Manage Budgets and Financial Plans

This document provides information about managing budgets and financial plans for companies. It covers topics such as principles of accounting, cash accounting, accrual accounting, GST legislation, taxation obligations, financial statements, budgeting process, improving cash inflow, and TV advertising. The document includes a marketing budget draft, an email to the CEO, a budget meeting discussion, and a modified budget.

Manage budgets and
financial plans

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1 ...........................................................................................................................................3
TASK 2 ...........................................................................................................................................8
TASK 3 .........................................................................................................................................11
TASK 4 .........................................................................................................................................13
TASK 5..........................................................................................................................................15
CONCLUSION..............................................................................................................................18

INTRODUCTION
The term budget can be defined as an estimation of revenues and expenses so that
available financial resources can be used in an effective manner. The aim of project report is to
understanding about role of budgets and financial plans for companies. The project report is
categorised into four tasks and each of them consists different kinds of activities. Such as first
part consists information about principles of accounting, GST etc. As well as second task covers
information regards to marketing budget and task three about update in marketing budget. While
task four includes analysis of profit & loss account and in the end part of report aged debtor
summary is covered.
MAIN BODY
TASK 1
1. Principle of double entry book keeping system.
Double entry book keeping system- It is a kinds of bookkeeping system in that each
financial entry of an account needs a corresponding and opposite entry to different account.
Principle- The basic principle of this accounting is that every debit has a corresponding credit. In
broad sense, total value of debits must be equal to total value of credits.
2. Principle of cash accounting along with advantages and disadvantage.
The basic principle of this accounting is that amount which is received in a time period
are necessary to be recorded in that time period. As well as expenses are needed to be recorded
in the period in that they are paid.
Advantage- The key benefit of this accounting is that it is simple to use. In addition, business
entities can identify income & expenses when it is received or paid.
Disadvantage- It does not focus to track actual date of sale and purchase.
3. Principle of accrual accounting along with advantages and disadvantage.
The principle of this accounting is that financial transactions should be recorded in the
time period in that they incur, instead of period of occurring cash flows.

Advantage- It helps in better business analysis because under this matching of expenses and
revenues is done in an effective manner.
Disadvantage- One of they drawback of this accounting is that it needs more judgement and
projections.
4. Explain the two accounting principles on which the calculation and reporting of deprecation is
based.
 Cost principle- As per this principle the deprecation expenses needs to be reported on the
income statement and the amount of assets requires to be based on original cost of assets.
 Matching principle- This principle needs that the assets' cost must be allocated to
deprecation expenditure during life of assets.
5. Three key features of A New Tax System (GST) Act 1999.
 It is resulted in unintended consequences in some cases.
 This helps in applying a common tax rate that reduce complexity.
 It did not consists small value exclusions.
6. Explanation of the four main taxation and superannuation obligations for a business.
 Pay as you go- The PAYG is a mechanism which permits to make payment of tax
liabilities in instalments.
 Goods and service tax- It is a tax of 10% obligatory on goods, services and other
commodities sold in Australia.
 Tax obligations for paying staff- The managers of companies should be aware of tax
obligations when paying to staff, withholding tax and superannuation.
 Consider getting an ABN for business- ABN benefits in managing tax and obligations as
well as used as reference by Australian Taxation office.
7. According to GST legislation, list four items that do not attract GST.
 Sheep and goats (Live, HSN Code-0104)
 Live swine (HSN Code-0103)
 Live assess, mules and hinnies (HSN Code-0101)

