QUESTIONS_KARAN

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Swinburne University of Technology *

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4000

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Accounting

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Nov 24, 2024

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docx

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QUESTIONS (1 to 14) 1. The type of previous financial data which needs to review and analysed to understand which area generates profit and where business is facing loss are given below:  Forecasted budget and variations, as this give a clear understanding how much company is invested and where it bis invested.  Cash flow statement, as this helps to understand how much cash comes or received and how much goes out from the business.  Profit and loss statement as this gives a clear understanding about the profits and losses figures appropriately.  Last is market valuations, as this helps to in taking wise decisions for present and future. 2. A detailed investigation of the causes behind the company's profit or loss might benefit the user. Investigating your earnings will help you to discover what is effective and what is beneficial to the company in its existing economy. Analysing company losses, on the other hand, can help you to spot any flaws or shortfalls that the company is experiencing and enables to address issues before they can become a serious problem. 3. Having the business plan assessed allows us to explore & disclose all alternatives and plans with a professional. Professionals can present us with the benefits and drawbacks of each one of the options, enabling impartial judgments. After you've considered their suggestions, you'll be able to make an appropriate judgment. Altogether, reviewing the information in the business plan ensures that its assertions are accurate. Helps in keeping a checklist of the occasions and activities that will need additional funding for supplies and helps business to prepare in advance for extra budget. 4. Measuring cash flow trends is among the most effective techniques to monitor a company’s performance. Conducting monthly ratio studies can provide you with a tangible approach to assess how successfully your company manages its cash flow. Means, you need to have companies previous financial data or income statement which will help to calculate 3 crucial

ratio’s and these ratios will help to understand the timings business collect payments from customers and make payments to vendors means the inflow and outflow trend of cash. 5. Review statutory requirements is for the compliance and liabilities of the business for the tax purpose as different obligations or compliance are there which every type of business needs to adhere to work legally and to pay all the liabilities which is essential for the business to pay to the government in the form of different taxes and standards. 6. Most common software covers:  MYOB which stands for mind your own business, this software helps to input the financial data to create reports and also helps in interacting directly with the accountant or financial advisor.  Xero, a cloud-based accounting software for small businesses that includes features for billing, reconciliations, inventories, procurement, expenditures, accountancy, and much more.  QuickBooks, bookkeeping software that integrates a range of financial accounting. The major purpose of the software is to eliminate the need for various tables, worksheets, & monitoring sheets to capture and monitor accounting functions at an organization. 7. Previous data needs to be reviewed in order to determine the allocation for the resources as this helps in preparing budget and with the help of budget estimations of different activities are made and accordingly resources were allocated effectively and efficiently. Additionally, the predictions for expenses and revenues in budgets are based on facts and informed judgments, such as in all other plans. The information must be relevant, and all predictions must be founded on acceptable indications, in order for the forecasts to be credible. This planning method uses budgets to keep track of a number of things, including expenditure , stock turnover profit and losses this helps in effectively allocate the resources. 8. Below mentioned techniques can help in making informed estimates of the new items for the inclusion in the budget:

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 Expenditure proposal : Extra money are typically harder to achieve by when the corporation's budget has indeed been determined. Conditions change, and new possibilities emerge. Indeed, the finest ideas might be missed if they are not conveyed in a clear and compelling manner to administration.  Rejected Proposals : It is critical to figure out how and why your proposal was turned down. Even the finest plan might be dismissed for a variety of reasons outside our control. Nevertheless, you could get some really helpful criticism about why your idea wasn't appealing or compelling sufficiently.  Update on successful proposal. 9. How should you prepare Budget? The budget is being prepared considering the organizational and statutory requirements. Moreover, it is critical to ground your assumptions and forecasts on real-world facts. Budgets for minor aspects of a company's operations can be used to shape larger budgets. While creating a budget for a workforce, assure that: they are part of the same work and workplace division; there is indeed a team leader in charge of the division and the group is explicitly responsible for reaching a certain profit or expenditure. Phases of budgeting process is represented below: Other than that, there were to main ways of preparing a budget:  Base it on the existing or the previous budget  Utilize zero based approach 10. It is important to circulate budget and to ensure that all managers and supervisors have clear understanding about the prepared budget and reporting requirements because this helps in controlling the cost effectively and efficiently. Additionally, to comprehend the financial plan,

