Diploma of Accounting: Assessment 1-4

This article covers the assessment of Diploma of Accounting, including tax liabilities reduction goals, wealth accumulation, asset development, legal and financial requirements, personal investment strategies, insurance needs, tax issues and requirements, implementation strategies, importance of continuous review of financial position, completeness of the annual report of Kogan ltd, accuracy of the financial data, vertical and horizontal analysis of income statement of Kogan Ltd, and more.

Running head: DIPLOMA OF ACCOUNTING
Diploma of Accounting
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Assessment 1...................................................................................................................................4
Part 1................................................................................................................................................4
Insurance Needs...............................................................................................................................7
Implementation Strategies...............................................................................................................7
Part 2................................................................................................................................................8
Importance of Continuous Review of Financial Position................................................................8
Completeness of the Annual Report of Kogan ltd...........................................................................8
Changes in Financial Position.........................................................................................................8
Assessment 2...................................................................................................................................9
Accuracy of the Financial Data.......................................................................................................9
Vertical and Horizontal Analysis of Income Statement of Kogan Ltd..........................................10
Profit and Loss Statement and Debt Equity Ratio.........................................................................11
Problems Faced by Kogan Ltd......................................................................................................12
Analysis of Cash flow Statement...................................................................................................12
Analysis of Performance of the Business......................................................................................12
Increase in Profits..........................................................................................................................13
Funds Requirement........................................................................................................................13
Assignment 3.................................................................................................................................14
Corporate Governance Principles..................................................................................................16

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Risk faced by the Company...........................................................................................................17
Risk Management Strategies.........................................................................................................18
Investment Options........................................................................................................................18
Assessment 4.................................................................................................................................19
Different Types of Taxes...............................................................................................................19
Deductions allowable to a business...............................................................................................20
Rules for Claiming an Expenses as Deduction..............................................................................21
Deduction for Travel Expenses.....................................................................................................21
Simplified Depreciation Rules.......................................................................................................21
Tax Implications of Prepaid expenses...........................................................................................22
Time limit for Amending Tax Assessment....................................................................................23
Capital Gain Tax Concessions.......................................................................................................23
PAYG Installments........................................................................................................................23
GST Concessions...........................................................................................................................24
Areas Causing issues in Taxation..................................................................................................24
Financial Forecasting Techniques.................................................................................................24
Financial Risks...............................................................................................................................24
Managing Risks.............................................................................................................................25
Legal Rights of a Client.................................................................................................................25
Formats Used for Depicting Financial Information.......................................................................26

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Significant Acts.............................................................................................................................26
Important Reports..........................................................................................................................26
Cash Flow Statement Analysis......................................................................................................27
Budgeting in Business...................................................................................................................27
Financial Markets..........................................................................................................................28
Treasury’s Role..............................................................................................................................28
Reference.......................................................................................................................................29

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Assessment 1
Part 1
Tax Liabilities reduction goals
The information which is presented in this assessment is obtained by a process of
interview which is conducted with the board of directors of the business. The board of directors
of the company are responsible for formulation of policies and different strategies of the business
and therefore they are the best persons to get information about the working of the company.
The tax liabilities of the company as shown in the annual report for the year 2017 is
shown to be $ 2,384,500 which is shown in the financial statements. The tax liability of Kogan
Ltd has increased considerably when the tax liability of the business is considered for the
previous year. The tax liability of the company is shown to be $ 622,072 as per the financial
statements of 2016. The tax expenses which is shown in the income statements of the company is
comprised of both current tax expenses and deferred tax expenses of the business. The tax
reduction policies of the business involve effective optimization of taxes as per the policy of the
management1. The management of the company has already employed competent accountants
and tax advisor so as to ensure that all the provisions and legal requirement are followed when
the business is assessing the tax which the business needs to bear at the end of the financial year.
The GST components of the business which are concerned with operating and investing
activities which are either to be paid or received from the ATO is shown in the operating cash
1Kogancorporate.com. (2018). [online] Available at:
https://www.kogancorporate.com/document/73c43b2fa1cd4706851051ddaaced964/
KOG0004%20AR17_PFO_web.pdf [Accessed 29 Jun. 2018].