 Bovine animals (Live) (HSN Code-0102)
8. The process by which a business reports GST to the Australian tax office.
If GST turnover is less then $10 million then:
 Reporting GST by help of BAS reporting method.
 If GST turnover is more then $10 million then it is essential to chose simpler BAS or
GST full reporting method.
 If payment of GST is in instalment then companies may chose GST instalment method.
9. The penalty rate to be applied if a supplier does not provide an ABN?
In the case when total payment of products and services is more then $75, the penalty
will be 47% of payment.
10. A non-profit organisation needs to register for GST after it has a turnover of more than how
much?
If turn over is more then $150000 per annum then a non- profit organisation needs to
register for GST.
11. List the key information that must be included on a tax invoice for sales of $1,000 or more.
 Identity of seller.
 Date on which invoice was issued.
 Seller's ABN.
12. Explanation of three types of financial statements and their purpose.
There are various kinds of financial statements and some of them are mentioned below:
 Balance sheet- It is a type of statement that consists information about summary of
financial balance of business entities. In detailed manner, it includes final value of total
liabilities, assets and equities at the end of financial year.
Purpose- The purpose of preparation of balance sheet is to providing monetary information about
how much amount of fund is being used and what assets it has been spent on.

 Cash flow statement- This can be defined as a kinds of statement that consists
information about how variation in amount of balance sheet accounts and income can
impact to cash & cash equivalents.
Purpose- The purpose of this statement is to getting information about those aspects wherein a
company is generating and spending cash.
 Profit and loss account- This is a statement that defines about total value of loss and
profit during a specific time.
Purpose- The objective of preparing this statement is to provide information about detailed
summary of activities that leads to revenues generation or loss occurrence.
13. Type of entity that is required to have financial reports audited.
A business entity which is registered and managed by group of individuals or government
is required to audit their financial reports. The small proprietorship companies do not require to
audit their financial statements.
14. Purpose of a financial audit and auditor’s report.
Purpose of financial audit- The main objective of financial audit is to enhance the value and
credibility of financial statements prepared by management. It becomes possible because under
this, accuracy of each transaction is evaluated.
Purpose of audit report- It helps in indicating whether prepared financial statements are as
accordance of GAAP. As well as in assessing unusual aspects regards to company.
15. Why companies may choose to develop budgets.
The companies choose to develop budgets because by doing this they become able to
allocate their available financial resources as accordance of need of futuristic activities. As well
as under this, companies can make optimum utilisation of their resources by making financial
plan under guidance of budgeted activities.
16. Main steps of the budgeting process.
The budgeting process consists below mentioned process that is as follows:
 First step is to set realistic goals.

 Second is to identifying income and expenses.
 Determination of needs and wants is done in third step.
 The fifth step is regarding to creation of budget.
 After planning of budget, it is being put into the action.
 This is the last step in which corrective actions are taken after implementation of budget.
17. Five ways to improve cash inflow with examples.
 Replacement of old equipments and stock can help in boosting cash flow. This is so
because selling of these old equipments may lead to generation of cash.
 Creation of incentive for early payments and penalties for late payment may also help in
improving of cash flows.
 Offering of discounts on loans can help in enhancing cash flows. For example if
companies will offer discount to customers if they will pay bill on time then this will
surely improve the cash flow.
 Using of electronic payment system can also bring enhancement in cash flows because if
companies will use this system then they will receive debt amount in less time period.
 Increase in pricing also can improve the cash flows because if price will raise then
customers have to more amount to make purchase and as a result cash inflow will
increase.
18. Use of electronic spreadsheets in developing budgets and two of their key features.
The electronic spreadsheets play a key role in context of developing budgets because due
to this financial data is presented in an effective manner. As well as it brings accuracy in process
of budget preparation.
Features:
 In this spreadsheet, formulas are used to express relationship of two or more then two
cells.
 In addition, these spreadsheets provide commands for text manipulations.
19. Explain three key principles relating to the management of a chart of accounts.
 The financial statements needs to present information in a simply manner.

