BSBFIM601 Manage Finances

Assessment Task 1- Assignment

Answer1
A) Conservatism is a political and social philosophy promoting traditional social institutions in the context
of culture and civilization. The central tenets of conservatism include tradition, human
imperfection, organic society, hierarchy, authority, and property rights. Conservatives seek to preserve a
range of institutions such as religion, parliamentary government, and property rights, with the aim of
emphasizing social stability and continuity.
In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of
anticipating possible future losses but not future gains. Conservatism plays an important role in a number
of accounting rules, including the allowance for doubtful debts and the lower of cost or market rule.
Conservatism is a political philosophy which believes that if changes need to be made to society, they
should be made gradually. You can also refer to the political beliefs of a conservative party.
B) There are different kinds of key accounting:
1)An income statement is one of the three important financial statements used for reporting a
company's financial performance over a specific accounting period, with the other two key statements being
the balance sheet and the statement of cash flows.
Revenues and Gains:

1. Operating Revenue: Revenue realized through primary activities is often referred to as operating
revenue. For a company manufacturing a product, or for a wholesaler, distributor or retailer
involved in the business of selling that product, the revenue from primary activities refers to
revenue achieved from sale of the product.
2. Non-operating Revenue: Revenues realized through secondary, non-core business activities are
often referred to as non-operating recurring revenues.
3. Gains: Also called other income, gains indicate the net money made from other activities, like the
sale of long-term assets.

2)Balance sheet summarizes what a company owns and owes. Revenue feeds into the accounts
receivable and cash line item summaries on the balance sheet, sometimes known as "financial assets,"
depending on the report template used.

C) The Australian Accounting Standards Board(AASB) is an Australian Government agency that

develops and maintains financial reporting standards applicable to entities in the private and public sectors
of the Australian economy.

The objective of this standard is to prescribe the basis for the presentation of general purpose financial
statements to ensure comparability both with the entity’s financial statements of previous periods and with
thefinancial statements of other entities.

A complete set of financial statements comprises:

 • a statement of financial position as at the end of the period

• a statement of comprehensive income for the period

• a statement of changes in equity for the period

• a statement of cash flows for the period

• comprising a summary of significant accounting policies and other explanatory information.

D) Off-the-shelf features:

1) off-the-shelf software called as a ‘boxed solution.’ It’s a commercial product targeted towards a
large audience. Picture Microsoft Word or QuickBooks.
2) Off-the-shelf solutions are typically affordable because their development costs are distributed
across the broader.
3) Lots of choice available

Accounting software:

Simple data entry - it is typically fast, straightforward and only required once

Fast processes - delays, for example between sale and invoicing, are minimal

Automation of reports and analysis - e.g. on profit and loss, debtors and creditors.

E)

It is very important to manage all the departments in the industry so that, all the effective communication is
taken into place for the smooth running of the business. Cloud based accounting system are very important for
the business because in the business there are various day to day task and sometimes it is very hard to manage
the business manually so there is a need for cloud-based accounting system. Another reason that why cloud
based accounting system is important that high volume of invoices in the business are sometimes very difficult
to handle so for proper running of business there is a need for cloud-based accounting system. Managing
inventory, point of sale and payroll are different tasks in the company which needs to be established in such a.
manner that all the task is taken into consideration before reporting.

Answer2.

A)

Revenue Gross profit margin Net profit margin

$3560 99.243 60.67
$3663 99.208 59.98

B) The formula for contribution margin is the sales price of a product minus its variable costs. In other
words, calculating the contribution margin determines the sales amount left over after adjusting for the
variable costs of selling additional products.
C)The variable contribution margin, also known as the contribution margin or gross profit, describes the
amount of profit generated by the sale of an item for a company. The variable contribution margin considers
the variable costs associated with a product but does not consider any of the fixed costs associated with the
item. Determine all of the variable costs associated with producing the product. Variable costs are those
costs that change based on the volume of a product produced. Contribution margin (CM), or dollar
contribution per unit, is the selling price per unit minus the variable cost per unit. "Contribution" represents
the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage
of fixed costs.

D)Horizontal analysis (also known as trend analysis) is a financial statement analysis technique that shows
changes in the amounts of corresponding financial statement items over a period of time

The statements for two or more periods are used in horizontal analysis. The earliest period is usually used
as the base period and the items on the statements for all later periods are compared with items on the
statements of the base period.

Horizontal analysis may be conducted for balance sheet, income statement schedules of current statements.

Answer 3

A)

Due dates for the lodging and paying an organization business activity statement online are as follows:

 July, August and September – 28 October

 October, November and December- 28 February
 January, February and March- 28 April
 April, May and June – 28 July

B)

Due dates for an organization lodgment of their income tax returns are as follows:

Tax returns cover the financial year from 1 July to 30 June. If the organization is lodging tax return it is due
on 31 October.

Answer 4

A) Government budget is an annual financial statement which outlines the estimated government
expenditure and expected government receipts or revenues for the forthcoming fiscal year. Depending on
the feasibility of these estimates, budgets are of three types -- balanced budget, surplus budget and deficit
budget.

BALANCED BUDGET
A government budget is said to be a balanced budget if the estimated government expenditure is equal to
expected government receipts in a particular financial year.
SURPLUS BUDGET
A government budget is said to be a surplus budget if the expected government revenues exceed the
estimated government expenditure in a particular financial year.

DEFICIT BUDGET
A government budget is said to be a deficit budget if the estimated government expenditure exceeds the
expected government revenue in a particular financial year.