or budget it's necessary to first comprehend whoever "owns" the figures. A widespread misunderstanding is that the figures belong to the "financial" division. Whenever it comes to how individuals view the budget process, this frequently leads to a defeatist attitude. In fact, all members in the multinational corporation own the revenue and expenditure plans. The creation of an effective strategic plan, as well as its finances and budget decisions, is the result of many different individuals working together towards a similar goal. 11. Risk may be controlled by ensuring there were no chances for finances to be misappropriated and also that suitable procedures are followed to document all business activities or transactions, means it is essential to monitor the budgets to compare the department's true results to the budget estimates. If there are any variations, it is your job as the supervisor to solve the problems that led to errors. Altogether, auditing of budget is also necessary as it assists in reviewing the financial records in order to determine their accuracy. 12. Review of profit and loss statement, cash flow and ageing summary is carried out to monitor, analyse and to make comparisons in between the actual expenditure with the budget. As by comparing it will become easy to get a clear view about the variations because if variation is high then it is essential to identify its main cause and accordingly few steps need to be taken to work on that variations. So, this can be concluded that review of financial statements helps in getting the variations. 13. Budget is being revised to dela with the contingencies as well as to discover and emphasize important problems in reports, particularly comparative financial accomplishments, for assessment and strategic thinking. Means revision of budget directly helps to deal with different unforeseen challenges and helps the firm to prepare or manage the budget as per the conditions altogether this also helps in identifying the variations in between the projected budget and between the actual performance so that firm can identify different causes of variations and take effective decisions accordingly. 14. Maintaining audit trails is necessary in order to track the finance of the business effectively and efficiently and to get a clear picture about the variations or discrepancies in between the actual allocation of funds or budgets to the different activities with the agreed allocations so

that if there is any dispute it will be sorted as soon as possible so that it will not harm the performance, whereas ensuring compliance helps the business to operate as per the law and to reduce the errors. WRITTEN ACTIVITY 1. Requirements of financial probity? 2. As an employee or an organization below mentioned are the requirements for the financial probity:  It is essential for all the officials to behave ethically following the APS values set up in section 10 of public service act and as per the code of conduct set up in section 13 of the same act in all situations while performing sourcing or procurement.  A tender party or potential party should be treated equally and fairly, and no one should be given an unfair advantage over someone else.  Details about parties' business and intellectual property should remain private. Confirm that the tendering, negotiating, assessment, and contract management procedures are verifiable, accessible, and accountable.  Recognize & resolve disputes, either actual, possible, or imagined, in a timely and accurate manner, in compliance with applicable legislative and policy obligations, especially Victorian Public Sector standards of ethics. 2. Principles of Accounting and Financial system:  Accrual Principle : This states that transfers must be documented in the time current time period, irrespective about when the transaction's actual earnings were obtained.  Conservatism Principle : This principle encourages companies to produce their financial statements with prudence and high level of scrutiny.  Consistency Principle : It states that the concept you choose once you need to continuously follow the same in future as well so that it will become easy to compare results of different periods.

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 Cost Principle : As per this principle Assets, debts, and equity investments must be represented on financial records at their actual amount.  Economic entity concept, according to the economic entity concept, a corporate entity's documented actions must be kept distinct from those of its shareholder or any corporate entities. 3.  Corporation act 2011: The Commonwealth of Australia Act establishes the federal and interstate rules governing commercial enterprises in Australia.  ASIC: ASIC's mission is to safeguard Australian shoppers, lenders, and creditors by regulating accounting and business services and enforcing laws.  ATO: The Australian Taxes Office (ATO) is in charge of managing the Australian system of taxation, superannuation laws, as well as other related concerns in Australia.  ASX: It’s an Australian public company which operates Australia’s primary security exchange.  AASB: The Australian Accounting Standards Board is a governing body in Australia that develops and sustains accounting standards for businesses in both the private and public sectors.  International Accounting Standard Board: It is a non-profit organisation that works in the interest of the nation. Its major goal is to create a unified collection of high, rigorous, and universally recognized International Financial Reporting Standards (IFRS) based on well-defined principles. 4. Requirements of ATO including GST, Company Tax and PAYG? In practice, GST-registered firms and perhaps other entities would then: Incorporate GST in the cost of their consumer purchases. Assert refunds for the GST included with the price of their company's business operations.

Company Tax : In the same way that people are obligated to pay taxes on their earnings, corporations are also compelled to do so. As of now, Australian firms must pay 30 percent of their profits in taxes. Across all firms, this rate is the same and does not fluctuate based on profit levels. PAYG : Sole businesses report their company profits (or losses) on their personal tax returns & pay income tax at standard rates. Whenever the ATO receives a personal tax return from a sole trader, partnership, or corporation, it notifies the company owner if PAYG payments are required. The payments you pay are applied to the taxation evaluation you get once you file your income tax return at the end of each year.