 The chart of accounts needs to be set up so that accurate information of financial reports
can be provided.
 In setting up a chart of accounts for companies, accountants need to think about
information that is needed.
20. Purpose of P&L account and its feature.
The main purpose of P&L account is to determine about value of profit or loss during a
particular time period. Along with assessing key activities that are resulting as cause of loss or
revenues.
Features:
 It is prepared at the end of each accounting period in order to get an idea of incurred
value of profit and loss during a particular time.
 This statement contains information about non cash expenses such as depreciation.
TASK 2
Benefit of TV advertising:
 It helps in attracting more number of customers.
 It fosters emotions and empathy.
 It promotes products and services in way of both sound and sight.
1. Draft of marketing budget.
King Edward
VII College
Master
Marketing
Budget (monthly)
2016 - 2017 FY
Projected
expenses

Marketing
Activity
01/0
6/16
01/0
7/16
01/0
8/16
01/0
9/16
01/1
0/16
01/1
1/16
01/1
2/16
01/0
1/17
01/0
2/17
01/0
3/17
01/0
4/17
01/0
5/17
2016/17
Total
Redesign web site 2000 2000 3000 5000
Incentive scheme 200 200 200 200 200 200 200 200 800 600 800 2400
Advertising
campaign 2000 2000 2000 2000 2000 10000
Online
communication - - - - - - - - - - - - -
Stand package 275 275 275 275 275 275 275 275 275 275 275 275 3300
Promotional
brochure 1500 1500
Sponsor
community 2000 2000
Contingency
amount
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7 800
25000
2. Email to CEO
To: [e-mail]
From: [e-mail]
Subject: About marketing budget discussion.
Main body:
In the aspect of prepared marketing budget for financial year 2016-17, we need your
permission to implement it. As well as we want that you must evaluate each activity of budget
and provide essential guidance to make modifications. Below we are attaching marketing
budget.
3. Budget meeting:
 Explanation of each marketing activity- In the marketing budget, different kinds of
activities are included such as radio advertising expenses and many more.

 The budget is needed to be increase by $5000 in order to do TV advertising. This is so
because it can be beneficial to do advertisement by help of this medium. As well as it is
an effective way to attract more number of customers.
4. Modified budget:
King Edward
VII College
Master
Marketing
Budget (monthly)
2016 - 2017 FY
Projected
expenses
Marketing
Activity
01/0
6/16
01/0
7/16
01/0
8/16
01/0
9/16
01/1
0/16
01/1
1/16
01/1
2/16
01/0
1/17
01/0
2/17
01/0
3/17
01/0
4/17
01/0
5/17
2016/17
Total
Redesign web site 2000 1000 3000 4000
Incentive scheme 200 200 200 200 200 200 200 100 800 600 800 2300
Advertising
campaign 1000 1000 1000 1000 1000 5000
Online
communication - - - - - - - - - - - - -
Stand package 275 275 275 275 275 275 275 275 275 275 275 275 3300
Promotional
brochure 1500 1500
Sponsor
community 1500 1500
Contingency
amount
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7 800
18400

5. Mail to CEO:
To: [e-mail]
From: [e-mail]
Subject: About discussion of modified marketing budget.
Main body:
After the first meeting and according to your guidance we modified the marketing
budget and reduced amount of some activities. Now we need that you assists it again and meet
with us to make comment on modified budget.
6. Discussion of budget with team:
 Overall budget allocation- The activities are allocated as accordance of marketing
campaign and amount of estimation is similar to actual outcome.
 Amount allocated to each activity- The redesign website cost is allocated of $4000,
incentive scheme is of $2300. As well as cost of radio campaign is reduced till $6200.
 Amount allocated to contingencies- For contingencies, $800 is allocated which was of
$800 in previous.
TASK 3
1. Amount of actual expenditures:
2016 - 2017 FY
Actual Expenses
Marketing
Activity
01/0
6/16
01/0
7/16
01/0
8/16
01/0
9/16
01/1
0/16
01/1
1/16
01/1
2/16
01/0
1/17
01/0
2/17
01/0
3/17
01/0
4/17
05/0
5/19
201/1
Total
Redesign web site 3000 3000 3000 7000
Incentive scheme 200 200 200 400 200 200 200 1000 600 800 600 2800
Advertising
campaign
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33
833.
33 10000

