Comprehensive Solution: Manage Budget and Financial Plans Assignment

This document presents a comprehensive solution to an assignment focused on managing budgets and financial plans. It covers a range of topics including the double-entry bookkeeping system, cash and accrual accounting principles, and Goods and Services Tax (GST) regulations. The assignment delves into budget planning, including the creation of a marketing budget, communication with the CEO, and budget revisions. It also explores financial statements such as profit and loss statements, balance sheets, and cash flow statements. Additional topics covered include financial audits, budget development processes, and the use of spreadsheets in budgeting. The solution provides detailed answers to various assessment tasks, offering a thorough understanding of financial management concepts and practices. Furthermore, it includes examples of emails and meeting summaries related to budget planning and allocation, demonstrating practical application of the concepts discussed.

Running head: MANAGE BUDGET AND FINANCIAL PLANS
Manage budget and financial plans
Name of the student
Name of the university
Student ID
Author note

1MANAGE BUDGET AND FINANCIAL PLANS
Table of Contents
Assessment task 1......................................................................................................................2
Assessment task 2 – Budget planning project............................................................................9
Assessment task 3 – Monitor and control finances project......................................................13
Assessment task 4: Profit and loss review project...................................................................15
Assessment 5: Aged Debtor Report.........................................................................................18
Reference..................................................................................................................................22

2MANAGE BUDGET AND FINANCIAL PLANS
Assessment task 1
Answer 1
Basis principle of the double entry bookkeeping system is there shall always be 2
entries for each transaction. One of the entries is known as credit entry and another entry is
known as the debit entry (Dudin et al., 2015).
Answer 2
The principle of cash accounting is that the entities shall record the expenses when the
expenses are actually paid rather than recording it when it is incurred.
Advantage – while paying tax under cash accounting basis, it is ensured that the taxes are not
paid for the monies that has not been received yet. It improves the cash flows and ensures that
the funds are available for the tax expenses.
Disadvantage – as it is very simple method it does not allow tracking of the accrual dates of
purchase and sales. In addition, it does not provide matching the transaction with specific
inventory items (Dzhandzhugazova et al., 2015).
Answer 3
Under accrual basis of accounting it requires recording of the accounting transaction
under the period in which they are occurred actually and not under the period to which the
cash flow associated to it takes place.
Advantage – it produces more faithful, more accurate financial statement which is turn
constitutes the better representation of the actual circumstances as compared to the cash basis
of accounting.

3MANAGE BUDGET AND FINANCIAL PLANS
Disadvantage – it requires transactions to be recorded at the time when it takes place.
However, as the invoices do not match with the actual event, this method requires estimation
from the accountant’s end (Kumar, 2017).
Answer 4
Matching principle –depreciation reduces the income of that accounting period though the
expenses do not require any credit or cash payment. Reason behind this expense is complying
with matching principle that is required by the accrual accounting.
Calculation of depreciation expenses – expenses for depreciation can be calculated through
different methods based on the type of the assets, estimated useful life of the asset, expected
business use of the asset and its residual value. Various methods are straight line method,
sum of year’s digit method, units of production method and double declining balance method
(Sofat & Hiro, 2015).
Answer 5
A. Tax periods – tax invoice – purpose of this part is prescribing additional information
required to be included under tax invoices issued for purposes of GST.
B. Financial supplies – this part provides meaning of the term Financial supply. The
financial supplies are the input that is taxed under GST Act.
C. Reduced input tax credits – this part sets out the list for reduced credit acquisitions
that generates an entitlement for reduced input tax credits (Ato.gov.au, 2019).
Answer 6
 Goods and services tax – GST is the broad based tax at the rate of 10% that is
imposed on most of the services, goods and different other items sold over Australia.
Based on the turnover, the business required to be registered for GST

4MANAGE BUDGET AND FINANCIAL PLANS
 Pay as you go – PAYG system allows paying expected tax liability through
instalments. ATO will notify the PAYG obligations
 Fringe benefit tax – if certain benefits are provided to the employees or the people
related to employees by the employer the employer will be liable to FBT
 Superannuation guarantee obligation – as the employer either minimum level for
superannuation can be set for each of the eligible employees or charge can be paud to
the ATO (Ato.gov.au, 2019).
Answer 7
 Some heath and care and medical services
 Most basis foods
 Precious metals
 Farmland (Ato.gov.au, 2019).
Answer 8
If the business is registered under GST, Business activity statement (BAS) shall be
lodged that will help to report and pay GST. If the business is registered with ABN
(Australian business number) and GST, BAS will be automatically sent when it is required to
be lodged
GST reporting shall be one of the following –
 Monthly – if the GST turnover amounted to $ 20 million or more
 Quarterly – if GST turnover is lower than $ 20 million and no obligation is there to
report monthly
 Annually – if voluntarily registered for the GST.

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Based on the circumstances, cycle can be changed for reporting and paying GST (Ato.gov.au,
2019).
Answer 9
Tax equivalent of top marginal rate in addition to medicare shall be withheld from the
payment to the supplier unless the invoice is provided that is quoted with ABN. From 1st July
2017 the rate is 47% (Ato.gov.au, 2019).
Answer 10
Non-profit organization shall be registered for GST if its turnover exceeds $ 150,000
(Ato.gov.au, 2019).
Answer 11
 The document is intended to be the tax invoice
 Identity of the seller
 ABN number of the seller
 Date of invoice issue
 Brief description of items sold with the quantity and price
 GST amount payable, if any
 Extent to which the sales included in invoice is taxable sale (Ato.gov.au, 2019).
Answer 12
 Profit and loss statement – it represents the income and expenses of the company and
profit or loss generated from incomes after charging the expenses
 Balance sheet – it represents the details regarding assets, liabilities and equities of the
company.

