Task A

What are the key provisions of legislation, regulation and codes of practice relevant to financial operations?

Answer:

 Australian Securities and Investments Commission Act 1989

 Competition and Consumer Act 2010
 Australian Consumer Law (ACL)
 Corporations Act 2001
 Corporations Amendment (Future of Financial Advice) Act 2012
 Anti-Money Laundering and Counter-Terrorism Financing Act 2006
 National Consumer Credit Protection Act 2010

What are the key techniques used for forecasting and analysis?

Answer:

1. Straight-line Method - The straight-line method is one of the simplest and easy-to-follow forecasting methods. A financial analyst uses
historical figures and trends to predict future revenue growth.
2. Moving Average - Moving averages is a smoothing technique that looks at the underlying pattern of a set of data to establish an
estimate of future values. The most common types are the 3-month and 5-month moving averages.
3. Simple Linear Regression - Regression analysis is a widely used tool for analyzing the relationship between variables for prediction
purposes.

What are the key features of the options, methods and practices for deductions, benefits and depreciations?

Answer:

Business tax deductions - You can claim a tax deduction for most expenses from carrying on your business, as long as they are directly related to
earning your assessable income.

Straight-line: This method spreads the cost of the fixed asset evenly over its useful life.

List current business taxation requirements for preparing corporate accounting reports

Answer:
 1. The Australian Tax Office (ATO) requires businesses to submit a business activity statement (BAS) monthly, quarterly or annually (annual
GST return, if eligible)
2. Businesses are required to lodge an income tax return for this period. If you operate your business as a sole trader you can declare your
business income as part of your personal income tax return.
3. As of 1 July 2019, small businesses with fewer than 20 employees are required to lodge reports with the Australian Tax Office (ATO)
using Single Touch Payroll software.

List current financial legislation and statutory requirements relating to taxable transactions and reporting requirements

Answer:

 Australian Securities and Investments Commission Act 1989

 Competition and Consumer Act 2010
 Australian Consumer Law (ACL)
 Corporations Act 2001
 Corporations Amendment (Future of Financial Advice) Act 2012
 Anti-Money Laundering and Counter-Terrorism Financing Act 2006
 National Consumer Credit Protection Act 2010

What are the ethical requirements associated with preparing financial reports for corporate entities, including conflict of interest,
confidentiality, and disclosure requirements?

Answer:

 Avoid conflicts of interest

 Maintain your client's confidentiality
 Avoid contributing to the perpetration of unlawful acts
 Ensure your client is well informed; give comprehensive advice.
 Ensure your client understands the advice, and has capacity to act
 Be respectful. With older clients, beware of ageism and making an assumption that, because the client is old and perhaps frail, they are
not capable of making a valid decision.
 Your client's best interests come first

List industry-standard methods and formats used to present financial data in your organization.
Answer:

1. Balance Sheets
2. Income Statement
3. Cash Flow Statement

Describe the conversion and consolidation procedures that you use to compile financial information

Answer:

1. Record intercompany loans. If the parent company has been consolidating the cash balances of its subsidiaries into an investment
account, record intercompany loans from the subsidiaries to the parent company. Also record an interest income allocation for the
interest earned on consolidated investments from the parent company down to the subsidiaries.
2. Charge corporate overhead. If the parent company allocates its overhead costs to subsidiaries, calculate the amount of the allocation
and charge it to the various subsidiaries.
3. Charge payables. If the parent company runs a consolidated payables operation, verify that all accounts payable recorded during the
period have been appropriately charged to the various subsidiaries.
4. Charge payroll expenses. If the parent company has been using a common paymaster system to pay all employees throughout the
company, ensure that the proper allocation of payroll expenses has been made to all subsidiaries.
5. Complete adjusting entries. At the subsidiary and corporate levels, record any adjusting entries needed to properly record revenue and
expense transactions in the correct period.
6. Investigate asset, liability, and equity account balances. Verify that the contents of all asset, liability, and equity accounts for both the
subsidiaries and the corporate parent are correct and adjust as necessary.
7. Review subsidiary financial statements. Print and review the financial statements for each subsidiary and investigate any items that
appear to be unusual or incorrect. Adjust as necessary.
8. Eliminate intercompany transactions. If there have been any intercompany transactions, reverse them at the parent company level to
eliminate their effects from the consolidated financial statements.
9. Review parent financial statements. Print and review the financial statements for the parent company and investigate any items that
appear to be unusual or incorrect. Adjust as necessary.
10. Record income tax liability. If the company earned a profit, record an income tax liability. It may be necessary to do so at the subsidiary
level, as well.
11. Close subsidiary books. Depending upon the accounting software in use, it may be necessary to access the financial records of each
subsidiary and flag them as closed. This prevents any additional transactions from being recorded in the accounting period being closed.
 12. Close parent company books. Flag the parent company accounting period as closed, so that no additional transactions can be reported in
the accounting period being closed.
13. Issue financial statements. Print and distribute the financial statements of the parent company.

