Manage Finances Sample Assignment

MANAGE
FINANCE

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
(a) Purpose of conservatism.........................................................................................................1
(b)Two key accounting that are directly relevant to gathering revenue
data for statutory recording and reporting..................................................................................1
(c)Set of financial statements comprise as per AASB.................................................................1
(d) The features of off-the-shelf business management and accounting
software products........................................................................................................................2
(e) Software selected in retail business........................................................................................2
QUESTION 2...................................................................................................................................3
a) Calculation the revenue, gross profit and net profit margins...................................................3
b) Formula for calculating contribution market...........................................................................3
c) Importance of variable cost in calculation of contribution margin..........................................3
d) Three ways in which horizontal analysis can look at change in line item of financial
statements.....................................................................................................................................3
QUESTION 3...................................................................................................................................4
a) The due dates for lodging and paying an organisation’s business activity
statement (BAS) online...............................................................................................................4
b) Due dates for an organisation’s lodgement of their income tax
return...........................................................................................................................................4
QUESTION 4...................................................................................................................................5
a) Three budgets and budgeted statements should an organisation’s matter
budget include to ensure effective decision-making...................................................................5
b) Difference between incremental and zero-based budgeting methods.....................................5
c) Zero–based Budgeting a more appropriate method of allocating resources for
organisations with new strategies requiring new organisational activities.................................5
QUESTION 5...................................................................................................................................5
a) Formula to calculate an organization's net cash position.........................................................5
b) During the budget development processes, when are qualitative methods more

commonly used...........................................................................................................................5
c) Research into appropriate qualitative and quantitative forecasting
methods.......................................................................................................................................5
d) Preparing the expenses budget, should the variable costs be excluded...................................6
QUESTION 6...................................................................................................................................6
Why it is essential that budgets are clearly explained to all staff,
and why managers must use active listening techniques to do so...............................................6
QUESTION 7...................................................................................................................................6
a) The difference between supplier due diligence and customer due diligence..........................6
b) The value of supplier due diligence in managing procurement risk........................................6
QUESTION 8...................................................................................................................................7
What measures might be implemented if analysis of the payables ageing summary identified
that the organisation is consistently late in paying bills?.............................................................7
QUESTION 9...................................................................................................................................7
a) Purpose of Supporting Note.....................................................................................................7
b) What the Australian Reporting Dictionary..............................................................................7
QUESTION 10.................................................................................................................................7
The importance of reviewing and improving internal financial
controls........................................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................9

INTRODUCTION
Finance is an important part of any business organisation as to support its business
activities it is important for business to manage its finance in an effective way. Finance is need in
every aspects of business. The following report contains various information about the
importance of finance.
QUESTION 1
(a) Purpose of conservatism
Conservatism is a generally accepted accounting principle which states that the business
has to recognize its losses as soon as these losses can be quantified it also states that any profit is
to be only recorded in the books of accounts only when it is actually earned (Cavenaghi, 2014).
The main purpose of conservatism is to protect its users of financial information from various
inflated profit, assets, revenue and record all potential losses, costs or any decline in value as
early as possible. It also makes sure that all the income and its assets are not overstated and it
expenses and liabilities are not understated and gives clear picture of its actual financial
positions.
(b)Two key accounting that are directly relevant to gathering revenue data for statutory recording
and reporting
The two key accounting which are directly associated in gathering revenue data for
statutory recording and reporting are financial accounting and management accounting. Financial
accounting help managers to gather information about the total revenue which is generated by
the company from its financial statements as financial statement include three different types of
statements such as income statements, balance sheet and cash flow statement. Financial
accounting is help to record company's total revenue and management accounting helps in
reporting this income through various budget reports (Demarquet, 2016).