B)
Incremental Method:
 The term incremental method refers to an approach used to allocate a lump-sum sale to one or more
classes of securities. If the fair market value of a security is unknown, the incremental method
requires the proceeds from the sale to first be allocated to those securities with a known market
value; the remainder is then allocated to the security with an unknown value.
 Generates working software quickly and early during the software life cycle.
 This model is more flexible – less costly to change scope and requirements.
 It is easier to test and debug during a smaller iteration.

Zero Based Budgeting Method:

 Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for
each new period. The process of zero-based budgeting starts from a "zero base," and every function
within an organization is analyzed for its needs and costs.

 Zero-based budgeting provides better coordination and communication within the department and
motivation to employees by involving them in decision-making.

 This approach leads to identify optimum opportunities and more cost-efficient ways of doing things
by eliminating all the redundant or unproductive activities

C)
Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new
period. The process of zero-based budgeting starts from a "zero base," and every function within an
organization is analyzed for its needs and costs.
 Self-Imposition Strategy: Zero-based budgeting provides an opportunity to implement self-
imposed. budgeting, a process that uses individuals at all levels of the company to produce the
budget. This strategy gives employees a sense of ownership in the goals of the company and the
resulting budget.
 Expenditure Narrative: Zero-based budgeting requires justifying all expenditures in the company
budget. In combination with a self-imposition strategy, management should require unit managers
to write a brief description of every line item in their budget.

Answer 5
A)
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.
Net cash is generally used in testing for a company’s ability to pay off its liabilities.
B)
Budgeting and forecasting is an essential function of a business. From the gut instinct
of a small entrepreneur to the complex models of a large multinational, every business
has an estimate of how much it will sell and how much it will cost?
The usage of quantitative methods helps in:

 Financial Resource Allocation - Money is the lifeblood of a company. Having enough of it to

support operations, new business initiatives and acquisitions is vitally important.
 Strategic Plan Support - The budgeting process should focus on the important steps you must
take during the year to support your strategic plan. It should lay out the coordination of the
departments and set the benchmarks to signal if the plan is succeeding.
 Expense Control - Budgets provide feedback to managers as to their performance and should
incentivize them to take corrective actions when necessary and identify over performance and
possible opportunities.

C)

Two Examples of qualitative data:

The cake is orange, blue and black in color.
Females have brown, black, blonde, and red hair.
 Qualitative data does not include numbers in its definition of traits

Two Examples of Quantitative data:

There are 4 cakes and three muffins kept in the bag
1glass of fizzy drink has 97.5 calories.
 Quantitative data is any quantifiable information that can be used for mathematical calculation or
statistical analysis.

D)

A variable cost is a corporate expense that changes in proportion to. production output. Variable costs
increase or decrease depending on a company's production volume; they rise as production increases and
fall as production decreases. The total expenses incurred by any business consist of fixed costs and variable
costs. Fixed costs are expenses that remain the same regardless of production output. Whether a firm makes
sales or not, it must pay its fixed costs, as these costs are independent of output.
Answer 6.

Budgeting is the formulation of plans for a given future period in numerical terms.
Budgets usually serve four control purposes:

1. They help the manager’s co-ordinate resources;

2. They help define the standards needed in all control systems;
3. They provide clear and unambiguous guidelines about the organization’s resources and expectations.
4. They facilitate performance evaluations of managers and units.
Types of budgetary controlling techniques
 Financial Budgets Such budgets detail where the organization expects to get its cash for the coming
time period and how it plans to spend it.
 Operating Budgets This type of budget is an expression of the organization’s planned operations
for a particular period.
 Non-monetary budgets of this type are expressed in non-financial sales or revenues and expenses,
i.e. profit. If the anticipated profit figure is too small steps may be needed to increase the sales
budget or cut the expense budget.

Answer 7

A)

Meaning of Due Diligence:

Due diligence is the investigation or exercise of care that a reasonable business or person is expected to
take before entering into an agreement or contract with another party, or an act with a certain standard of
care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations.

Supplier due diligence: Carrying out supplier due diligence is just that and involves carrying out some
research into a prospective supplier before agreeing a transaction or a contract.It is similar to buy-side due
diligence but is originated by the seller. Hence, it is often also called sell-side due diligence. In the end, it
is a full and independent review of a company before it will come up for sale.
Customer Due diligence: CDD information comprises the facts about a customer that should enable an
organisation to assess the extent to which the customer exposes it to a range of risks. Organisations need to
‘know their customers’ for a number of reasons:

 to comply with the requirements of relevant legislation and regulation

 to help the firm, at the time the due diligence is carried out, to be reasonably certain that the
customers are who they say they are, and that it is appropriate
 to provide them with the products or services requested

B)
Every business face risk, i.e. the probability of events occurring that can, or will, present challenges to their
operations. Not every organisation is aware of the wide range of supply chain risks they might face. The
consequences of not managing procurement risk effectively can result in:
There are three main steps to developing a risk management plan:
1. Identify the risks: It requires a team effort to define the most critical risks. Ideally, a project or risk
manager should help generate these ideas in both group and one-on-one settings, and then allocate
ownership for individual risks.
2. Evaluate the risks: With every risk quantified, the team can evaluate which vendor risks need to be
addressed and in how much detail. The decision on whether to accept the specific risk (carry the cost) or
take action to prevent or minimise it depends on the organisation’s appetite for the risk. The cost of insuring
the risk may be so high that it does not make financial sense.
3. Build a contingency plan: Developing actionable plans is the most important step. Alternative solutions
for an adverse event should be created where relevant, according to priority, and include all the details
necessary to actually take action.

Answer 8
Australian Accounting Standard AASB 101 Presentation of Financial Statements is set in the absence
of explicit guidance, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors
provides a basis for selecting and applying accounting policies.