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flows of the business. The management of the company will also be availing the various
deductions which are available to the company if certain conditions are met.
Wealth Accumulation
As per the annual report of Kogan ltd, the management of the company focuses on
building up effective customer relationship and also improve the quality of the product which is
provided by the company. In addition to this, the management is committed towards generation
of wealth as per the annual report of the business. The most important role in the accumulation of
wealth for the business is that of the management who are involved in the planning process of
the business2. The wealth accumulation of the business can be clearly identified from the annual
report of the business which shows the asset such as property plants and equipment which are
under construction as shown in the notes to account section of the annual report3. As per the
annual report of the company for the year 2017, the annual report specifies that the effective
performance of the business during the year. Kogan company is engaged in a variety of business
and therefore has an effective portfolio of the services which is provided by the company
(Kogancorporate.com. 2018).
Asset Development
The assets which the company possess in the annual report of the business as per the year
2017. The assets of the business are shown in the profit and loss statements as prepared by the
business. The business has purchased assets during the year as shown in the notes to accounts of
the company. The business also had purchased assets from Dick Smith in the year 2017. The
2 McKernan, Signe-Mary, Caroline Ratcliffe, C. Eugene Steuerle, and Sisi Zhang. Less than equal: Racial
disparities in wealth accumulation. Washington, DC: Urban Institute, 2013.
3 Hills, John. Wealth in the UK: distribution, accumulation, and policy. Oxford University Press, 2013.

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business has shown significant amount of profit as shown in the annual report of the company for
the year 2017 which has increased tremendously in comparison to previous year’s estimate
which shows that the management of the business is focused towards generation of wealth for
the shareholders of the company.
Legal and Financial Requirements
The legal requirement of the business focuses on the compliance of all the legal
regulation which is applicable to the company as introduced by the government. In addition to
this, the annual reports of the business show that during the ordinary course of business, the
company has faced law suits which are other than for tax rules compliance. The code of conduct
of the business and management policies of the business are all governed by the legal
requirement of the business.
The financial regulations of the business are as per the standards of accounting which are
established by AASB which are applicable on the business. The other common accounting
policies and conventions which are followed by other businesses belonging to the same industry
is also applicable to the company.
Personal Investment Strategies
As per the cash flow statement which is prepared for Kogan ltd, the business has made
investment in intangibles. In addition to this, the management of the company is expecting
investments in the business. The strategies of the business is to maximize the investments of the
business. The management expects to increase the investments of the company in the coming
year 2018.

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Business Registration
In order to operate in the market, the business needs to register with the authorities. The
registration of the business needs to be handled by the legal team of the business and the
business also needs to comply with all rules and regulations of the corporation act.
Insurance Needs
The business is engaged in a variety of business, therefore the need for insurance for the
overall business is important. The insurance needs of the business are quite evident as the
business has various diversified business and certain retail and other service units might be
subjected to risks for which the business needs insurance cover.
Tax Issues and Requirements
In order to achieve the long-term goals and business objectives of the business, the
management of Kogan ltd need to comply with the legal requirements of tax. Due to the
diversified business of the company, various taxes are applicable on the company which the
business needs to consider in order to proceed with the business and overall operation of the
company.
Implementation Strategies
Strategies will be adopted by the business in order to ensure that all other strategies of the
business are effectively implemented which will be formulated by the top-level management.
The management has already as per the annual report of 2017 established different committee
which will be looking after different roles of the business. In addition to this, the management

