SITXFIN002 – Interpret Financial Information

Assessment 2 – Written Assessment (A)

Trainee Name
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This assessment is my own work based on my personal study/research, in my own words.
I have cited all sources and material used to assist my research for this assessment.
I have not copied or plagiarized any part of this assessment from another student.
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I have kept a copy for my own records.
I am aware of the availability of reassessment consistent with the Institute’s Reassessment Policy.
I understand my right to appeal the assessment or reassessment outcome, as per the Institute’s Complaints and Appeals Policy.

Trainee Initials	Date

Questions
1	When (the dates) and how many times a year do you need to pay taxes as a food and beverage business?
As a business of beverage and food, we need to pay tax as mentioned in the tax policy. Every fiscal year July 1 – June 30 and the main date is 31^st October for the due tax return. Only one time we require to pay the taxes for the business of beverage and food (Jury, 2012).
2	Name one accounting software or software package you could use to manage finances within your company and what are its key features and functions.
Software of accounting or package of software we can utilize for managing finances in the company is QuickBooks. Its main features are: a) Automated reminders of payment b) It has customized receipts of payment c) It make groups of customers d) It has advanced feeds of banks Its main functions are: a) It tracks and makes invoices b) It holds the tracks of expenses and bills c) It prints the statements of finance for the business (Jury, 2012).
3	In a restaurant, what is meant by average cheque or average customer spending?
The average cheque or average spending of the customer is an average amount of transaction that is measured by dividing the sum of sales number and the sum of guests of number and could be calculated regularly, monthly, weekly or annually. It is normally utilized standard measure in an industry of restaurant that supports the owner of the restaurant to estimate the consumer’s value (Munene & Tibbs, 2018).
4	What is the purpose of a Profit and Loss Statement and how do they measure business performance?
The purpose and objective of a statement of profit and loss are to display the expenditures and revenues of the company at a particular period, normally around a fiscal period of the year. The statement of profit and loss shows the accurate loss and profits of the company for a particular time through differencing between the whole revenues by the sum costs and expenses of the company. Sometimes it could display the ability of the company for increasing their profit by decreasing expenses and costs or by maximising the sales (Munene & Tibbs, 2018).
5	What is the name of the financial report required to report “Cash Flow” and what is the purpose of it”?
The Cash Flow Statement (CFS) is the report of finance that is needed for reporting the “Cash Flow”. The main purposes of it are: 1. It explains some changes in the cash: The cash flow statement aims to describe with details of what and how much amount of the cash coming in or going out of an organization or company. 2. Data about the activities of financing and non-cash investment: It outlines the income which is spent on the activities of non-core such as financing and investing. 3. Information about the firm’s condition of finance: It just not only concerned about financial figures but also how all these figures are achieved. 4. Gives a display of the strategy of management: The main purpose of the cash flow statement is to show the strategy of the management and the upcoming framework of the business (Munene & Tibbs, 2018).
6	What is an asset?
An asset means a resource with the value of the economy that a person, country or cooperation controls or own with some expectation which will give an upcoming profit. Assets are mentioned on the balance sheet of the company and are made or purchased to maximize the value of the business and provide profit to operations of the business (Ikechukwu & Nwakaego, 2015).
7	What is a liability?
A liability means something which an organization or an individual owes, normally a total of money. Liabilities are paid or resolved over the period with the transferring of benefits of the economy involving services, goods or money. Mentioned on the balance sheet’s right-hand side, liabilities involved expenses which are accrued, warranties, mortgages, bonds, revenues which are deferred and loans (Ikechukwu & Nwakaego, 2015).
8	Explain the financial term‘Owner’s Equity.
‘Owner’s Equity is described as the investment of owner in the asset further deducting all the liabilities. It is also the comparison between the assets amounts and liabilities values that permits us for knowing resolving the debts that we own. It can also describe as the total assets or total worth. If its amount is negative then it would be displayed on the balance sheet as the liabilities will take over the equity and fail to assess the liabilities and it will provide an incorrect sense about what we own(Ikechukwu & Nwakaego, 2015).
9	What is achieved by completing a Bank Reconciliation?
Through completing the reconciliation statement of the bank make sure the payments are completed and the collections of cash are deposited or paid in the bank. The statement of reconciliation helps to estimate the comparison between the balances of banks and balances of books, for processing the important corrections or adjustments (Ikechukwu & Nwakaego, 2015).
10	Provide THREE (3) examples of Fixed Costs in a business
Fixed costs involve payments of mortgage or lease of rents, payments of insurance and expenses of interest in the business (Mora, 2012).
11	How do you know if a business is making a profit or not and if it is NOT making a profit, what actions could you take to return it to profitability?
By subtracting the expenses or cost from the profits and revenue then we can get the total earnings of the company whether it is loss or profit. When the amount of revenue will be more than it is profit. When the number of expenses will be more then it is loss. If the company is not developing profits then we will sell the products which can give more profits and estimate the customer’s preference and offer the products according to their needs and demands (Mora, 2012).
12	Explain what The Chart of Accounts is and what are the 5 major types of accounts.
It’s an indicator of the accounts of finance in the general company ledger. It’s a tool of an organization that gives accurate figures of all transactions that an organization has done at a particular period of accounting. The five main kinds of accounts are Expenses, revenue, assets, equity, and liabilities(Mora, 2012).
13	What transaction activities could you have within these frequencies?
Weekly: 1. Record the payments or receipts that we have checked, deposited and received the amount. If we have received checks of paper and payments of cash then weekly we deposit that payment to make the healthy cash flow. 2. Invoice the customers or clients. 3. Check or review the timesheets of employee
Daily: It involves depositing and payments of cash or liabilities. Crediting amount from ATM or paying off the liabilities.
Monthly: It involves mentioning credit card payments or transactions for the account which includes fees, purchases etc (Mora, 2012).
