Financial Reporting and Analysis: A Comprehensive Guide

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Manage budgets and financial plans
1

Table of Contents
Task 1:.............................................................................................................................................3
Task 2:.............................................................................................................................................9
Task 3:...........................................................................................................................................12
Task 4:...........................................................................................................................................15
Task 5:...........................................................................................................................................19
References;....................................................................................................................................22
2

Task 1:
1):
 Statement of profit and loss
 Statement of financial position
 Cash flow statement
2):
A balance –sheet is prepared to present the real financial condition of a business on a specific
date or point of time. It presents the balance of assets and liabilities that are associated with the
organisation and helps to determine the financial health of the company.
3):
Steps in the budgeting process:
 Identify current strength and financial condition of the organisation.
 make relevant goals
 Evaluate recent data and market changes
 Design budget statements (Agarwal, 2019).
 Recording of real financial outcomes.
 Comparisonbetween budgeted and real outcomes for improvement.
4):
The concept of cash accounting states that expenses and incomes are required to be recorded on
the basis of real payments and receipts. As per this concept, all revenues are includable in the
income statement when really received and all expenses are recordable when really paid.
5):
Advantage Disadvantage
Use of cash accounting is easy because it works on The accuracy level of accounting results remains
3

the concept of a single accounting system.
Similarly, it helps to maintain regular monitoring
arrangements of liquidity.
low and the use of cash accounting is not allowed
under relevant companies Act regulations (ACCA,
2013).
6):
Accrual accounting concept:
As per this concept, revenues and expenses are required to be recorded on the basis of accruals
assumption without considering cash receipts or payments. Itstates that all incomes are required
to be included in the statements of that year in which such incomes are arising. Similarly,
expenses are needed to be included in financial statements of that year in which such expenses
are arising (Profitbooks, 2019).
7):
Advantage Disadvantage
Accrualaccounting presents real and most accurate
financial results of operations by including all
incomes and costs in the financial statement of the
relevant year (ACCA, 2013).
Accrual accounting demands real-time basis
processing of the financial transaction. Use of this
concept is comparatively hard which demands high
accounting skills.
8):
Applicable Standard GST is rate is 10% for maximum goods and services.
9):
Under Australian GST regulations, the following things are excluded from the obligation of
GST:
 Meat
 Fish
4

 Dairy products
 Poultry and cereals
 Coffee and tea
 Vegetables and Eggs.
10):
There are two different methods that can be utilised by a business to report GST. If GST turnover
of entity is more than $ 10 Million, full reporting method will be utilised by the company. In this
method, the GST amount can be paid andreported quarterly. Similarly, an entity which is not
generating turnover more than $10 million can use BAS reporting method detailed reporting of
business transactions are not require and reporting can be made quarterly.
11):
If ABN number is not provided by the supplier, the payer can deduct the withholding tax with
the highest rate which is required to be paid to ATO office.
12):
Some vital info0rmation that is required to be included in sales invoices are as below:
 ABN number of the seller.
 Date of invoice
 description of goods
 Applicable tax rate
13):
As per the guidelines issued by the ATO office, a business entity is liable to keep the financial
records for the five years from the date of creation.
14):
Following entities must have audited financialstatements:
 All companies other than (SPC) Small property companies
5

 An entity that is registered under a managed investment scheme (ASIC, 2019).
 A disclosing entity
15):
Auditor’s report can be explained as the most essential tool which helps in tactful reporting of
financial documents. It is performed with the object of independent opinion on financial
statements so that realistic financial condition of an organisation can be delivered to external
stakeholders (ASIC, 2019). It works to ensure that financial statement is prepared in accordance
with reporting regulations and there are no material misstatements are existing in reported
financial documents.
16):
Key components of financial reports:
 Balance sheet
 profits & Loss account
 Statement of cash flow
 statement of changes in equity
17):
A profit & loss statement can be explained as the document which is prepared to evaluate the
profitability or net income of the entity. It presents the net annual profitability of the organisation
by comparing figures of incomes, expenses and overheads. The main Purpose of preparation of
profit statement is a determination of net incomes so that relevant business decisions can be
made by the management and real conditions of profitability can be reported.
18):
The budget can be described as the projected financial plan which contains projected information
about future costs, revenues, cash flows and volumes. It is prepared by evaluating recent
financial data and latest market alterations so that business activities can be operated in a most
managed manner (Holtzman, 2019).
6

Cash flow budget Master budget
This budget statement includes the projected values
about the future inflow and outflows of cash
resources.
This budget statement can be defined as the
combination of all small budgets which includes
overall information about the financial strategies of
the company (Holtzman, 2019).
19):
The processto develop a budget:
 Identify and categorise organisational goals.
 Investigate current resources, incomes and expenses.
 Analyse changes in competitive conditions and other economic factors.
 Create a budget plan and circulate to departmental managers (Agarwal, 2019).
 Analysemodification requests that are received from departmental managers.
 Create a final budget.
The process to manage a budget:
 Implement budgeted strategies.
 Interrogate the lacking factors of implemented plans.
 Modify the budgeted figures as per requirement.
 Ensure continuous monitoring to assure removal of threat-full factors at the initial stage.
20):
Ways Example
Reduce the costs Reduction in marketing expenditure will improve cash availability.
Reduce the credit period Reduction of credit period from 60 days to 30 days will improve
cash flow.
7