Task B

General Journal Packett

Packaging Pty Ltd
Date Account # Debit Credit
Asset acquisition
1/7/2010 1-5110 Motor vehicle $66,000
1-1150 Cash at bank $66,000
Total $66,000 $66,000

General Journal Packett

Packaging Pty Ltd
Date Account # Debit Credit
Depreciation entry
1/7/2011 6-0160 $16,500
1/7/2011 1-5210 $16,500
1/7/2012 6-0160 $16,500
1/7/2012 1-5210 $16,500
1/7/2013 6-0160 $16,500
1/7/2013 1-5210 $16,500
1/7/2014 6-0160 $16,500
1/7/2014 1-5210 $16,500
Total $66,000 $66,000
 Asset register
Packett Packaging Pty Ltd
Asset description: Sales vehicle General Ledger acct:
Value: $66,000 Person responsible: (your name)
Depreciation method: Straight-line Depreciation rate: 0.25 or 25%
Salvage value = $45,000
Estimated life: 4 years
Authorization Asset ID Date Details Asset Accumulated Depreciation
Debit Credit Balance Debit Credit Balance
X 1 1/7/2010 Sales vehicle $66,000 $66,000 $0 $0
X 1 1/7/2011 Sales vehicle $5250 $60,750 $5250 $5250
X 1 1/7/2012 Sales vehicle $5250 $55,500 $5250 $10,500
X 1 1/7/2013 Sales vehicle $5250 $50,250 $5250 $15,750
X 1 1/7/2014 Sales vehicle $5250 $45,000 $5250 $21,000

Authorization Disposal Date Disposal method Disposal amount

X 1/7/2014 Cash on the spot $45,000

What is the discrepancy in this case? To gain authorization to correct the error.

General Journal Packett

Packaging Pty Ltd
Date Account # Debit Credit
Asset acquisition
1/7/2010 1-5111 Motor vehicle $66,000
1-1150 Cash at bank $66,000
Total $66,000 $66,000
The discrepancy is the account number for the motor vehicle account. There is no account number 1-5111 for Motor vehicle only 1-5110 exist. In
order to correct this error, I ask permission from the Senior Accountant or in this case the Chief Financial Officer.
Task C

Sales Journal (SJ01)

1 2 3 4 5 6 7
Date Debtors details Folio no. Invoiced Sales GST collected Debtors control
10/06/2011 Australian Paper 32 123 456 789 1 $3,300 $30 -
Mills Pty Ltd

Purchase Journal (PJ01)

1 2 3 4 5 6 7
Date Creditors details Folio no. Invoiced Purchases GST paid Creditors control
10/06/2011 Packett Packaging 87 671 495 227 1 $4,312 $56 -
Pty Ltd

BAS calculation worksheet

GST amount you owe the ATO from sales and services
Total sales and income and other supplies including capital (GST-inclusive) G1 $282,038
Exports G2 $0
Other GST-free supplies G3 $0
Input-taxed sales and income and other supplies G4 $0
Add G2 + G3 + G4 G5 $0
G1 – G5 G6 $282,038
Adjustments (must be total, GST-inclusive) G7 $0
Add G6 + G7 G8 $282,038
Divide G8 by 11 G9 $25,639
The amount at G9 is the GST payable and is the amount at 1A on the BAS statement
GST amounts the ATO owes you from purchases
Capital purchases (GST-inclusive) G10 $0
Other purchases (GST-inclusive) G11 $77,039+ $90,000 + $4,312 = $171,351
Add G10 + G11 G12 $171,351
Purchases for making input-taxed sales and income and other supplies G13 $0
Purchases without GST in the price G14 $0
Total estimated private use of purchases + non-income tax-deductible purchases G15 $0
Add G13 + G14 + G15 G16 $0
G12 – G16 G17 $171,351
Adjustments (must be total GST-inclusive) G18 $0
Add G17 + G18 G19 $171,351
Divide G19 by 11 G20 $15,577
The amount at G20 is a GST credit and will be shown at 1B on the BAS
PAYG tax withheld
Total salary, wages and other payments W1 $6,153
Amount withheld from payments shown at W1 W2 $1,178
Total amounts withheld (W2 + W4 + W3) W5 $1,178
PAYG income tax installment
T7 $15,360
Summary
GST on sales or GST instalment 1A $25,639
GST on purchases 1B $15,577
PAYG tax withheld 4 $1,178
PAYG income tax instalment 5A $15,360
Credit from PAYG income tax instalment variation 5B $0
Deferred company/fund installment 7 $0
1A + 4 + 5A + 7 8A $25,639 + $1,178 + $15,360 + $0 = $42,177
1B + 5B 8B $15,577 + $0 = $15,577
Task D – Provide financial feedback

