Assessment: BSBFIM601 Manage Finances - Knowledge Assessment Tasks

This document provides a comprehensive solution to the BSBFIM601 Manage Finances Knowledge Assessment, covering various aspects of financial management. The assessment includes questions on balance sheets, cash flow, expenditure monitoring, financial record keeping, financial input programs, expenditure and income types, accounting processes, tax liability, budget auditing, variance analysis, financial documentation, and budget negotiation. Each question is answered in detail, offering insights into financial concepts and practices. The document aims to assist students in understanding the key concepts of financial management, providing a valuable resource for exam preparation and assignment completion. The solution covers topics like the role of a balance sheet, causes of poor cash flow, advantages of expenditure monitoring, the importance of financial record-keeping, common financial input programs, different types of expenditure and income, the accounting process, tax liability, budget auditing, variance analysis, financial documentation for expenditure verification, and budget negotiation strategies.

Assessment: BSBFIM601 Manage Finances
Knowledge Assessment (Written Tasks)
1. What does a balance sheet enable you to do?
A balance sheet reports about the total amount of the assets, liabilities and
the owner’s equity of the company on a particular date. It enables the users and
readers to know about the overall financial position of the company. It briefs about
the total resources available to the company. The total capital structure of the
company, liquidity position of the company as well as the resource management
capability of the company. It is helpful to easily determine the working capital and
the leveraged position.
2. Poor cash flow may arise from what?
Poor cash flow and cash flow gap arises when the cash flow of the company is
insufficient in order to meet the needs of cash flow of the business. Cash inflow of
the business arises from the capital contribution, sales, interest income, borrowed
funds etc. On the other hand, cash outflow is generated on the purchase of material,
equipment purchase, poor cash flow sales etc. The poor cash flow arises by
stagnant inventory, dipping sales, uncollected dept tie up etc.
3. Monitoring expenditure has important advantages. What are they?
Monitoring the expenditure of a business are crucial element of the business
as it evaluates all the expenses of the business and measure that which expenses
of the company could be reduced to enhance the overall performance of the
company. On the other hand, it also focuses on the capability and efficiency position
of the company. It enhances the overall profitability level of the company. Due to
which, it becomes important for the business to monitor the expenses of the
business.

Assessment: BSBFIM601 Manage Finances
4. Why do you need a good financial record keeping system?
Financial statements are prepared by the organizations to maintain the
financial records of the business. Keeping the good financial records are very
important for the business. Good financial recording system helps the business to
do the following:
 Prepare the financial statements
 Monitor the business progress
 Identify the income sources of the business
 Keep a track on the deductible expenses of the business
 Prepare the tax returns
 Keep track on the property basis
 Support the items which has been reported in the tax returns of the business
It explains that it is very crucial for each of the organization to maintain the good
recording system in the business.
5. Give a description of the 3 most common programs used for financial
input.
Technology has impacted significantly in the financial planning. I independent
advisers, registered reps and even accountants have come to rely on sophisticated
financial software designed to help them not only devise appropriate investment and
retirement plans for clients but help them better engage clients as well.
The main financial program which us used by the business for the financial
input are as follows:
 Money GuidePro
 EMoney Advisor

Assessment: BSBFIM601 Manage Finances
 Right capital
These software programs help the business to evaluate the financial record and
make better decisions about the financial performance of a business.
6. Give a detailed description of the below types of expenditure and income:
Expenditure budget and income budget describes that capital disbursement
and revenue of numerous department and presents the approximation in order to
manage the performance of the business. the description about the expenses and
income of the business are as follows:
Capital expenditure: It is the expenses which have been occurred to acquire the
assets such as building, equipment etc.
Revenue expenditure: It is the expenses which have been incurred in one
accounting year and which have also been enjoyed in the similar period only.
Deferred revenue expenditure: It is the revenue expenses that has been incurred
during an accounting year but the benefits of which might be extended to more than
an accounting year.
Revenue income: the income from the sales and the interest income are knows as
revenue income.
Earned income: the income which has been received by the company in terms of
wages, salary or commission is known as earned salary.
Unearned income: the income which has been received by the company has not
been earned yet is known as unearned income.
7. Describe what the following 3 phrases mean in detail:
The accounting process: It is an accounting process which is also known as
accounting cycle. It starts with sorting on the basis of the initial transaction bills which
proceeds to post and record them in the ledgers and journals.

Assessment: BSBFIM601 Manage Finances
Recording and posting: It is the first phase of accounting process which is
related to the posting and recording the journal entries for future use of the
business.
Adjusting and closing: it is the second phase of the accounting process in
which adjusting entries are done to manage the balance of the company.
8. What does “Tax Liability” mean?
Tax liability is the total amount of debt which is owned by the individuals, entity
or other corporations to a tax authority such as Australian taxation office. It is total
amount of tax which must be paid by a business.
9. Effectively auditing a budget requires an estimation process that is
acceptable and/or reasonable. What are some issues to consider?
When an organization is preparing the budgets than it becomes important for
the business to monitor it on periodic basis. A budget must be prepared by the
business after evaluating various factors of the business. Mainly, the following
issues could be raised in the business:
Previous budgets of the organization \
Profit and loss statement of the business
Payroll figures
Balance sheets
Operating cost
10. Explain the terms used to describe variations and what can the
unfavourable variances be further classifies into?
Variances are the difference among the estimated values and the actual

Assessment: BSBFIM601 Manage Finances
values. It is used to find the deviations among the actual behaviour and the planned
or forecasted behaviour in the management accounting and the budgeting process.
Mainly the variance analysis offers the two different results to the user which are
favourable variances and the unfavourable variances of the business.
Unfavourable variances are those variances which express that the actual cost
of the behaviour is higher than the estimated behaviour of the business. An
unfavourable variances could alert the management of the business that the profit of
the business could be lower than the expected.

Assessment: BSBFIM601 Manage Finances
11. What are 3 pieces of financial documentation necessary to verify expenditure? Give
an explanation for each.
The main financial documentation to verify the expenses of the company are
as follows:
Pay slips
Bank books
Share scrip
12. To ensure that you are in a good position to negotiate your budget
submission what should you do?
Negotiating is a critical part of a business for success of the business. for a
better negotiation, it is important for the business to set a win-win situation. and close
the deal in favour of both the parties. It is required for the business to measure all the
alternatives and make a decision on the basis of that.

Assessment: BSBFIM601 Manage Finances
Assessment Outcome
Quest
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Assessed by: _________________________

Assessment: BSBFIM601 Manage Finances
Assessor Signature: _________________ Date
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Assessment: BSBFIM601 Manage Finances

Assessment: BSBFIM601 Manage Finances