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can implement performance report on a monthly basis so as to review the performance of the
business as per the goals and objectives of the business.
Part 2
Importance of Continuous Review of Financial Position
In order to ensure that the financial position of the business is stable and the policies
which are formulated by the business are appropriate, continuous review of the financial position
is needed4. The market and the business environment are dynamic in nature and changes
continuously therefore it is essential that the financial position of the business is review
regularly.
Completeness of the Annual Report of Kogan ltd
The annual report of the company shows the business model of the company which is to
ensure that the best quality of online services is available to the customers. The management of
Kogan ensures that the business uses the best technologies and online technologies for retail
services. The business model of the company focuses on cutting out the benefits of the middle
men and ensure that the clients get the best deals for the products.
Changes in Financial Position
The financial position of the business is shown in the annual report of the company which
is engaged in retail business. The management of the company has brought about changes in the
technological aspect of the business and thereby also improved the operational structure of the
4 Yang, S. Alex, and John R. Birge. "How inventory is (should be) financed: Trade credit in supply chains with
demand uncertainty and costs of financial distress." (2013).

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business. The profits of the business have significantly increased from the results of 2016. The
profit which is earned during the year is shown to be $ 3,739,865. The business should plan
aggressive strategies to further increase the revenues of the business5.
Assessment 2
Accuracy of the Financial Data
The accuracy of the financial information by consulting with the auditors of the business
and also by reviewing the auditor report which is provided in annual report of the business
during the year 2017. The auditors of the company are KPMG and the auditor report shows that
the financial statements are prepared according to corporation act 2001 and is also showing true
and fair view. The accuracy of the financial information can be confirmed by reviewing the
treatments of the various items which are shown in the annual report of the business and ensure
that the same comply with the relevant standards to which the treatments are associated with.
5 Gitman, Lawrence J., Roger Juchau, and Jack Flanagan. Principles of managerial finance. Pearson Higher
Education AU, 2015.

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Vertical and Horizontal Analysis of Income Statement of Kogan Ltd
Particulars 2017 2016 Amount Percentage
$ $
Revenue 289,517,780.00$ 211,158,595.00$ 78,359,185.0000 0.3711
Cost of sales -237,824,300.00$ -178,462,191.00$ -59,362,109.0000 0.3326
Gross Profit 51,693,480.00$ 32,696,404.00$ 18,997,076.0000 0.5810
Selling and Distribution Expenses -15,275,422.00$ -10,182,023.00$ -5093399.000 0.500
Warehouse Expenses -5,810,443.00$ -4,672,696.00$ -1137747.000 0.243
Administration Expenses -23,108,076.00$ -15,798,804.00$ -7309272.000 0.463
Other expenses -993,060.00$ -406,279.00$ -586781.000 1.444
Profit before net financing income and income tax 6,506,479.00$ 1,636,602.00$ 4869877.000 2.976
Finance Income 469,845.00$ 6,207.00$ 463638.000 74.696
Finance Costs -124,694.00$ -211,588.00$ 86894.000 -0.411
Unrealised Foreign Exchange (loss) -727,265.00$ -$ -727265.000 0.000
Profit before income tax 6,124,365.00$ 1,431,221.00$ 4693144.000 3.279
Income tax (expense)/benefit -2,384,500.00$ -622,072.00$ -1762428.000 2.833
Profit for the year 3,739,865.00$ 809,149.00$ 2930716.000 3.622
Statement Showing Income and Expenses (Common Size Statement)

