Provide Answer To All Questions Below: 1. List Three Types of Financial Statement? Income Statement
Provide Answer To All Questions Below: 1. List Three Types of Financial Statement? Income Statement
Provide Answer To All Questions Below: 1. List Three Types of Financial Statement? Income Statement
Balance sheet
The balance sheet does not account for the entire period and rather is a snapshot of
the company at a specific point in time such as the end of the quarter or year. The
balance sheet shows the company’s resources (assets) and funding for those
resources (liabilities and stockholder’s equity). Assets must always equal the sum of
liabilities and equity.
The purpose of the balance sheet is to reveal the financial status of a business as
of a specific point in time. The statement shows what an entity owns (assets)
and how much it owes (liabilities), as well as the amount invested in the business
(equity). This information is more valuable when the balance sheets for several
consecutive periods are grouped together, so that trends in the different line
items can be viewed.There are several subsets of information that can be used
to gain an understanding of the short-term financial status of an organization.
When the current assets subtotal is compared to the current liabilities subtotal,
one can estimate whether a firm has access to sufficient funds in the short term
to pay off its short-term obligations.
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7) Looking Ahead
4. Explain the principle of cash accounting?
Cash accounting is one of two forms of accounting. The other is accrual accounting,
where revenue and expenses are recorded when they are incurred. Small businesses
often use cash accounting because it is simpler and more straightforward and it
provides a clear picture of how much money the business actually has on hand.
Corporations, however, are required to use accrual accounting under Generally
Accepted Accounting Principles (GAAP).
KEY TAKEAWAYS
Advantages
Disadvantages
1. Small companies might lack the staff needed to manage this method. Larger
companies typically have staff – even an entire department – dedicated to
tracking and reporting transactions. For example, a hospital might have an
account receivables department to keep track of patient billings, and an account
payable department to track hospital expenses.
2. Accrual basis accounting requires at least monthly reporting. In order to
remain accurate, accrual accounting needs frequent reports generated. These
are usually the monthly financial statements most business managers are
familiar with, such as the income statement and balance sheet. But accounts
receivable and accounts payable reports are often generated on a more
frequent basis.
3. Taxes. Although an advantage to using accrual accounting is that you can
report income when the sale is incurred instead of waiting until you have cash
on hand, this also means a business pays taxes on money it hasn't received.
The goods and services tax (GST) in Australia is a value added tax of 10% on most
goods and services sales, with some exemptions (such as for certain food, health
care and housing items) and concessions (including qualifying long term
accommodation which is taxed at an effective rate of 5.5%). GST is levied on most
transactions in the production process, but is in many cases refunded to all parties in
the chain of production other than the final consumer.
The tax was introduced by the Howard Government and commenced on 1 July 2000,
replacing the previous federal wholesale sales tax system and designed to phase out
a number of various State and Territory Government taxes, duties and levies such as
banking taxes and stamp duty.
An increase of the GST to 15% has been put forward, but is generally lacking in bi-
partisan support.
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10.What is the process by which a business would report GST to the Australian Tax
office?
GST reporting method:
The GST reporting method you use is based on your business's GST turnover and
other reporting requirements:
The GST turnover figure we use to determine your GST reporting method is obtained
from your ATO records. It was previously advised by you (at GST registration or
subsequently).
Your GST reporting method will generally be rolled over at the end of each financial
year based on your GST turnover. You can contact us to change your GST reporting
method.
11.What is the penalty rate to be applied if a supplier does not provide an ABN?
If a business or organization supplies you with goods or services, it should quote its
Australian business number (ABN) to you. Most quote their ABN on their invoice,
and you need to keep this invoice in your business records. They can also quote their
ABN to you on another document as long as it relates to the supply they are making.
If they don't quote their ABN, you must withhold 47% from their payment you make
to them and send the withheld amount to us.
The total payment to the supplier is $75 or less, excluding any goods and
services tax (GST).
The supplier is an individual under 18 years old, is not your employee, and
the payments you make to that person do not exceed $350 per week.
The supply is wholly input taxed under GST – this includes most financial
supplies, supplies of residential rent, residential premises and some precious
metals, and food supplies by school tuck shops and canteens that have
chosen to be input taxed – contact us if you are not sure whether a supply is
input taxed.
12.A non-profit organization needs to register for GST after it has a turnover of
more than how much?
Remit gst to the ato for their sales of goods and services
Claim credits for the gst included in the price of goods and services bought in
carrying on its activities.
If your organization has a turnover of less than $150,000, it can choose to voluntarily
register for gst. This decision should be made based on the administrative needs of
your organization.
Generally, an organization that registers for gst must stay registered for at least
12 months, even if its gst turnover is less than $150,000.
13.What information must be included on a tax invoice for sale of $1000 or more?
Tax invoices for sales of $1,000 or more need to show the buyer's identity or ABN.If
your tax invoices meet the requirements for sales of $1,000 or more, you can also
use them for sales of lesser amounts.
Tax invoice for a sale of more than $1,000
14.Under tax law how long must business keep their records for?
Long to keep your records
Generally, you must keep your written evidence for five years from the date you
lodge your tax return.
five years from the date you lodge your tax return or
five years from the date the dispute is finalized.
15.Who must have their financial report audited?
Certain types of entities must have their financial reports audited by a registered
company auditor.
However a proprietary company may be exempt from having its financial report
audited (see Regulatory Guide 115 and CO 98/1417 Audit Relief for Proprietary
Companies) or may otherwise be eligible for audit relief.
A disclosing entity must have its interim financial report reviewed and obtain a
registered company auditor's review report.