(c)Set of financial statements comprise as per AASB
As per Australian Accounting Standard Board 101 a set of financial statement is to be
considered as complete if it comprises the following;
a) a balance sheet of the company which states its financial position should contain
information as at the end of period
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b) a statements which shows company's profit or loss or any other comprehensive income is
shown for the period.
c) a statement which shows the changes in the equity for the period
d) a statements showing flow of cash for the period
e) various significant accounting policies, notes to above statements and other explanatory
information including comparative information of the previous period which are specified
in paragraphs 38 and 38A
f) a statement which states its financial position as shown at the beginning of previous year
when a business entity retrospectively applies an accounting policy or makes a
retrospective restatement of various items present in financial statements.
(d) The features of off-the-shelf business management and accounting software products
There are various off the shelf business management and accounting software products
following are the features:
Accounting Software:
1. GnuCash: The main feature of this product is that it has a steep learning curve which
results in the knowledge and patience. It can also generate report, keep a track of all
accounting transactions along with its details and also it can manage several currencies.
2. QuickBooks Pro: Main feature associated with QuickBook Pro is that it can manage both
business management and accounting. It can help print deposit slips, track invoices and
bills, print check, generate reports and many more.
Off the shelf Business management:
1. The main feature of this kind of software is that it is very price effective.
2. It is easy to start and run in the daily business and is not complex. POS system as the
history of its customers are stored in their database.
3. End to end Solutions and manufacturing management.
(e) Software selected in retail business
In the retail business to manage its inventory, point of sales and payroll and web based
cloud services to on its financial planning and management (Gilad and Yogev, 2012). The best
recommended software is Scotia Software as it has features like customized point of sales,
inventory management and it also provide end to end solutions including the financial planning
and controlling it will help retail business to meet its daily business requirements.
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QUESTION 2
a) Calculation the revenue, gross profit and net profit margins
Product COGS/
unit
Fixed
costs/unit
Selling
price/unit
Gross
profit/unit
Units
sold
Revenue Gross
profit
margin
Net
profit
margin
Front
pocket
wallet
$27.00 $16.00 $89.00 $62.00 40 $3560 70.00% 51.60%
Compact
smart
phone
wallet
$29.00 $17.00 $99.00 $70.00 37 $3663 71.00% 53.53%
b) Formula for calculating contribution margin
Following formula can be used in order to calculate the contribution margin
Contribution margin = P – V
where P is Price per production and V is the variable cost per product
c) Importance of variable cost in calculation of contribution margin
Variable cost is important in the calculation of contribution margin as it separate variable
cost from fixed cost it also states that the revenue which is generate is not consumed by such
costs (Hong and Kostovetsky, 2012). This helps the managers to determine that whether to
include or eliminate various aspects of business which have a direct impact on net profit.
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d) Three ways in which horizontal analysis can look at change in line item of financial
statements
Horizontal analysis can help managers to look at various changes in line item of financial
statements by using the three ways such as occurrence in the percentage change, monetary
changes and the change in unfavourable or favourable within period of time.
QUESTION 3
a) The due dates for lodging and paying an organisation’s business activity statement (BAS)
online
Organisations can lodge and pay their business activity statements annually, monthly and
quarterly. Following are the due date :
Quarterly:
Quarter Due date
1. July, August and September 28 October
2. October, November and December 28 February
3. January, February and March 28 April
4. April, May and June 28 July
Monthly: For monthly due date is the 21st day of the next month of the period for it
wants to lodge or pay their BAS.
Annually: Due date to lodge and pay BAS online is 31 October (Australian Taxation
Office. 2018).
b) Due dates for an organisation’s lodgement of their income tax
return
Due date for organisation to lodge their income tax return are displayed on a list of client
which is generated by the July end of every year (Australian Taxation Office. 2018).
