's Equity «Revenues ‘+ Expenses 6 | List and explain 5 different financial records that a company must keep ‘Answer may include, but is not limited to: general ledger, recording all the company's transactions and balances (e.g. revenue, expenses, assets, liabilities) or summarising transactions and balances detailed in other records «cash records (e.g. bank statements, deposit books, cheque butts, petty cash records) debtor and sales records (e.g. a list of debtors and their balances, delivery dockets, invol and statements issued, a list of all sales transactions) «creditor and purchases records (e.g. purchase orders, invoices and statements receivec and paid, unpaid invoices, a list of all purchases, a list of all creditors and their balances) + wage and s,uperannuation records + arregister of property, plant and equipment showing transactions and balances in relatio individual items + inventory records «investment records (e.g. contract notes, dividend or interest notices, certificates) «tax returns and calculations (e.g. income tax, group tax, fringe benefits tax and GST rett and statements), and deeds, contracts and agreements. Pedro's Pasta purchases a car for $8,800 using a loan from the bank suppler. Referring to dor entry accounting, what are the two effects of action? Show how you would record the transac in the ledger.© Pedro's Pasta acquires an ASSET worth $8,800 (the car). This is the debit affect. © At the same time it also incurs a LIABILITY to the bank of $8,800 (the bank loan). This is tr credit effect. DR CR Motor Vehicles a/c $8,800 Bank Loan alc $8,800 10 Describe the budget creation steps that are in most company budgeting procedures ‘Answer may include, but is not limited to: Establish goals Establish objectives Prepare budget calendar Define roles in budget preparation Gather and review budget request Prepare budget document, ensuring the following key principles are adhered to: © Transparency - the budget documents provide a clear link between objectives and expenditures: © Co-ordination and Co-operation - involve relevant people in budget conversations. © Integration - of recurrent and development budgets © Flexibility - the system allows responses to changed circumstances © Accountability - involve the CEO an relevant others © Comprehensive - include alll revenues and expenses11 | Outline 9 different expenditure and revenue items that are relevant to budgeting and forecastin: ‘Answer may include, but is not limited to: capital expenditure client and supplier payments such as: © sales © commissions community service obligation expenditure discretionary expenditure fees and charges occasional expenditures other revenues revenue producing expenditures sales service fees. 412 | What are the key purposes / objectives of forecasts?Answer may include, but is not limited to: * Business forecasts help a business predict cash flow, and future growth * Forecasting future growth allows a business to plan ahead, in terms of increasing or decreasing equipment, production or human resources * Asa forecast is the best guess of what will happen to the business financially over a perioc time, it requires regular review and amendments when circumstances change © Forecasting: © demonstrate the financial viability of a new business venture. © allows you to construct a model of how your business might perform financially if certain strategies, events and plans are carried out. © allows you to measure the actual financial operation of the business against the forecast financial plan and make adjustments where necessary. © allows you to guide your business in the right direction and take control of your cas! flow. © provides a benchmark against which to measure future performance. © identifies potential risks and cash shortfalls to keep the business out of financial trouble. © provides an estimate of future cash needs and whether additional private equity or borrowing is necessary. © assists companies to secure a bank loan or other funding. Lenders and investors require financial forecasts to show your capacity to repay the loan. 13. | Describe the process you would use to maintain the integrity of electronic financial spreadshee Answer may include, but is not limited to: © Version controls * Password protection * Linking spreadsheets * Never working on original - but on copy + Back-up contro! 18 | What legislation covers Income Tax? ‘Taxation Administration Act 1997 What sort of records should be kept according the Taxation Administration Act 2005? — How long must tt 19 | (ecords be kept for?Answer may include, but is not limited to: |All records that are necessary to enable the person's tax liability under taxation law to be prop assessed. These records must be kept for 5 years. 20 | List 5 possible prosecutable acts when lodging a tax return under the Taxation Administration Act 2008. ‘Answer may include, but is not limited to: ‘© Wifully destroying records ‘© Giving false or misleading information + Deliberately omitting information «Failing to lodge documents ‘ Falsifying or concealing identity «_Taxevasion 24 | Whatis the purpose of the Income Tax Assessment Act 19977 ‘Answer may include, but is not limited to, This Act is one of the main statutes under which income tax is collected within Australia law such as: ‘* Who has to pay income tax What is classed as taxable income + Expenses, deductions, claims that made against taxable income «Penalties for not complying with tax laws + Etc It outlines