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Particulars 2017 Percentage 2016 Percentage
$ $
Revenue 289,517,780.00$ 100.00% 211,158,595.00$ 100.00%
Cost of sales -237,824,300.00$ 82.14% -178,462,191.00$ 84.52%
Gross Profit 51,693,480.00$ 17.86% 32,696,404.00$ 15.48%
Selling and Distribution Expenses -15,275,422.00$ -29.55% -10,182,023.00$ -4.82%
Warehouse Expenses -5,810,443.00$ 2.01% -4,672,696.00$ 2.21%
Administration Expenses -23,108,076.00$ 7.98% -15,798,804.00$ 7.48%
Other expenses -993,060.00$ 0.34% -406,279.00$ 0.19%
Profit before net financing income and income tax 6,506,479.00$ 2.25% 1,636,602.00$ 0.78%
Finance Income 469,845.00$ 0.16% 6,207.00$ 0.00%
Finance Costs -124,694.00$ 0.04% -211,588.00$ 0.10%
Unrealised Foreign Exchange (loss) -727,265.00$ -$
Profit before income tax 6,124,365.00$ 2.12% 1,431,221.00$ 0.68%
Income tax (expense)/benefit -2,384,500.00$ -0.82% -622,072.00$ 0.29%
Profit for the year 3,739,865.00$ 1.29% 809,149.00$ 0.38%
Statement Showing Income and Expenses (Comparative Statement)
Profit and Loss Statement and Debt Equity Ratio
As per the profit and loss statement which is shown in the annual report of the company
for the year 2017 shows that the profitability of the business has significantly improved from the
performance of previous year. The profit of the business has increased from $ 809,149 in 2016 to
about $ $ 3,739,865 in 2017. This shows tremendous performance of the business and also
depicts operational efficiency of the business6. The computation of debt equity ratio of the
business is shown below:
The debt equity ratio shows that the proportion of debt in the capital structure mix is
much more than the equity mix in the capital structure of the business. The business as per the
annual report of the company for the year 2017 shows that the business does not utilizes any
6 Heikal, Mohd, Muammar Khaddafi, and Ainatul Ummah. "Influence analysis of return on assets (ROA), return on
equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and current ratio (CR), against corporate profit
growth in automotive in Indonesia Stock Exchange." International Journal of Academic Research in Business and
Social Sciences 4, no. 12 (2014): 101.

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borrowings in the capital mix of the business. Therefore, the business mostly relies on the equity
capital as the main source of finance for the activities of the business.
Problems Faced by Kogan Ltd
The major risks or problems which are faced by the management of Kogan ltd are clearly
indicated in the annual report of the company. The retail environment and economic condition in
the country is not stable and things can be difficult for the business. In addition to this, Kogan
company faces intense competition in the market as clearly indicated in the annual report of the
company as per 2017 report.
Analysis of Cash flow Statement
The cash balance of the business has decreased significantly from the previous year which
shows the liquidity position of the business has improved significantly as shown. The reasons for
such an increase in the cash flow of the business can be attributed to the following reasons:
 Increase in the revenue receipt from customers of the business from previous year which
is shown to be $ 291.236,987.
 Net proceeds which is received by the business from the new issues of shares which is
undertaken by the business.
 Repayment of debts which amounts to $ 4,900,000 which is more than previous year
payments.
Analysis of Performance of the Business.
As per the annual report of the business, the profitability of the business which is shown
in the income statement of the business has increased as shown in the annual reports of the

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company. The rise in the profitability of the business is due to the improved operational
performance of the company and better sales generation for the business. The profit of the
business has increased to $ 3,739,865 which was just $ 809,149 in 2016.
The financial stability of the company is also appropriate as the company is engaged in
retail business which has various diversification. The efficiency of the business is also
considered to be good when measured with the operational capacity of the business.
Increase in Profits
As per the question, the business is able to consolidate the profits of the business
effectively and there has been a significant increase in the profits of the business. The income
statement of the business shows considerable rise in the profits of the business.
Funds Requirement
The annual reports of the business clearly indicate that the management of Kogan ltd uses
more of equity capital and does not rely on the debt capital of the business. The capital structure
which is used by Kogan ltd for the year 2017 shows that the capital is made up of only equity
capital funds and does not incorporate debt capital funds. This suggest that the business should
use more of Debt capital to attain a favorable capital structure for the business and for any
funding required for any future operations.

