Interpreting Financial Information: A Detailed Project Report

This report provides a detailed interpretation of financial information, focusing on its relevance to entrepreneurs in the food and beverage industry. It covers essential aspects such as quarterly taxes, accounting software (MYOB and XERO), financial statements (profit and loss, cash flow), and key accounting concepts like assets, liabilities, and owner’s equity. The report also addresses practical business concerns, including bank reconciliation, cost management, profitability, and waste reduction. Furthermore, it delves into specific metrics such as average customer spending, occupancy rate, and sales analysis, offering insights into commission structures, accounts receivable/payable, and variance analysis. The document defines various financial terms and concepts, including ledgers, journals, transactions, receipts, disbursements, debtors, creditors, and charts of accounts, to provide a comprehensive understanding of financial management.

Running Head: Interpret Financial Information
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Project Report: Interpret Financial Information

Interpret Financial Information
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Assessment 2: Written task
Question 1
Being a food and beverage trader, an entrepreneur is required to pay quarterly taxes to
the Australian government. The tax schedule could be changes on the basis of total income
and other factors.
Question 2
In order to manage the finance in the company, below is the best accounting software:
1. MYOB
2. XERO
Question 3
The main benefits of MYOB and XERO are as follows:
1. MYOB: It could be accessed anytime, anywhere. It has greater speed of input and has
greater accuracy among all the accounting packages available in the market. Along
with that, it also reduces the cost in the market.
2. XERO: This accounting software helps the company to manage various activities at
the same time. Cloud software of this package has also improved which helps the
companies to access the data from anywhere and record all the data on cloud (Ward,
2012).
Question 4
Average cheque is normally considered as indicator of successful sales in the
establishment of the restaurant whereas the average customer spending is the total amount
spent and the total customers of the company.
Question 5
Profit and loss statement is a financial statement which is prepared by the companies
to evaluate the total revenue generated and the total spending in a particular [period of time.
It makes it easier for the businesses to evaluate the profitability position and the financial
performance of the business.
Question 6

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Cash flow statement is a financial statement which is prepared by the companies to
evaluate the total cash inflow and cash outflow in a particular [period of time. It makes it
easier for the businesses to evaluate the cash position and liquidity level of the business.
Question 7
Asset is anything of value or resources of value which could be converted into cash.
In an organization, it is the thing which helps the organization to generate the business and
could be converted into cash.
Question 8
A liability is defined as company’s legal financial debts of the financial obligations of
the business which has occurred during the business time period.
Question 9
Owner’s equity is the difference of assets and liabilities amount in an organization. It
defines about the owner’s investment in the business minus the loss and withdraws plus the
net profit of the business.
Question 10
The formula of the balance sheet is as follows:
Assets = liability + owner’s equity (Zimmerman and Yahya-Zadeh, 2011)
Question 11
Bank reconciliation statement is used to compare the records of business to the bank
book in order to see whether there is any difference among those set of records for any cash
transaction.
Question 12
Fixed cost examples:
1. Insurance
2. Interest expenses
3. Depreciation of assets
Question 13

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Gross profit is defined as the sales minus cost of goods sold of the business whereas
net profit is defined as sales minus all expenses of the business which includes cost of goods
sold, selling expenses, administrative expenses etc. Net profit defines the actual profitability
position of the business.
Question 14
If a business is not even able to make the normal profits then below actions could be
taken to return to the profitability level:
1. Change operating procedure
2. Maximize the cash flow of the business
3. Raise the marketing bar
4. stay visible and connected
5. Reduce the unnecessary expenses of the business
6. Increase the turnover and productivity of the business (Weston and Brigham, 2015)
Question 15
Weekly: A business could evaluate the weekly sales and identify the list of accounts
receivables.
Daily: In daily routine, a business is required to match the balance and manage the inventory
of the business.
Monthly: In monthly frequencies, a business is required to identify and evaluate the accounts
in order to identify the performance of the business.
Question 16
Reasons that why wastage is important in a restaurant:
1. Reducing the food wastage is healthy for the environment.
2. It reduces the total expenditure of the business.
3. Along with the environment benefit, it has various social benefits as well such as the
food could be distributed among poor people (Higgins, 2012).
Question 17