Executive Summary
Information from financial statements can be gathered by examining relationships between items on the statements and identifying trends in
these relationships. The relationships are expressed numerically in ratios and percentages, and trends are identified through comparative
analysis. A problem with learning how to analyze statements is that the means may become an end in itself. There are thousands of possible
that could be calculated and trends that could be identified. If one knows only how to calculate ratios and trends without understanding how
such information can be used, little is accomplished. Therefore, a logical approach to financial statement analysis is necessary. Such an
approach may consist of the following steps:
1.0 Analysis of Financial Ratio
1.1 Current Ratios
Formula Calculation Interpretation
Current Ratio = Current assets / Current liabilities 130,596/83896 = 1.55664155621 The company is capable of paying its
obligations due in a year or less.
1.2 Quick Ratio
Formula Calculation Interpretation
Quick Ratio = 130596-36000/83896 = 1.12753885763 The company can instantly get rid of its
(Cash & equivalents + Marketable security + Account current liability.
receivable) / Current Liabilities

Or

Quick Ratio =
(Current Assets - Inventory – Prepaid Expenses) /
Current Liabilities

1.3 Working Capital

Formula Calculation Interpretation
Work Capital = Current Assets – Current Liabilities 130596-83896 = 46700 The company can fund its current operations
and invest in future activities and growth.
1.4 Account Receivable Turnover
Formula Calculation Interpretation
Accounts Receivable Turnover= 260,000/23,000 = 11.3043478261 The company collected its receivables 11.30
Net Credit Sales/Average Accounts Receivable times on average this year.

1.5 Leverage (Equity) Ratio

 Formula Calculation Interpretation
Debt-to-Equity Ratio= 83,896/114,568 = 0.73228126527 The company is not taking many risk and is
Total Liabilities/Total Shareholders’ Equity making good investments.

2.0 Variance Analysis of Financial Position from FY2008 – 2011

2.1 Cash at bank Variance
Fiscal Year 2008-2009 to Fiscal Year 2009-2010 = $16,538 or an increase of 43%
Fiscal Year 2009-2010 to Fiscal Year 2010-2011 = $ 13,781 or an increase of 25%

The company has more money to spend then it did before.

2.2 COGS Variance
Fiscal Year 2008-2009 to Fiscal Year 2009-2010 = $19,636 or an increase of 43%
Fiscal Year 2009-2010 to Fiscal Year 2010-2011 = $16,364 or an increase of 25%

The company’s COGS keep increasing.

2.3 Sales goods and services Variance
Fiscal Year 2008-2009 to Fiscal Year 2009-2010 = $47,956 or an increase of 43%
Fiscal Year 2009-2010 to Fiscal Year 2010-2011 = $31,964 or an increase of 25%

The company’s sales revenue is increasing as well.

2.4 Trade debtors Variance
Fiscal Year 2008-2009 to Fiscal Year 2009-2010 = $5,625 or an increase of 43%
Fiscal Year 2009-2010 to Fiscal Year 2010-2011 = $4,688 or an increase of 25%

The company seems to have more unpaid invoices.

2.5 Bank loans Variance
Fiscal Year 2008-2009 to Fiscal Year 2009-2010 = $14,400 or an increase of 43%
Fiscal Year 2009-2010 to Fiscal Year 2010-2011 = $12,000 or an increase of 25%

The company is taking out more loan then it did before.

3.0 Analysis of Financial Performance
3.1 Gross profit margin = (Net Sales – Costs of Goods Sold) ÷ Net Sales
Gross profit margin = (286,050.00 – 140,000.01) / 286,050.00 = 0.51057503932 or 51%

This means the company earns 51 cents on the dollar in gross margin.
3.2 Net profit margin = (Net profit / Total income) * 100
Net profit margin = (63,078.89/286,050.00) * 100 = 22.0517007516 or roughly 22%
 This means the company earns 22 cents in profit for every dollar it collects.
4.0 Cash Flow Statement Analysis
The Net Cash Flows from Operating Activities is positive which means that the company is still sustainable and has to money to pay dividends and
invest. However, it is significantly less the net income which means a lot of money is flowing out from operating activities.

The Net Cash Flows from Investing Activities is 0 which means the company is not investing anymore.

Overall, the company’s cash0 flow is healthy because it has a positive cash flow.
5.0 Recommendations
I recommend the following:
1. The company should conduct regular financial reviews to allow for a true understanding of when cash comes in and when it goes out.
2. The company should consider leasing business equipment rather than buying it to help maintain a much healthier cash flow from operations.
3. The company should monitor its accounts receivable and ensure that every customer is adhering to the agreed upon credit terms.
4. The company should review its accounts payable to ensure that the company's cash is not being paid to suppliers prior to the required
payment dates.
5. Lastly, the company should review its staffing and ensure they not hiring staff that is not essential for the company in the current situation.
Conclusion
The company is fine in terms of its ability to pay its obligations; however, the company is not well when it comes to financial growth. The current
profits margin is low enough that management is concerned about the business sustainability. The cash flow from operation is also of concern
because it is too low.