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Assignment 3
In order to clearly explain the performance of the Kogan ltd, significant ratios are
calculated. The ratios which are calculated are financial indicators as to how the business is
performing and such ratios include profitability ratios, liquidity ratios and stability ratios7. The
calculations for the same is shown in the table format below:
7 Babalola, Y. A., and F. R. Abiola. "Financial ratio analysis of firms: A tool for decision making." International
journal of management sciences 1, no. 4 (2013): 132-137.

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Profitability Ratios
Particulars 2017 2016
Total Revenue 289,517,780.00$ 211,158,595.00$
Materials & Consumables Used 237,824,300.00$ 178,462,191.00$
Net Profit 3,739,865.00$ 809,149.00$
Total Assets 80,323,856.00$ 32,443,291.00$
Total equity 42,671,685.00$ 7,070,740.00$
Borrowings -$ 4,900,000.00$
Gross Profit Margin 0.821 0.845
Net Profit Margin 0.013 0.004
Return on Assets 0.047 0.025
Return on Equity 0.088 0.114
Earning Per Share 0.04 2.359
Dividend Payout ratio 25.25 27.25
Solvency Ratio
Particulars 2017 2016
Total Assets 80,323,856.00$ 32,443,291.00$
Total equity 42,671,685.00$ 7,070,740.00$
Total Liabilities 37,652,171.00$ 25,372,551.00$
Current Assets 74,440,508.00$ 26,898,980.00$
Current Liabilities 37,557,000.00$ 25,329,187.00$
Debtors 2,045,324.00$ 2,981,881.00$
Inventory 39,741,987.00$ 20,532,375.00$
Current Ratio 1.982 1.062
Debtor Collection period 2.579 5.154
Inventory held period 60.994 41.994
Debt Ratio 0.469 0.782
Equity Ratio 0.531 0.218
Capitalisation Ratio 0 0.40933142
The net profit margin of the company as calculated shows that the same has increased in
comparison to previous year’s results. The profits of the business have increased from previous
year estimate due to the rise in revenue which is received from investments8. The overall profits
8 Robb, Alicia M., and David T. Robinson. "The capital structure decisions of new firms." The Review of Financial
Studies 27, no. 1 (2014): 153-179.

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from operations has decreased as per the estimates of previous year. The return on assets and
return on equity has also increased which are positive indicators of the business as the return
which is received from the use of the assets and the returns which the business generates for the
shareholders. The earnings per share of the business has reduced as shown in the annual report of
the company which signifies that there is fall in dividends of the business.
The current ratio of the business shows that the liquidity of the business has significantly
improved in comparison to previous year’s estimates. This shows an improvement in the
liquidity position of the company. The debtor and inventory collection period which shows the
efficiency of the business in analysis of the operational capabilities of the business. Both the
results show favorable outcome for the company as both have reduced. This shows the
operational strength of the business in collection of funds and effective use of inventories9. The
debt ratio of Kogan ltd is zero as the borrowings of the business for the year 2017 is shown.
Corporate Governance Principles
The management of Kogan ltd is engaged in provided and formulating the best policies
for the purpose of effective corporate governance of the business. The corporate governance
statement which is shown in the annual report of the company as per 2017 shows that the
business follows the Corporate Governance Principles as set out by ASX council10.
The role of the board of directors of the business are responsible for the overall
management of the company and also for supervising whether the policies which are
implemented by the company are followed or not. The strategies of the business are formulated
9 Reid, Walter, and David Roderic Myddelton. The meaning of company accounts. Routledge, 2017.
10 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.