14	In a restaurant, what should be included as wastage?
Various amount of wastage of food in the restaurant occurs at the time while raw materials are not properly stored, which result in their decomposition. It is then important to protect against contamination of the food. Various leftover products and food create wastage in the restaurant which is a topic of concern for the owners of the restaurants(Ito, et al., 2018).
15	What is meant by labour cost for a hospitality business?
It is the total amount of the income which is paid to the labours, and also the cost of benefits and profits of the labours and payroll liabilities which is paid by the manager. The labour cost is divided into the cost which is the indirect or direct amount (Ito, et al., 2018).
16	How much stock should you have and why?
$2000 stock we should have because to invest and survive in the market so that we can earn a good amount of returns in exchange (Ito, et al., 2018).
17	Why is it useful to have a ratio between: A) Covers and gross income B) Occupancy and gross income
A) If the ratio between the income of gross and covers is low and few then it estimates the policy of sales and purchases unfavourable. However, if the gross income is more, then it is good for the company (Ito, et al., 2018).					B) It can be a sign of the failure or success of that company which is in concern. It could be also utilized to estimate how successful is the facility in comparison to the competitors (Ito, et al., 2018).
18	What is meant by the term “sales”?
Sales are activities are involved in product selling or providing services or products to the customers or companies. These activities result in sales, customer satisfaction and the company’s profit (Ito, et al., 2018).
19	What are “commission earnings”?
These are the remuneration. It includes the basic salary which a worker receives in return for their work with some other kinds of the accrued payments while their work course, and it is given to the worker when they complete the work which is frequent like selling different services or products (Ito, et al., 2018).
20	What are the “outstanding accounts” and their purpose?
These are the kinds of accounts in which the total of every advance revolving are outstanding, interest and the balance which is debited on the current account is not paid. The objective of this account is to record and maintain accurate records of the transaction r payment which is not paid and are due.
21	What is the “variance” from a budget?
A variance of the budget is the comparison between the amount for which we have budgeted and the amount which is spent. While making the budgets, it is probably not possible to always be accurate on money, consequently converting in deficit or surplus of budget (Ito, et al., 2018).
22	Define the following Financial Terms and include their purpose
Financial Term			Definition			Purpose
Budget			It is the evaluation of expenditure and income for a particular period.			It gives an accurate method for reviewing the facts involving upcoming activities and making relevant targets.
Covers			Is a kind of act of minimizing the disclosure in the investment, through taking that action which can restrict obligation or liability			It helps to hold action which is defensive to decrease the risk disclosure of an investment, position or investment portfolio.
Expenditure			It is the payment or liability incurrence in conversion for services or products (Ito, et al., 2018).			It is utilized by the organization for acquiring new assets and improving the assets which we and decreasing the liability.
Labour			It is some kind of contribution to effective activities created by the company through hand or mentally.			The purpose of the labour is to complete the task to earn the wages.
Occupancy rate			It’s a kind of ratio of space that is used or rented to the sum amount of the space which is available (Dobbie & Goldsmith-Pinkham, 2015).			It calculates the ratio between the space which is occupied and the space which is rented.
Purchases			It is the activity for buying products and services.			Its objective is to acquire the materials for immediate consumption or acquiring the services (Dobbie & Goldsmith-Pinkham, 2015).
Sales			It is an activity of selling products or services to earn money in return.			Its purpose is to earn maximum profits and incomes.
Stock			It is the security that shows corporations or companies’ ownership.			These are bought or purchased for selling to the consumers for earning profits (Dobbie & Goldsmith-Pinkham, 2015).
Transaction			It is a kind of deal between seller and buyer for exchanging the products or services (Dobbie & Goldsmith-Pinkham, 2015).			It helps to record the amount which is earned and paid.
Transaction exempted			It is a kind of transaction of securities where the company doesn’t require recording the registrations with bodies of regulatory.			It records the transactions which are exempted by the company (Dobbie & Goldsmith-Pinkham, 2015).
Unit sold			These are the figures on the balance sheet that shows the sum of sales in a particular period (Dobbie & Goldsmith-Pinkham, 2015).			Its purpose is to estimate the point of a price that permits big profits by considering the accurate production cost.
Wages			These are the sum of remuneration which is paid to the workers.			It permits the labour for making a comfortable living from their wages.
Direct Debit and Credit			Direct debit is a withdrawal that is electronic from the account of the customer and direct credit is a deposit that is electronic into the account of the customer.			Its purpose is to help the customer to pay the amount through electronic means.
23	Explain the following financial terms:
Ledger				It is a record or the account utilized for storing the entries of bookkeeping for transactions of the balance sheet (Dobbie & Goldsmith-Pinkham, 2015).
Subsidiary ledger				It is a ledger of accounts that displays the history of payments and transactions of every customer which are provided with loans and credit by the business or bank.
Journal				It is the account that displays the transactions of the company(Dobbie & Goldsmith-Pinkham, 2015).
Transaction				It is a kind of deal between the seller and buyer for exchanging products or services.
Receipt				It is the document that displays proof about transactions (Dobbie & Goldsmith-Pinkham, 2015).
Disbursement				It is the accurate funds delivered from the account of a customer to another.
Debtor				It is an individual or company which owes the amount of money.
Invoice				It is the document that secures the transaction’s records between the seller and buyer (Dobbie & Goldsmith-Pinkham, 2015).
Creditor				It is an individual who has provided a loan and owes the amount of money to the debtors.
Accounts payable				It is the account in the ledger which shows the obligation of the company to pay the amount (Dobbie & Goldsmith-Pinkham, 2015).
Accounts receivable				It is the money balance that is due or not paid to the company for the services or products bought.
Cash flow				It is the flowing of cash outside and inside of the organization(Dobbie & Goldsmith-Pinkham, 2015).
24	How many types of account reconciliations are there and what is their purpose?
