Analysis of Business Assets, Liabilities, Expenses, and Cash Flow

This assignment examines the fundamental concepts of business, including assets, liabilities, expenses, and gains, within the context of a small firm, Oxford Technology Recruitment. The assignment begins with definitions and explanations of these key business elements. It then addresses the practical challenge of managing cash flow, particularly in light of a 20,000 budget. The solution includes a breakdown of potential expenses and provides recommendations for avoiding cash flow problems, such as managing assets and liabilities carefully and prioritizing faster service delivery. The assignment emphasizes the importance of financial statement handling for new businesses and suggests maintaining good relationships with suppliers and vendors. The references provided support the concepts discussed in the assignment, offering further insights into asset management, liabilities, and business development.

Task 5

Table of Contents
INTRODUCTION...........................................................................................................................1
Describe business assets, liabilities, expenses and gains............................................................1
Being mindful of the 20,000 budget for the business, provide an account of what should be
done to avoid any cash flow problems........................................................................................1

INTRODUCTION
A business comprises of different concepts including assets, liabilities, expenses and
gain. In this assignment they are explained in consideration of a small firm- Oxford Technology
recruitment. (Bennedsen and Foss, 2015) Carvalho, Rodrigues. and Ferreira,, 2016)
Describe business assets, liabilities, expenses and gains
Assets: Every business organisation can successfully worked because it has some assets
within the company. It is anything which poses the strong value and can easily be converted into
the cash. It comprises of such properties which have the future value for the company. There are
two types of assets namely fixed and current asset. The Oscar Technology has the land, building,
equipments as their fixed assets and cash, account receivables, etc. are their current assets which
can be converted into cash.
Liabilities: A liability is treated as a debt for the company which needs the business
organisation to give up an economic benefit in order to settle the previous events and
transactions. Therefore, the Oscar Technology has certain liabilities like account payables,
outstanding expenses, bank overdraft, etc.
Expenses: An expense is treated as a cost for the company which is used by the company
in order to generate the profits. The basic expenses which are required to be bear by the Oscar
Technology are wages and salaries of employees, payment to suppliers, etc.
Gains: A gain is income or benefit for the company which has been earned from the
outside business operations. Therefore, the Oscar Technology will experience the gain by selling
their asset like machinery more than the price prevailing in the market.
Being mindful of the 20,000 budget for the business, provide an account of what should be done
to avoid any cash flow problems
Cash flow problems arise when company spends more than the money earned (Samygin
and Baryshnikov, 2015). This can be explained with a small example that if a company spends
5000 on rent and it makes a profit of 4500, then company has a negative cash flow of 500. A
company makes negative cash flow when they are not able to handle financial statements of
business. Oscar Technology recruitment is a new business and the budget for project of this
company is 20,000.
Particular Amount in (£)
1

Cash 5000
Raw material stock 4500
Selling and administration expenses 3500
Variable production expenses 5000
Distribution 2000
Total 20000
It is advisable for this company to take care in handling of assets and liabilities. As it is a new
firm, it should not increase it's liabilities. The solutions for handling cash flow are given below-
 Faster delivery of services to customers
 A good relationship should be kept between suppliers and vendors.
2

REFERENCES
Bennedsen, M. and Foss, N., 2015. Family assets and liabilities in the innovation
process. California Management Review. 58(1). pp.65-81.
Carvalho, C., Rodrigues, A. M. and Ferreira, C., 2016. The recognition of goodwill and other
intangible assets in business combinations–The Portuguese case. Australian
Accounting Review. 26(1). pp.4-20.
Samygin, D. Y. and Baryshnikov, N. G., 2015. Scenarios of agricultural business development in
Penza oblast: Forecast and risk estimate. Studies on Russian Economic Development.
26(1). pp.59-62.
3