The purpose of an audit is for an independent third party to examine the financial
statements of an entity. This examination is an objective evaluation of the statements,
which results in an audit opinion regarding whether the statements have been
presented fairly and in accordance with the applicable accounting framework (such as
GAAP or IFRS). This opinion greatly enhances the credibility of the financial statements
with users, such as lenders, creditors, and investors. Based on this opinion, users of
the financial statements are more likely to provide credit and funding to a business,
possibly resulting in a reduced cost of capital for the entity.
When financial statements are finalized, they usually must contain an evaluation –
an auditor's report - from a licensed accountant or auditor. This report provides an
overview of the evaluation of the validity and reliability of a company or
organization’s financial statements.
Along with balance sheets, profit & loss statements, and directors reports, auditor's
reports make up part of a company's statutory accounts.
Balance sheet
The balance sheet is a report that summarizes all of an entity's assets, liabilities, and
equity as of a given point in time. It is typically used by lenders, investors, and
creditors to estimate the liquidity of a business. The balance sheet is one of the
documents included in an entity's financial statements. Of the financial statements,
the balance sheet is stated as of the end of the reporting period, while the income
statement and statement of cash flows cover the entire reporting period.
Income statement
The income statement is a financial report that shows an entity's financial results over
a specific period of time. The time period covered is usually for a month, quarter, or
year, though it is possible that partial periods may also be used. This is the most
commonly-used of the financial statements, and is the most likely statement to be
distributed within a business for management review
The profit and loss (P&L) statement is a financial statement that summarizes the
revenues, costs, and expenses incurred during a specified period, usually a fiscal
quarter or year. The P&L statement is synonymous with the income statement.
These records provide information about a company's ability or inability to generate
profit by increasing revenue, reducing costs, or both. Some refer to the P&L
statement as a statement of profit and loss, income statement, statement of
operations, statement of financial results or income, earnings statement or expense
statement.
P&L management refers to how a company handles its P&L statement through
revenue and cost management.
Since leasing supplies, equipment, and real estate usually ends up being more
expensive than buying, doing so may seem counter intuitive to someone who is only
paying attention to the bottom line, or your income after expenses are paid off. But
unless your company is flush with cash, you’re going to want to maintain a cash
stream for day-to-day operations.
Everyone loves an incentive, and if you offer customers a discount if they pay their
bills ahead of time, you’re creating a win/win situation for both of you. Getting the
cash in early helps your cash flow, of course.
If a customer doesn't want to pay you in cash, then be sure to conduct a credit check
—especially before you sign them up. If the client has poor credit, you can safely
assume that you won’t be receiving payments on time.
As badly as you might want to make the sale, the late payments will hurt your
business’s cash flow. If you opt for a sale despite any questionable credit, be sure to
set it up with a high interest rate.
Take an inventory check. Those goods you buy that aren't moving at the same pace
as your other products? They tie up a lot of cash.
Task 2
Marketing Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May Total
Activity 16 16 16 16 16 16 16 17 17 17 17 -17
Incentive 200 20 200 200 200 200 200 200 200 200 200 200 2400
Scheme 0
Radio 83 83 83 83 83 83 83 83 83 83 83 83 1000
Advertiseme
nt
Social Media
communicati
on
Expo-2016 33 3300
00
Contingency 800
Amount
Total
The advent of digital computer marketing models made it cheaper and easier for
businesses to target customers. It sometimes seems like television advertising is left
only for the big brands with large budgets. However, there are still many advantages
for a small business to produce commercials for television broadcast and capture its
market share.
Television commercials are seen and heard by anyone tuned into the television
channel at the time of airing. While many call this a shotgun approach, there is a
strong branding message that happens when you have a good commercial seen by
tens of thousands of people. You don't need to advertise on the national platform,
but instead keep to local markets where your products and services will benefit from
strong brand recognition.
Television has expanded, with cable markets that not only help target specific
demographics but also help reduce the cost of commercial advertising. A local comic-
book and gaming store might benefit from commercials on the Syfy network. Those
who watch this channel are likely to be the ideal customers for the store. Some of
the smaller networks have smaller audiences and thus are cheaper to advertise on.
Doing research about your target market and the types of television shows they
watch can help you cost effectively hit that group.
A smart business owner can research the stations and times he wants to advertise
and then contact advertising distributors to see what packages are available. This
means a business owner can gain a captive audience compared to competing against
the noise in digital formats.
A marketing plan is a detailed road map that outlines your marketing strategies,
tactics, costs and projected results over a period of time. Your marketing plan and
budget keeps your entire team focused on specific goals – it’s a critical resource for
your entire company.Writing a marketing plan is a time-consuming exercise, but
it forces you to think through your strategies and relevant tactics. A good
marketing plan typically includes
Strategic goals — for example, you may want to expand into a new market
with a new distribution channel, or you may need to re position your brand to reflect
a change in your business.
Emphasize your positioning in the marketplace
Your positioning strategy defines how you’ll differentiate your offering from
those of your competitors.
Your brand strategy defines what you stand for and how you’ll communicate
with the market.
If you need to do anything to strengthen your product line and better support your
positioning, address those issues in your plan.
The number of sales reps you’ll need and the markets they’ll target
Whether you’ll need to develop new compensation plans, or hire and train
new personnel
Plans for launching any new distribution channels and driving revenue
through existing channels
You don’t need to list every campaign — just outline your major promotional plans
for the year. You’ll need to set your budget too, so the more planning you do now,
the better. Your plans should include:
The media you’ll use (for example, email, social, print, telemarketing, trade
shows, publicity, etc.)
You also use ROI to determine the appropriate total budget for your
marketing efforts.
The planning process itself is immensely valuable, but if you don’t review the
plan regularly, it’s easy to lose focus. Periodically revisit the plan, and measure your
progress.
Task Assessment 4:
1. Analyse the information provided in the interim profit and loss account
including?
Calculating Variance
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