There are two types of account balances for reconciliations the first one is bank reconciliation and the other is the account ledger of the organization. The account reconciliation works with the ledger account of the company(Dobson., 2014). The bank reconciliation has the work with the bank statement of the company account and their transaction. The bank transaction helps the company to examine their money sources and for which things they require money(Dobson., 2014). Most of the time the company requires their bank reconciliation to check their expenses and the financial position of the company. Reconciliation is generally working as the balance sheet of the company from the bank.
25	What is the impact of an unpresented cheque on an organisation?
The unpresented cheque is another name of the outstanding check that is not cleared yet from the bank. The unpresnted check reduces the balance from the cashbook of the bank but the money is not deducted from the bank account(Liddell., 2012). The amount is reduced from the cash book of the bank but the third party will not receive the amount at that time which causes the misunderstanding between the company and the third party(Liddell., 2012). This is the reason the amount of money will show a higher amount in comparison to the cash book of the bank.
26	What are fixed costs? Give 2 examples
There are several things in the organization that has fixed cost. The motive of the fixed cost is to fix the price no matter how many years passed but the cost that is decided on the fixed rate will remain the same till the company end. There are two types of fixed cost the first is amortization this is the yearly charges expenses that are charged by the company on their intangible assets. The second fixed cost is depreciation which is used by the organization to apply on their asset after the period of purchasing them.
27	What are variable costs? Give 2 examples
The variable cost is that cost that is fluctuated by the company during producing the product and selling their goods in the market(Hirth, 2013). The cost of the material goods that are purchased by the organization these are the raw materials that are purchased by the organization to manufacture their goods and they can buy it at variable costs because the cost of raw materials can be changed. The second variouscost is the amount of money that is given by the company to their labour for the working in the organization(Hirth, 2013). The labour cost is variable because it can be decided according to the labour work.
28	Explain the basic rules for double-entry accounting.
The basic rule of double-entry is to have two simple principles in accounting. The motive of doing a double entry in the account of books is because every debit in the books of account has equal credits in them. This will help the account book to show the amount from both the debit and the credit side and because of this, both sides have an equal amount of moneyinward and outward. This is how double entry in the books of account work and they explain both the transaction.
29	What are the terms Debit (DR) and Credit (CR) in the Double-Entry Accounting system
The terms of debit and credit which is used in the accounting system that reflects the increase and decrease amount of money in the books of accounting of the company. These entries reflect the transaction of business in the organization and show the financial reports to the organization. The double entry system in debit and credit is used by the books of accounting to keep the bookkeeping so that there is no confusion create in the company regarding the entries of debit and credit. The decrease in the credit is coming to the credit side of the journal book and an increasing part will come to the debit side of the company.
30	What are accruals and what is their relationship with the cash account?
. Accrual accounting means the expense which is recognized by the company with the help of cash that is present in the account of the company bank. The cash that is currently available in the company account and the expenses that occur in the organization. Accrual accounting is the method that recorded the revenue expenses and also they keep an eye on the transaction of the money or payment that is done by the company to receive it. These transactions help the organization to find out the expenses.
31		Explain what are the key information and features of a profit and loss statement and a balance sheet? Do not use one-word answers.
Profit and Loss Statement Key Information and Features – This who the company’s profit and loss areas and highlight those section in which the company face most of the losses and have profit in their working years. The profit and loss sheet help the organization to understand their mistakes and improve their working policy to earn profit. Balance Sheet Key Information and Features- The balance sheet of a company shows the overall performance of the organization. This will help the company to understand their transaction of money in the market and their progressive report of working at the current time.
32		Explain what the term GST stands for and what it is? Please provide the formulas for how you calculate it when the cost of goods is known and when it is not known.
GST the goods and the services taxes is used for applying the tax on the product before selling it in the market. GST is the multi sate of taxes the main motive of goods and service taxes to apply the only single taxes rather than using other taxes to create confusion in the market. GST is known as the indirect tax that is introduced by the government of India to apply this tax on their goods before selling them into the market(Liu et al., 2014). The formula for GST calculation: 1. Add GST: GST Amount = (Original Cost x GST%)/100 Net Price = Original Cost + GST Amount 2. Remove GST: GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}] Net Price = Original Cost – GST Amount. This is the formula for calculating GST that helps the organization to decide the value of their product according to the GST tax demand the company requires(Liu et al., 2014). Also, the market is very important in the price-deciding competition because the competitors of the organization will help the company to value their products.
33		You have prepared a series quotes for a customer for their wedding. The first quotation has a cost per person of $150 for a 3-course meal, the second is $200 for a 4-course meal and the third is $500 for 4 course meal with drinks. The customer calls you the day after and asks to change the formula with a 3-course meal with drinks and cake. Can you draw another quotation for the customer Explain your answer.
First Quote: 3 Course Meal $150 (Entrée/Main Course/Dessert) one meal costs $50 Second Quote: 4 Course Meal $200.00 (Entrée/Main Course/Dessert/Cheese) the drink costs $200 Third Quote: 4 Course Meal with Drinks $500.00 (Entrée/Main Course/Dessert/Cheese) The cake cost is $150. Your Quote: 3 Course Meal with Drinks and Cake (How Much?) _$__500 _______ Provide a detailed explanation of how you came up with this quote. Your answer should reflect a fair and reasonable quote and include how you modified it to incorporate the customer’s request. Answer After the customer comes to change the formula for a 3-course meal with drinks and cake the cost of that will be $500 because one meal costs $50 and the drink costs $200 and the cake cost is $150.
34		You work in an ice-cream shop in Melbourne and you realise that in summer the sales rise and in winter they fall. Draw a graph that shows this change in sales performance.

