SITXFIN003 Manage Finances within a Budget

Learner Assessment Pack

V3.1_June 2019

Q1. 8 kinds of financial records include the following:

Stock records

Tax invoices and related tax records

Details of every contract

Debtor’s records

Creditor’s records

Banking records

Cash book records

General account books

Q2. All registered companies operating in Australia must file Business Activity Statements (BAS). Accordingly, BAS contains various tax details which entail luxury car tax (LCT), wine equalization Tax (WET), fringe benefits tax (FBT), pay as you go installments (PAYGI), pay as you go withholding (PAYGW) and goods and services tax (GST).

Q3.

Cash flow budget A summarized presentation of how cash flows in and out of a business at a specific duration

Capital expenditure budget Capital expenditure budget express long-term capital requirements and purchase approach for an organization

Sales budget Presents attainable or anticipated sales over a particular period

Procedures that should be followed when collecting data to inform budgets Engaging other employees to determine needs and adjustments in revenues and expenditure priorities

Actual collection of vital ideas and data from different cost centers

Developing and presenting a draft budget to encourage feedback from concerned persons

Discussing with relevant persons and informing them about resource allocation strategies

Finalizing the budget by informing colleagues on eventual decisions

Q4.

Wage budget is a projected expenditure that an organization would utilize to pay hourly employees.

Purchasing budgets are projections on the type, quantity and costs of inventory that a firm needs to acquire during a given duration.

Events budgets are forecasts on expenditures and income that an organization would realize while handling specific events.

Project budgets are estimations of expenditures for acquiring necessary resources and accomplishing relevant processes to attain particular goals and objectives while handling specific projects over specified periods.

Q5.

Cashflow Cash flow is the net value of money that move in and out of a business at a given period

Occupancy Rate Occupancy rate is a KPIS which shows the ratio of used or rented business space to the total size of available space over a period of time

Sales Performance Sales performance is the evaluation of actual sales against projected sales goals during a particular period

Variance in income/expenditure This is the difference in projected and actual income/expenditure that a business realizes while handling a given activity

Expenditure Expenditure is the value of money that is spent to accomplish a given business activity

Cover Cover is the amount of resources available to ensure effective operation of a business over a given duration

Stock levels Stock levels are available quantities of raw materials that a business keeps

Wastage Wastage is the value of loss that a business realizes through unfavorable acts such as inefficiencies, destruction, expiry or decay of resources/ raw materials

Q6. The main reason for preparing a draft budget is to gain rough and informative details that would inform proper development of a final budget. Accordingly, draft budgets attract varied benefits such as disclosure of previously unconsidered or hidden elements and provide a basis for refining initial plans to ensure development of an effective final budget.

Q7. When analyzing budget results, projected expenditure and income should be compared with actual income and expenditure.

Q8. 3 things to include in a budget report entail the following:

Net worth of the business

Revenue

Expenses

Q9. Components of an operating budget include

Revenue

Fixed costs

Variable costs

Non-operating expenses

Non-cash expenses

Q10.

Variance Variance is the difference between projected and actual revenue or expenditure

Projected/forecasted figure This is the desired and expected value

Actual figure Actual figure is the eventual outcome upon execution of a business activity

Budgeted figure Budgeted figure is the figure that a business plans to achieve using available resources

Q11. It is essential for staff to understand a budget and related targets to remain focused and motivated towards realizing goals and objectives of their firm. Informed workers would understand the importance of prioritizing certain processes while striving to improve their competence and skills for better performance and efficiency by comparing actual versus projected outcomes.

Q12. It is essential to critically analyze income and expenditure when reviewing and updating a budget. For instance, actual expenditure used in preparing hotel rooms should be compared with budgeted expenditure to determine if there is variance. Moreover, actual income from the sale of food and beverages could be compared with sales budget.