Interpret financial information Projects-
Learning Outline - Within this resource, you will be covering the following key topics:
- Access and interpret financial information
- Use and provide financial information
- Use correct financial terminology.
Using these key topics as a guide, you will work with your trainer/assessor to develop your skills and knowledge. The role of your trainer/assessor is to assist and guide you through your learning journey to achieve your goals.
Project 1 -
Based on the principles of double-entry accounting and assuming that the following table is a general journal, indicate whether the accounting transaction requires a debit or credit by placing a tick or a cross in the appropriate box.
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Accounting Transaction
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Debit
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Credit
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Increase in cash in bank account
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Decrease in sales revenue
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Increase in rent expenses
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Decrease in credit card liability
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Decrease in postage expenses
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Decrease in owner's equity
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Decrease in non-current asset
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Increase in bank loan
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Increase in sales revenue
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Increase in owner's equity
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Match the financial information listed below (and on the next page) to the correct explanation by placing the correct number in the right hand column.
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No.
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Financial Information
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Explanation
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No.
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1
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Expenditure Report
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A report showing GST collected and paid by the business and remitted to the ATO monthly, quarterly or annually.
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2
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Invoice
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Used to record the transactions from source documents.
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3
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Journal
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Provides a financial snapshot of the owner's equity (difference between asset and liability valuation) at the end of an accounting period
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4
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Accounts Payable
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Shows the difference between actual performance and forecasted performance (the difference is usually expressed in both dollars and as a percentage)
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5
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Budget Report
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Shows the allocated budget for all key financial indicators of the business
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6
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Chart of Accounts
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Written acknowledgement that a specified article or sum of money has been received - it records the purchase of goods or a service.
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7
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Balance Sheet
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The department (typically within larger organisations) that handles purchases and the payment of bills.
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8
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Accounts Receivable
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Generally used to highlight the costs of doing business (C.O.D.B.) and usually includes a corresponding budget for each line of expense
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9
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Inventory Report
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Allocates a general ledger code and is used to help organise and post financial transactions in a consistent and uniform manner.
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10
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Business Activity Statement
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The record of either a sales transaction or a purchase transaction.
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11
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Cash Flow
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The income derived by a business from sales of its products and services.
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12
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Variance Report
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The department (typically within larger organisations) that handles sales and receipting payments from customers.
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13
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Revenue Summary
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Tracks the flow of money into and out of the business.
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14
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Disbursement
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This statement is made up of revenues received and expenses incurred for the period, highlighting the change in owner's equity with either a profit or loss.
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15
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Receipt
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The act of paying out money.
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16
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Profit and Loss
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Shows the closing stock on hand levels at the end of an accounting period
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Project 2 -
Complete both variance columns of the following Profit and Loss statement ensuring that you signify negative variances by placing brackets around the calculated variance figures.
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Around the World Travel Services Monthly Profit and Loss Statement (Final) as at 30 September 2013
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Details
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$
Actual
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$
Budget *
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$
Variance
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%
Variance
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REVENUE (ex. GST)
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Retail takings
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54,000
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45,000
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Wholesale commission
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8,000
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5,000
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Total Revenue
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62,000
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50,000
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EXPENSES (ex. GST)
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Variable operating expenses
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Wages (casual consultants)
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22,100
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13,235
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Advertising costs
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3,500
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600
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Vehicle costs
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3,000
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400
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Fixed operating expenses
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Electricity (accrual)
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350
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350
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Wages (permanent staff)
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8,500
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8,500
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Rent
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3,500
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3,500
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Water (accrual)
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100
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100
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Gas (accrual)
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500
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500
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Total operating expenses
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41,550
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27,185
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NET OPERATING PROFIT
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20,450
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22,815
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*NB: Budget forecast figures were established in May 2013.
As the owner of Around the World Travel Services, you tried a new sales strategy during the month of September 2013. This involved hiring a number of casual travel consultants to drive around to businesses in an attempt to 'drum up' new business. You also needed to hire several rental cars. In addition to this, you decided to heavily advertise through print and radio media.
a) Address the following questions (which relate to the above Profit and Loss statement, generated after implementing your new sales strategy) in the form of a report that might be required by management to monitor performance and / or assist with decision making. You can answer each question individually or holistically.
i) What impact did the sales strategy have on your revenue?
ii) What impact did the sales strategy have on both your variable and fixed expenses?
iii) Explain why water, gas and electricity might be accounted for on an accrual basis?
iv) Explain why GST has not been accounted for / reported on the P&L. How might GST instead be accounted for and reported? Explain.
v) What part did the budgeted forecast play in the overall result (if any)? Consider when the forecast was developed.
Project 3 -
Below is a sales report showing total retail takings for the last quarter (July, August and September) for all permanent sales consultants (including yourself).
Review this report and answer the questions below.
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Sales Consultant
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July
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August
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September
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Total
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Brown, Aaron
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12,000.00
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9,000.00
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16,000.00
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37,000.00
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Davis, Tina
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15,500.00
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14,000.00
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23,500.00
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53,000.00
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You
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10,500.00
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13,500.00
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14,500.00
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38,500.00
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Total Sales:
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38,000.00
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36,500.00
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54,000.00
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128,500.00
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a) Who has had the highest sales this quarter? Include their total sales for the quarter in your answer.
b) Who has had the lowest sales for this quarter? Include their total sales for the quarter in your answer.
c) Who had the best month during the quarter? Include the month and sales figure in your answer.
d) Each of your sales consultants is entitled to 5% commission on total retail takings for the quarter. How much will each consultant's commission be for this quarter as well as the total? Show your calculations. Do not calculate any commission for yourself.
Project 4 -
Below is the Balance Sheet for Around the World Travel Services as at 30 September 2013.
Review this report and answer the questions below.
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Around the World Travel Services Balance Sheet as at 30 September 2013
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Assets
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Current Assets
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Bank account
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71,258.00
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Cash Drawer
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1,000.00
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Trade Debtors
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43,775.00
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Total Current Assets
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116,033.00
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Non-Current Assets
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Equipment @ Cost
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25,000.00
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Less Accumulated Depreciation
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<4,270.00>
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Total Non-Current Assets
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20,730.00
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Total Assets
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136,763.00
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Liabilities
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Current Liabilities
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Credit Card
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5,525.00
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Trade Creditors
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20,899.00
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GST Collected
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13,215.00
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less GST Paid
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<11,578.00>
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PAYG Payable
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9,637.00
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Superannuation Payable
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6,800.00
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Total Current Liabilities
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44,498.00
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Non-Current Liabilities
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Bank Loan
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20,000.00
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Total Non-Current Liabilities
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20,000.00
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Total Liabilities
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64,498.00
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Net Assets
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Equity
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Capital from Owner / Shareholders
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5,000.00
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Current Year's Earnings
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67,265.00
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Retained Earnings
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0.00
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Total Equity
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72,265.00
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a) How much GST is owed to the ATO based on this balance sheet? Show your calculations.
b) How much PAYG is owed to the ATO based on this balance sheet?
c) How much is owed in total to the ATO based on this balance sheet? Show your calculations.
d) How much is owed in superannuation based on this balance sheet?
e) If all of these payments were made on 1 October 2013, how much money would be left in the business bank account? Show your calculations.
f) How much is owed to your suppliers?
g) Using your bank balance calculated in (e), how much would you have left in your bank account if you paid your suppliers in full? Show your calculations.
Attachment:- Assignment.rar