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in such a way such that the expectations of the shareholders are always given priority and the
overall activities of the business are conducted in such a way that all the requirements of ASX’s
principles are followed. In addition to this, the board has established all significant committee
which play a vital role in the overall management of the business11. The management of Kogan
ltd complies with the standards of accounting as prescribed by AASB and also follow the tax
regulations established by ATO as is evident from the annual reports of the company.
Risk faced by the Company
The company is engaged in the business of retail industry and the business faces risks of
fluctuations in markets. The major risks which the business faces are related to the intense
competition which the business faces from the competitors in retail industry. There is always the
risk of fluctuations in the prices in the market and there is a high chance of losses in such a
situation.
The business is engaged in the sale of variety of products which are for the retail business
and the same are sold in online transactions. In addition to this, the business faces intense
competition from the other retail giants like Amazon.
Risk Management Strategies
The risk management strategies which are followed by the business are shown below in details:
 Enterprise risk management system is established which can identify risk and deal with
the same accordingly while at the same time reporting for the same. The system is known
to identify all the risks such as operational, strategic, financial risks.
11 Davies, Adrian. Best practice in corporate governance: Building reputation and sustainable success. Routledge,
2016.

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 A compliance program where important matters are to be reported directly to the Board
of directors on a six-monthly basis or even sooner.
 Implementation of proper debtor collection policy which can help the business to collect
the funds from the debtors and reduce any defaults in payments thus maintaining
the financial risks of the business.
 Implementation of Budgeting system which can ensure that the business that
the plan of the management is being followed and such will minimize the
risks automatically.
Investment Options
The business as per the annual report considers equity capital which is used by the
business in the capital structure of the business. However, the management can use more of debt-
based capital in order to obtain a favorable mix in the capital structure of the business. The
business can use retained earnings as well as a potential source. In addition to this, the company
can undertake investments in foreign bonds.
Assessment 4
Different Types of Taxes
The different taxes which are applicable on a business in Australia are stated below:

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1. Superannuation Taxes: These taxes are charged on a part of the retirement plan where the
employer saves a part of the savings from the salary of the employee and also contributes
a part into a fund which is then used for retirement purpose.
2. Corporate Taxes: Theses taxes refers to the taxes which is charged on the income or
profits which are generated by the operations of the business. In Australia most of the
businesses is charged at the rate of 30% on the profits of the business.
3. Goods and Service Taxes: The goods and service taxes refer indirect taxes which are
charged at 10% in Australia and is on the supply of goods as well as services. Such taxes
are usually charged on individuals who are registered under GST act.
4. Property Taxes: These taxes are charged on the property which may be of residential or
industrial nature in case of company. These types of taxes normally fall under the
purview of wealth taxes.
5. Payroll Taxes: These taxes are paid on the wages which are paid by the businesses to its
employees. These taxes are collected by the state government where the business
operates. The rate at which such taxes are charged keeps on changing as per the
requirement of the State Government.
6. Land Tax: Such taxes are charged by the state government on the land acquisition or
possession by business. The rate of taxes are pre decided by the government and the same
can be updated as per the will of the government.
Deductions allowable to a business
As per the tax rulings which are provided by ATO, most of the expenses which are
incurred by the businesses during the course of the business are allowed as deductions for the
business. Some of these deductions that a business can claim as deduction are given below:

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1. Business general expenses.
2. Deduction relating to GST input purchases.
3. Motor Vehicle expenses
4. Business Travel Expenses
5. Rent expenses
6. Wages and Salaries to employees
7. Interest paid
8. Bad Debts
9. Gratuity, pensions, superannuation.
10. Expenses for repairs and maintenance.
11. Computer provided to employee for which the employer bears the expenses.
12. Donations made to charitable institute.
13. Other operating expenses.
14. Fringe benefits provided by the employer.
15. Miscellaneous Business expenses
Rules for Claiming an Expenses as Deduction
As per the provisions which are provided by Australian Tax Office (ATO), the general
rule is that if any company spends money for the purpose of earning revenues for the business
then the business can claim the deduction immediately or even overtime. In order to claim an
expense as deduction the following needs to be established:
 Expense must be incurred to earn an income for the business.