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Labour cost is one of the highest costs in hospitality business as the labour in this
industry must be skilled. Hence, a hospitality firm is required to measure the total labour cost
of the business and make the decision accordingly.
Question 18
Is a business over-order or purchase more inventory than required than it could affect
negatively on the business. Firstly the working capital of the business get reduced, along with
that the company has to spent more money to manage the extra inventory in the business.
Question 19
The report of total number of persons and the list of the total sales of the business can
help the business to identify the average spending of the customers. The total revenue could
be dividend by the total number of person so that it could be measured that how much
average amount is spent by the customer in the business. It would help the business to
manage the budgets and meet the objectives of the business.
Question 20
Occupancy rate in a hotel defines about the total occupied room from the total
available rooms. This rate is defined in %. In order to determine the occupancy rate, total
number of rooms and total number of occupied room’s data is needed. It could be calculated
through dividing the occupied room from the total rooms of the hotel (Krantz, 2016).
Question 21
In order to determine about the total occupancy rate of the business, total number of
rooms and total number of occupied room’s data would be collected. Further, the occupied
room’s data would be dividend from the total rooms of the hotel to measure the occupancy of
the hotel. Moreover, the gross income would be calculated through evaluating the total sales
of the business and the total cost of services. The cost of services given would be reduced
from sales to measure the gross income of the business. Occupancy rate and gross profit rate
would help the business to identify the financial position of the business. It helps the business
to plan the budget.
Question 22

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A sale is a transaction among the two parties where one party offers some product or
services to another party in exchange for the money. In a hotel business, the rent of room,
charges of food and beverages are included in sales.
Question 23
Some types of jobs, especially the marketing based jobs offer commission to the
person. A commission earning is basically a sum of money which is given to a person on
completing a task (Higgins, 2012). Usually the task is related to sell certain amount of
services or the goods.
Question 24
Accounts receivable defines the total debtor’s amount which is assets of the company
and will be received by the company within a year whereas the accounts payable defines the
total amount which is required to be paid to the creditors within a period of time. It is the
liability of a business.
Question 25
Variance is the measurement of spread between the budgeted data and the actual data
in a business. It is a process which is used in an organization to identify the difference among
the planned data and the actual data. This process helps the business to identify the difference
so that the root of the difference could be identified.
Question 26
Financial report Definition Purpose
Budget Budget is a forecasting process of
income and expenditure of a
business in advance.
It is a financial plan which is
prepared to identify the future
performance and set the future goals
of the business.
Covers Cover is n ability to serve the debt
obligation out of the income of
the company.
This is helpful for the company to
manage the income and the
receivables of the company.
Expenditure Expenditure stands for the total In order to generate the revenue, it

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spending of the company. is essential for the business to spend
some money.
Labour Labour amount stands for the total
wages which is paid to the
unskilled and skilled labour
against their work.
Labour are the assets of the
business. They make it easier for the
business to stand and run smoothly.
Occupancy rate Occupancy rate defines about the
total occupied room against the
total available rooms.
It is important for the business to
manage the occupancy rate in order
to meet the goals.
Purchase Purchase is the agreement in
which one party owns some goods
or services against money.
Purchase recordings are done in the
purchase book of the company.
Sales Sales are an agreement in which
one party sells some goods or
services against money.
Sales recordings are done in the
sales book of the company
Stock Stock defines about the total
inventory of the company which
is bought for the business
purpose.
This is used in the daily operations
of the company to prepare the goods
or deliver the services.
Transaction Transaction is related to any kind
of financial activity which is
recorded in the financial books of
the company.
Main purpose of recording of
transaction is to keep track over the
financial activities of the business.
Transaction
exempted
It is the position where a business
is not required to register itself
under any authorised body.
The main purpose of this is to
reduce the burden from the
business.
Unit sold It defines the total unit of goods
which has been sold by the
It helps the business to track their

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business. performance.
Wages It defines the total amount which
is paid to labour against their
work.
It helps the business to track their
expenses.
(Gapenski, 2008)
Question 27
Meaning of following term
Ledger A ledger is the book which is designed for storing of individual
accounts. It is periodically summarized and posted from the journal
entry of the company.
Subsidiary ledger A subsidiary ledger is his ledger which is designed for storing of
specific types of accounting transaction in a business. It is periodically
summarized and posted in the general ledger.
Journal Journal is a book where all the financial transaction is recorded at the
very first time in the company.
Question 28
Terms meaning:
Transaction Transaction is related to any kind of financial activity which is
recorded in the financial books of the company.
Receipts Receipts are the process in which the cash amount is received by the
company from its stakeholders.
Disbursement Disbursement is the process of paying out the money or distributing
the money. It is the opposite of cash receipts of a business.
(Lee and Lee, 2006)