Online
communication - - - - - - - - - - - - -
Stand package 275 275 275 275 275 275 275 275 275 275 275 275 3300
Promotional
brochure 1000 1000
Sponsor
community
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67
166.
67 2000
Contingency
amount
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7
66.6
7 800
TV advertisement
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67
416.
67 5000
31900

2. Report on budget and expenditures:
 Projected budget, actual and variances:
The value of project budget and actual budget is different from each other. This is so
because projected budget is of 18400 for year 2016-17. While the actual budget is of 31900 and
variation is of 13500.
 Overall level of variance:
Activity Budgeted Actual Variance
Redesign web site 4000 7000 3000A
Incentive scheme 2300 2800 500A
Advertising campaign 5000 10000 5000A
Online communication - - -
Stand package 3300 3300 -
Promotional brochure 1500 1000 500F
Sponsor community 1500 2000 500A
Contingency amount 800 800 -
TV advertisement - 5000 5000A
 Reasons of over-burns- There are four activities whose expenditures are over estimation.
These are redesign web site, incentive scheme, advertisement campaign and sponsor
community. Such as in incentive scheme the budgeted expenses are of 2300 but in actual
it occurred of 2800. Thus, the variance is of 500 adverse.
 Solution for budget- In order to minimise the difference between actual and estimated
expenditures, this is important to focus on those expenses that are resulting in higher cost
such as advertising campaign whose estimated expenditure are of 5000 but actual
expenditures are of 10000. As well as implementation of new strategies that may lead to
reduction in total actual expenditures.

3. E-mail to CEO
To: [e-mail]
From: [e-mail]
Subject: About actual expenditure of marketing budget.
Main body:
The mail consists information about actual amount of expenditures of marketing for
year 2016-17. As well as level of variances in actual and estimated budgets is also included in
attachment of budget.
TASK 4
Melbourne
Budgeted Actual Variance
(+/-)
Income:
Sales 450000 475000 25000 F
Expenses:
Electricity and gas 1500 3000 1500A
Internet 1000 1100 100A
Office supplies 700 1200 500A
Rent 225000 220000 5000F
Stationary 800 1300 500A
Wages and salary 115000 117000 2000A
Superannuation 15000 16000 1000A
Travel and accommodation 2500 2700 200A

Water 2000 2600 600A
Work cover insurance 900 900 -
Total expenditures 364400 365800 1400A
Net profit 85600 109200 23600F
Sydney
Budgeted Actual Variance
(+/-)
Income:
Sales 350000 410000 60000F
Expenses:
Electricity and gas 1200 2800 1600A
Internet 1100 1100 -
Office supplies 650 1300 650A
Rent 185000 190000 5000A
Stationary 700 1250 550A
Wages and salary 115000 117000 2000A
Superannuation 15000 16000 1000A
Travel and accommodation 2100 2300 200A
Water 1900 2100 200A
Work cover insurance 870 870 -
Total expenditures 323520 334720 11200A
Net profit 26480 75280 48800F
(a) Outline of financial performance:

In the Melbourne city, performance of college is better. As their actual profit is of
$109200 and estimated profit is of $85600. In addition, in Sydney the net profit is of $75280 in
actual and projected revenue is of $26480. As well as variation is of $48800.
(b) Variances higher then 10%
In the profit and loss account of both cities, there are some activities whose variances are
more then 10% such as:
Melbourne:
Activity Variance
Electricity and gas 100.00%
Office supplies 71.42%
Stationary 62.50%
Water 30.00%
Sydney:
Activity Variance
Electricity and gas 133.33%
Office supplies 100.00%
Stationary 78.57%
Water 10.52%
Net profit 184.29%
(c) Comparison of performance
On the basis of above profit and loss account of both campus, this can be find out that in
Melbourne campus, the net profit is of $109200 and estimated profit was of $85600.
While in Sydney campus, the net profit is of $75280 and project profit was of $26480. In
this campus, the variance is of 184.29% in net profit. In comparison manner, campus at
Melbourne city seems to be better as compare to Sydney.