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 The expense which is incurred by the business should not be in the nature of private or
domestic
 The expense which is incurred by the business should not be an outgoing of capital or of
capital nature which is related to a capital asset.
Deduction for Travel Expenses
As per the provisions which is provided by ATO, if an employee stays away from home
for business travel for one or more than one night than proper documentations of the expenses
need to be made in order to claim the deduction. In case the stay is for more than 6 nights, a
proper diary is to be made which contains all expenses related to the business. In certain cases,
fringe benefit taxes apply when employer incurs expenses for private tour of the employee.
Simplified Depreciation Rules
If a business chooses to follow simplified depreciation rules than the business needs to
consider and follow the following:
 The management should use this method for computing depreciation for all depreciable
asset except which are excluded.
 The business need to apply entire set of rules and not just one elements of the rules.
 The business needs to claim deduction for the asset which is used for business purpose
ant for domestic purpose.
If the business does not follow the simplified depreciation rule than it must follow the
general depreciation rules. This rule set the amount which can be claimed as deduction based on

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the useful life of the asset. The depreciation is calculated following prime cost method or
diminishing value method.
The simplified rule applies to a small business which has a turnover less than $10 million
from 1st July 2016 or $ 2 million for any previous years. The deduction will be allowed at 15% or
the first year and at 30% for the second year.
Tax Implications of Prepaid expenses
Prepaid expenses which are incurred by small business are immediately deductible under 12
months rule if the following are satisfied:
 The eligible service period for the expenditure is 12 months or lesser.
 The period ends up on the last date of the income year following the year in which the
expense was incurred.
In case the 2 months rule is not meet, then the business cannot claim deduction for the
expenses which was incurred in a similar fashion. Small business can also use simplified tax
system (STS) accounting method as well.
In order to access such a concession most of the business uses 12 months rule as it simplifies
the entire process and is mostly used in businesses.
Time limit for Amending Tax Assessment
The time limit which is set for amending the tax assessments for individuals and small
business is two years and for other categories of tax payers it is four years from the day when the
notice of assessment is received from ATO.

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Capital Gain Tax Concessions
The four scenarios where CGT concessions are allowed as per the provisions of ATO are:
 15-year exemption: In such case, if the employer is above 55 years of age or permanently
incapacitated and has an active business for more than 15 years, concessions will be
provided.
 50% active asset reduction: If an employer owns an active business asset than he will be
liable to pay 50% of the capital gain when the asset is sold.
 Retirement Exemption: This applies to sale of active business asset with a lifetime limit of
$ 500,000 and if the employer is above 55 years than the money received needs to be
deposited in a superannuation fund or retirement fund for concession purpose.
 Rollover: If an asset is replaced by another asset than the CGT applicable can be defer for
one year.
PAYG Installments
As per the provisions which are provided by ATO, a business can vary its PAYG
installments. However, if the business ends up payment too low which is lesser than 85% of the
amount which was actually needed to be paid than the business will be charged general interest
for such a default.
GST Concessions
The concessions which are available for goods and service tax are given below:
 Accounting for GST on Cash Basis.
 Annual apportionment of GST input tax credit

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 Payment of GST by installments.
Areas Causing issues in Taxation
The areas which can bring about issues in the overall tax computations in a business are
treatment of depreciation funds which can be done under simplified system and general system.
Then there is a case where stamp duty is to be paid for superannuation fund and also there is a
situation with dividend access shares.
Financial Forecasting Techniques
The techniques which are used for financial forecasting are given below:
1. Delphi Method: In this method questionnaire are to be answered by experts for the first
set and several other sets in order to narrow the scope of research and data.
2. Scenario Writing: In this method, different scenarios are considered along with their
respective results This method uses brainstorming to develop ideas and forecast
effectively.
3. Time series Analysis: This is a quantitative analysis which collects data from various
sources and even past years in order to understand the trend followed by the same.
Financial Risks
The financial risks which are faced by business are given below in point form:
1. Market Fluctuation risks
2. Credit Risks
3. Debt and borrowing risks