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 Cash flow statement – it records the cash received or expensed by the company from
or towards operating activities, investing activities and financing activities
(McKinney, 2015).
Answer 13
All the ASX listed companies are required to get their financial reports audited.
Answer 14
Purpose of financial audit is to deliver the users of financial statements with the
opinion issued by auditor on whether financial statement of the entity are presented in all
material aspects fairly and as per the applicable framework for financial reporting.
Purpose of the auditor’s report is documenting the reasonable assurances that the
financial statements of the entity are free from the error (Nosheen, Sadiq & Rafay, 2016).
Answer 15
Companies develop the budget for monitoring the progress towards the goals. It
majorly includes 3 aspects – forecast of the income, forecast of expenses and tool for the
decision making (Morgan et al., 2017).
Answer 16
 Setting the objectives
 Determining the available resources
 Estimating the future needs
 Matching the future needs to the available resources
 Obtaining the final approval
 Distributing the approved funds

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 Evaluating and monitoring (Manasan, 2017).
Answer 17
 Performing good forecast – good forecast is as simple as the paper and pencil for
small companies
 Evaluate the terms – checking that the suppliers terms and customer terms are
balanced properly
 Enforcing the payment discipline – shortening the receivable period
 Segmenting the customers, inventories and supplies – while inventory is analysed,
sales volatility must be observed
 Making it a priority all over the company – assuring that all the employees
understands the priority
Answer 18
Using the spreadsheet, changes if any made to the budget can be updated instantly for
the entire budget with the total calculation. It can be used for tracking the variance with
actual data and presenting it to the management.
2 key features of spreadsheet while preparing the budget are as follows –
 Pivot table – it summarizes large amounts of the excel data from the formatted
database
 Sorting and filtering – for making it easier to find the required data, the data can be
picked or reordered as per the requirement.
Answer 19
 Financial statements shall present the information simply

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 Shall be cautious regarding the adding additional accounts to chart of accounts
Considering key information required for knowing how well the business is going on (Muli &
Rotich, 2016).
Answer 20
Purpose of the profit and loss account is representing whether the business has made
the profit or loss during the financial year. Key features of profit and loss account are as
follows –
 Profit and loss statement is prepared in each year and from it the entity gets the idea
regarding whether the company made the profit or loss
 Cash inflows through sales, interest received and dividend received are recorded in
the revenue section of the statement (Morden, 2016).

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Assessment task 2 – Budget planning project
1. Draft marketing budget
2. E mail to CEO
From: John Ally [e-mail]
To: Hedley Brown
Subject: Discussion of budget
Dear Sir,
I would like to draw your attention regarding the marketing budget of the company for which
I have been allocated an amount of $ 25,000. However, it has been budgeted that the expense
for the purpose of marketing will be amounted to $ 55,000. The significant variance of
budget against the allocation is inclusion of TV advertising campaign amounting to $ 30,000.
Various advantages of TV advertising are as follows –
Grabbing attention – taking the product to millions of homes can be done through TV
advertising as it is a very common medium available to each of the houses. Biggest advantage
of TV campaign is it is able to call out the potential customer’s right where it is required.
Combining sound and sight – with the TV advertising sight and sounds are combined that are
intrusive and capable of interrupting whatever else the the viewer may be doing to listen and
watch to the pitch

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Hence, for discussing the budget please allow me a time and date for a meeting with you at
your convenient time.
Thanks & Regards,
John Ally,
Accounting manager
3. Revision of marketing budget
4. E mail to CEO
From: John Ally [e-mail]
To: Hedley Brown
Subject: Discussion of budget
Dear Sir,
I would like to draw your attention regarding the revised marketing budget of the company
prepared by me after the negotiation budget held with you on 5th January 2019. After
discussing with the radio and TV advertising agencies it is negotiated that they are ready to
offer some discounts that will bring down the entire cost to $ 43,600. Therefore, I would like
to request you to kindly revise the budget allocation to carry out the marketing activities
successfully.

11MANAGE BUDGET AND FINANCIAL PLANS
Hence, for discussing the budget please allow me a time and date for a meeting with you at
your convenient time.
Thanks & Regards,
John Ally,
Accounting manager
5. Meeting with the team
Overall budget allocation
As per the discussion with the CEO the total allocated amount for budget was $
44,000 whereas the revised budget amount was $ 43,600. Major expenses will be towards
radio advertising expenses amounting to $ 7,200 and for TV advertising campaign it will be $
21,600. Stand at the VCE careers Expo for 2016 and Develop and publish 2016 promotional
brochure will be expensed for 2016 only (Renz, 2016). Expenses for redesigning the web
sites for improving the branding will be reduced to $ 4,800 from $ 5,000.
Amounts allocated for each marketing activity –
 Redesign web site to improve branding – $ 4800
 Design and implement an incentive scheme for referrals by students - $ 2400
 Conduct a radio advertising campaign - $ 7200
 Stand at VCE Careers Expo 2016 - $ 3300
 Develop and publish 2016 promotional brochure - $ 1500
 Sponsor community organisation to improve local community profile - $ 2,000
 Contingency amount - $ 800
 TV Advertising campaign - $ 21,600