(d) Solution in relation to expenditure items where variances are more then 10%.
In the case of both campus, there are similar expenditures whose variance is more then
10%. Such as in the Melbourne campus, variance of electricity and gas is of 100% as well as in
Sydney, its variance is of 133.33%. This issue can be sorted out by focusing on minimising these
expenses as much as possible. Such as the they can find any another alternative for electricity
like solar panel. As well as for stationary items they may buy the commodities from those stores
whose prices are lower.
2. E-mail to CEO
To: [e-mail]
From: [e-mail]
Subject: About variances of profit and loss account.
Main body:
The mail consists information about value of profits of both campus located at Melbourne
and Sydney. As well as about variances in each activity of income and expenses.
TASK 5
Aged debtor report analysis
Client Name
120+
Days 90 Days 60 Days
30
Days Current Total
Client 1 Steven Smith
$4,356.0
0
Client 2 Alistair Cook
$2,714.0
0
Client 3 Nathan Lyon
$3,781.0
0

Totals 2,714.00 4,356.00 3,781.00 0.00 0.00 0.00
1. Aged Debtor Report for the CEO
 Information included in aged debtor report- On the basis of above report, this can be
analysed that client one is taking time of 90 days in making payment of debts. While
client 2 is taking more time of 120 days to make payment of $2714. While the last debtor
is taking less amount of time for payment of $3781.
 As per above analysis, this can be said about companies, debtor process that they are
taking too much time period in order to collect debt amount. Such as client 2 is taking
more then 120 days for making payment of debt.
 Recommendations:
(I) Providing rewards to debtors who make payment on time.
(ii) Offering discounts for early payments.
(iii) Discouraging for making late payments.
(iv) By bringing efficiency in collection process.
(v) Reducing in trading terms can also be beneficial.
2. Mail to CEO
To: [e-mail]
From: [e-mail]
Subject: About variances of profit and loss account.
Main body:
The mail consists information about college's debtor collection process. As well as
information of each individual client regards to debt amount and time taken in order to make
payment.
3. Debtors management process
The debtor management consists a process that consists below mentioned steps such as:
 By effective communication- This is the first step in order to enhancement of debtor
collection process that is linked with making better communication with debtors.

 Stay up to date with customer information- Another way to improve debtor collection
process is to keep in touch with customers so that it can be identified that how much of
amount is due.
 Use of artificial intelligence- In addition, implementation of artificial intelligence can
also help in aspect of managing of total number of debtors. This is so because it records
total number of debtors in an effective manner as well as computes amount of interest
automatically.
4. Mail to CEO
To: [e-mail]
From: [e-mail]
Subject: About variances of profit and loss account.
Main body:
The mail consists information about detailed process in order to enhance debtor collection
process. Under this, three steps are covered and each of them significant role for college in the
aspect of credit collection.
5. Monitoring of debtors management process:
Client Name
120+
Days 90 Days 60 Days
30
Days Current Total
Client 1 Steven Smith - - - 5250 - 5250
Client 2 Alistair Cook - - - 1500 1500
Client 3 Nathan Lyon - - - 1450 - 1450
Totals 6700 1500 8100
As compare to previous debtor report, this can be find out that debtors are making payment in
less time period. It all became possible only because of implementation of debtors management
process. Such client one was taking 90 days for making payment in previous but after applying
process, the days are decreased and now paying within 30 days.

6. Mail to CEO
To: [e-mail]
From: [e-mail]
Subject: About Aged debtor summary
Main body:
The mail consists information about comparative analysis of aged debtors report after
implementation of process for enhancement of debtor collection process.
CONCLUSION
On the basis of above project report it has been concluded that budgets are too crucial for
companies in order to manage financial resources. In the report, detailed information regards to
marketing budget and analysis of variances between actual & estimated outputs. As well as in
further part of report analysis of profit & loss account is done along with variances whose
difference is more then 10%. In the end part of report, aged debtor collection process is
concluded in a detailed manner.