Expansion plan put on hold It will reduce capital spending and more cash will be available as
working capital (Quinn, 2019).
8

Task 2:
Part A
2):
2017 - 2018
FY
Projected
expenses
Marketing
Activity
Jun-
17 Jul-17
Au
g-
17
Sep
-17
Oct-
17
Nov-
17
Dec-
17
Jan-
18
Feb-
18
Mar-
18
Apr-
18
May
-18
2017/1
8
Total
Redesign of
Website
$
1,667
$
1,66
7
$
1,66
7
$
5,000
Design &
Implementat
ion of
incentive
scheme
$
218
$
218
$
218
$
218
$
218
$
218
$
218
$
218
$
218
$
218
$
218
$
2,400
Radio
Advertising
Campaign
$
2,00
0
$
2,000
$
2,00
0
$
2,000
$
2,00
0
$
10,000
Stand at
VCE Carrers
Expo 2019
$
3,300
$
3,300
Developmen
t &
Publishing
Promotional
Brochure
$
1,50
0
$
1,500
Sponsorship
in
Community
Organisation
$
2,000
$
2,000
Contingency
amount
$
67
$
67
$
67
$
67
$
67
$
67
$
67
$
67
$
67
$
67
$
67
$
67
$
800
Total $ $ $ $ $ $ $ $ $ $ $ $ $
9

67 285 285 285
1,78
5 5,252 285
3,95
2 4,285
3,95
2 2,285
2,28
5 25,000
Particulars 2017/18
Marketing Activities
(25,
000)
Projected Advertisement Expenditure
(30,
000)
Total
(55,
000)
3):
In the modern business environment, advertising through television is very effective to improve
revenue figures. It comes with following proses:
 Reach to a large number of people.
 Products can be presented in the most attractive manner (Bean, 2019).
 Information can be delivered to targetedcustomers to base more effectively and easily.
4):Roleplay:
** MM is used for a marketing manager
MM: hello sir, how are you
CEO: Hello, I am fine and tell me about you.
MM: I am fine sir. I am here to discuss some marketing aspects of the marketing budget. It is a
copy of the latest marketing budget and the same has been delivered to your mail account also.
CEO: Well, I already saw your mail and I have some queries regarding the allocation of
resources, butfirst I would like toknow about yourmarketing strategies.
10

MM: To ensure the effectiveness in overall activities, a different type of marketing mediums are
selected. Amount of $ 1667 is allocated to website redesigning activities whereas $ 10000 is
allocated for the radio advertisement. To assure the appropriate handling of contingencies, $ 800
are allocated to the contingency reserve.
CEO: Would you like to make any changes in this statement?
MM: Yes sir. From different researches, it is outlined that TV marketing is one of the most
effective ways of marketing. It provides benefits in the form of access to the large community,
attractive presentation of products and more. I am recommending that more funds are required to
be allocated to TV advertisement so that the purpose of marketing expenditure can be
accomplished.
Part B: Team meeting for budget discussion:
This team meeting is organised to discuss different aspects of the latest marketing budget. From
the final draft of the budget, it is outlined that $ 25000 are allocated to marketing activities in
which $ 10000 are allocated for radio marketing whereas $ 5000 are allocated for the website
redesigning activities. $ 3300 is allocated for the VCE stands and $ 1500 is allocated for the
Brochures. There are significant chances of alteration in market conditions, so $ 800 are
allocated to contingency fund so that unexpected events can be handled correctly.
11

Task 3:
1):
Marketing
Activity
Jun-
17
Jul-
17
Aug-
17
Sep-
17
Oct-
17
Nov-
17
Dec
-17
Jan
-18
Feb-
18
Mar-
18
Apr-
18
May
-18
2017/
18
Total
Redesign of
Website
$
2,00
0
$
2,0
00
$
3,000
$
7,000
Design &
Implementation
of incentive
scheme
$
200
$
200
$
200
$
200
$
200
$
200
$
200
$
800
$
600
$
800
$
800
$
4,400
Radio
Advertising
Campaign
$
2,0
00
$
2,00
0
$
2,000
$
2,000
$
2,00
0
$
10,00
0
Stand at VCE
Carrers Expo
2019
$
3,50
0
$
3,500
Development &
Publishing
Promotional
Brochure
$
1,50
0
$
1,500
Sponsorship in
Community
Organisation
$
2,00
0
$
2,000
Contingency
amount
$
-
Total
$
-
$
200
$
200
$
200
$
1,70
0
$
5,70
0
$
200
$
4,2
00
$
4,80
0
$
5,600
$
2,800
$
2,80
0
$
28,40
0
2):
From the comparison of budgeted and real figures, it is outlined that website redesigning
expenses, incentive scheme cost and expenses of VCE stands are overrunning.
12