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DIPLOMA OF ACCOUNTING
4. Liquidity risks
5. Risks associated with sources of finance
6. Foreign Exchange Fluctuation risks.
Managing Risks
The measure which can be taken for managing the common risks which the business faces are
given below:
 Establishing risk management and identification programs for effective identification and
management of risks.
 Creating an effective capital structure so as to reduce the risks related to the capital mix
in a business.
Legal Rights of a Client
The legal rights of a client are given below in details:
1. The right to be kept reasonably informed for any situation concerning legal matters.
2. Right of privacy of communication with the attorney of the client
3. Right against any sort of discrimination on the basis of race, creed, caste, gender.
4. The client is entitled to sue the business in case of any default in the contract,
5. The client similarly has rights to claim from the client for any damage caused to the
client’s business.

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DIPLOMA OF ACCOUNTING
Formats Used for Depicting Financial Information
The formats which are used business for depicting the financial information of the
business are Financial Statements, Budgets, AGM presentations and Half yearly performance
reports.
Significant Acts
Australian Privacy Principles: As per this principle all Australian and Norfolk Island
Government Agencies, all private sector as well as public sector and NPO which has a turnover
of $ 3 million must handle, use and manage personal information. The principles are covered
under Privacy Act 1988.
Stamp Duty Act: Stamp Duty is a tax which is on documents which are imposed by state
governments and the nature of the tax varies from one state to another state. Transactions like,
leases and mortgage, hire purchase agreements, transfer of property requires stamp duty taxes.
Taxation Acts: The taxation acts are introduced by the tax regulating authority in Australia
which is the ATO and is also responsible for amendments and introductions of new taxation acts.
An example can be given of the GST act introduced by the ATO.
Trades Practice Act: This act was introduced for the purpose of ensure that effective
competitive pressure exist in the market place. In addition to this, the act was responsible for
preventing monopolistic practices which can affect the competition of the business.

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DIPLOMA OF ACCOUNTING
Important Reports
Profit and Loss Statement: The profit and loss statement show the expenses which the business
has incurred during the year and also the income which the business has earned during the year.
In addition to this, the profit and loss statement depicts the financial performance of the business
in terms of either profit or losses as per the performance.
Balance Sheet: The balance sheet depicts the financial position of the business at the end of a
particular period. The balance sheet shows the total assets which are possessed by the business
and also the total liabilities which the business accrues during the year. The assets and liabilities
sides of the balance sheet matches to show accuracy and precision in preparation of financial
statements.
Statement of Changes in Equity: This statement shows the changes which takes place in the
equity related items of the business. This statement effectively shows the fluctuations in
comparison with the estimates from previous year.
Cash Flow Statement Analysis
The cash flow statement forms part of the financial statements of the business and the
statement is prepared for the purpose of showing the cash position of the business at the end of a
period. Cash flow statement shows cash from operations, cash from investing activities and cash
from financing activities. The cash flow statement shows the various changes that takes place in
the cash position and also shows the liquidity of the business.

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DIPLOMA OF ACCOUNTING
Budgeting in Business
The role of Budgeting in a business is very important nowadays. Budgets provides the
business a means to plan for the future operations and effectively forecast the resources which
are required by the business. In addition to this, budgets provide a means to the business to
control the activities of the business and ensure that performance of the business is on the right
tracks as per the plan and goals of the business.
Financial Markets
Financial products refer to the instruments which are used by business such as bond,
securities and other sort of investments. Two important sources of financial information are stock
market and banking institutions which offer securities as well.
Treasury’s Role
Treasury is a department which is normally found in financial organizations and even in
some businesses. The main purpose of treasury is to maintain the inflow and outflow of cash of
the business. In addition to this, they are responsible for sanctioning any amount of cash for the
use of business or as a loan in case of banking institute. In addition to this, treasury also
maintains liquid assets and investments.

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