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Question 29
Term meaning:
Debtors Debtors stand for the person which owes amount in the business.
Debtors are the current assets of the business.
Invoices Invoice stands for the amount which is to be paid to the business by
the debtors of the company or which is to be paid by the business to
its creditors.
Creditors Creditors stand for the person or entity which asks for the amount in
the business. Creditors are the current liability of the business.
Accounts payable Accounts payable amount is the total amount which is to be paid by
the company to its creditors.
Cash flow Cash flow stands for a statement in which all the transaction related to
the cash inflow and cash outflow are recorded to identify the cash
level in the business.
Question 30
Chart of accounts: a chart of accounts is the list which is used by an organization to define
each class of item which is equivalent to the received or spent money in the business. It
contains the name of all the accounts which is available to record the transaction of the
business.
Question 31
Mainly, ban reconciliation and the general leader to sub ledger reconciliation
statement are prepared by the business. Bank reconciliation statement is used to match the set
of records of the business from the pass book of the company whereas the general ledger to
sub ledger reconciliation is prepared to match the accounts payable, accents receivable,
prepaid expense etc of the business (Hillier, Grinblatt and Titman, 2011).
Question 32

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Bank reconciliation statement is used to compare the records of business to the bank
book in order to see whether there is any difference among those set of records for any cash
transaction.
Question 33
Fixed cost is defined as total cost which does not change along with the change in the
number of goods or service produced or delivered by the company. This cost always occurs
in the business no matter how much business has been generated by the company. Main
examples of the fixed cost is Deprecation on fixed assets and rent of building.
Question 34
Variable cost is defined as total cost which get change along with the change in the
number of goods or service produced or delivered by the company. This cost always depends
on the total business generated by the company. Main examples of the fixed cost is purchase
cost and labour cost.
Question 35
Double entry accounting system is an accounting system which defines that each
financial truncation affected two or more than 2 account. Double entry accounting system
helps the business to tally the debit and credit both the side of the business.
Question 36
In double entry accounting system, debit refers to the left side of an accounting
ledger. A debit is an accounting entry either improves the asset worth of the business or
expenses of the company.
Question 37
In double entry accounting system, Credit refers to the right side of an accounting
ledger. A credit is an accounting entry either improves the liability worth of the business or
revenue of the company.
Question 38
Accrual based accounting method defines that the revenue and the expenses the
business must be recorded in the business at the time they have earned regardless the time
when the money is actually paid or received by the company whereas cash based accounting

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method defines that the revenue and the expenses the business must be recorded when the
money is actually paid or received by the company regardless the time when such transaction
have taken place. In a business, accrual based accounting method suits better as it helps the
business to track the actual performance and position of the business (Lord, 2007).
Question 39
Profit and loss statement is defined as the statement of financial performance of an
organization. It defines about the total expense and revenue of the business which has taken
place in a particular time period in an organization. It informs the stakeholders of the business
about the profitability level and performance of the business whereas balance sheet is defined
as the statement of financial position of an organization. It defines about the total assets and
liabilities of the business which has owned on a particular date by the organization. It informs
the stakeholders of the business about the total worth and position of the business.
Question 40
GST defines about the goods and service tax. The current rate of GST in Australian
market is 10%. It is applied in each good and service in the Australian market.
Question 41
According to given scenario, there are 3 quotations and the client has chosen one
quotations. So being a financial manager, it is required it evaluate that how much cost would
occur to the hotel and how much profit could be generated through this quotations. Quotation
given to a client for bulk order must be bit lower than the actual sales price of the company in
order to satisfy the client and improve the market goodwill of the business (Schlichting,
2013).
It is necessary to review the quotes so that a better idea could be generated about the
profit and the total cost which would take place in the entire event.
Question 42
If a person is trialling a new product in the market than the sales performance help the
person to identify the demand and likeliness of that product in the market. It boosts the
confidence of the client in that product.

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References:
Gapenski, L.C., 2008. Healthcare finance: an introduction to accounting and financial
management. Health Administration Press.
Higgins, R. C., 2012. Analysis for financial management. McGraw-Hill/Irwin.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy.
McGraw Hill.
Krantz, M. 2016. Fundamental Analysis for Dummies. London: John Wiley and Sons.
Lee, C.F. and Lee, A.C. eds., 2006. Encyclopedia of finance. New York: Springer.
Lord, B.R., 2007. Strategic management accounting. Issues in management accounting, 3,
pp.135-154.
Schlichting, T. 2013. Fundamental Analysis, Behavioral Finance and Technical Analysis on
the Stock Market. GRIN Verlag.
Ward, K., 2012. Strategic management accounting. Australia: Routledge.
Weston, J.F. and Brigham, E.F., 2015. Managerial finance. Hinsdale, IL: Dryden Press.
Zimmerman, J.L. and Yahya-Zadeh, M., 2011. Accounting for decision making and
control. Issues in Accounting Education, 26(1), pp.258-259.