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QUESTION 4
a) Three budgets and budgeted statements should an organisation’s matter
budget include to ensure effective decision-making
In order to make effective decision making matter budget of organisation must include
these three such as cash profit, budget balance sheet and loss budget.
b) Difference between incremental and zero-based budgeting methods
Incremental budget is method of budgeting in which the budget of current year is
prepared by only making necessary changes in past year's budget whereas in Zero based
budgeting budget is made from the zero level.
c) Zero–based Budgeting a more appropriate method of allocating resources for
organisations with new strategies requiring new organisational activities
Zero based budgeting is prepared from the zero level which help managers to allocate its
resources to the areas which is beneficial for the organisation (Jessop, 2013). The top most
priority in zero based budget is given to those activities which can generate maximum revenue
and is important for business to survive. As in this budget managers prepare the budget from
zero and have to give explanation of each cost added to the budget.
QUESTION 5
a) Formula to calculate an organization's net cash position
Net Cash position = Cash Receipts – cash payments
b) During the budget development processes, when are qualitative methods more
commonly used
When the previous data information is not recorded or there is a lack of information
managements uses qualitative methods during budget making processes.
c) Research into appropriate qualitative and quantitative forecasting
methods
i. Two examples of qualitative analysis techniques
Two examples of qualitative analysis techniques are Delphi techniques and market research.
ii. Two examples of quantitative analysis techniques
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Examples of quantitative analysis techniques are Casual Modelling and Time Series analysis.
d) Preparing the expenses budget, should the variable costs be excluded
No, while preparing the expense budget the variable cost must be included in it as the
operating expense incurred by the company include both variable and fixed expense in order to
ensure that all expense are recorded in a budget or not.
QUESTION 6
Why it is essential that budgets are clearly explained to all staff,
and why managers must use active listening techniques to do so
It is very important to communicate the budget and is to be explained to every staff as to
provide a good insight of the financials of the company (Kendall and Voorhies, 2014). It is also
important to deliver the budget to every staff as it bond the various employees working in
different organisation. Managers should use active listening techniques as it helps them to gather
feedback and opinions about the budget and the organisation managers can use these feedbacks
to develop new strategies and improve its position.
QUESTION 7
a) The difference between supplier due diligence and customer due diligence
Due diligence: Due diligence is known as the audit or investigation of product or
investment which is potential in order to confirm that every fact associated to it such as
reviewing of all financial records, anything else which is deemed to be material (Lee, Sameen
and Cowling, 2015).
Customer due diligence involve taking various steps in order to identify that the
customers are genuine or not and the details provided by them are true and supplier due diligence
means considering various key supplier who can provide raw material of the best quality at a
reasonable price.
b) The value of supplier due diligence in managing procurement risk
Supplier due diligence is important in managing procurement risk as supplier due
diligence is considered as a long term invest as it simplifies and accelerated the process involved
in the transaction. It also reassures the vendors about its financial information and other
information related to it.
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QUESTION 8
What measures might be implemented if analysis of the payables ageing summary identified that
the organisation is consistently late in paying bills?
Following are action which an individual can take:
 The account payable process in an organisation must be simplified.
 Proper organizing of the accounting progression.
 Establishing various negotiable term with vendors.
 Account invoices must be optimized in order to verify it as per the dues
QUESTION 9
a) Purpose of Supporting Note
As per Australian Accounting Standards board 101 Presentation of financial statements
states that it is important for an entity to show supporting notes to the accounts of financial
statements as these notes show the detailed information top the users of the financial statements.
b) What the Australian Reporting Dictionary
The Australian reporting Dictionary is a part of standard business report which states the
process, formats, set, key rule and regulation regarding various expenses and their relevant head
under which certain items are reported for taxation purposes.
QUESTION 10
The importance of reviewing and improving internal financial
controls
It is important for an organisation to review and improve its internal controls as it helps
the managers to control its financial requirements (Peat, 2013). Reviewing of financial controls
helps the organisation to protect and safeguard it against being victimized.
CONCLUSION
Finance is required at every step in order to support its business organisation. It is
important for a business to manage its finance in an effective manner. From the above file it can
be concluded that it is important for a business to prepare its financial statements in a way which
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can be easily interpreted and understood by its users. This report also states purpose of
supporting notes.
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