References

Dobbie, W., & Goldsmith-Pinkham, P. (2015).Debtor protections and the Great Recession. Unpublished Working Paper.

Dobson, A. (2014). Listening for democracy: Recognition, representation, reconciliation.Oxford University Press.

Hirth, L. (2013). The market value of variable renewables: The effect of solar wind power variability on their relative price. Energy Economics, 38, 218-236.

Ikechukwu, O. I., & Nwakaego, D. A. (2015).The effect of accounts payable ratio on the financial performance of food and beverages manufacturing companies in Nigeria. Journal of Research in Business and Management, 3(9), 15-21.

Ito, T., Koibuchi, S., Sato, K., & Shimizu, J. (2018). Choice of invoice currency in Japanese trade: industry-andcommodity-level analysis. Edward Elgar Publishing.

Jury, T. (2012). Cash flow analysis and forecasting: the definitive guide to understanding and using published cash flow data (Vol. 653). John Wiley & Sons.

Liddell, C. (2012). Benefit Entitlement Checks-impacts on consumers applying for fuel poverty measures.

Liu, B., Huang, A., & Freudenberg, B. (2014). The impact of the GST on mortgage pricing of Australian credit unions: An empirical analysis. Accounting Research Journal.

Mora, N. (2012). What determines creditor recovery rates. Federal Reserve Bank of Kansas City Economic Review, 97, 79-109.

Munene, F., & Tibbs, C. Y. (2018).Accounts receivable management and financial performance of Embu Water and Sanitation Company Limited, Embu County, Kenya. ACCOUNTS RECEIVABLE MANAGEMENT AND FINANCIAL PERFORMANCE OF EMBU WATER AND SANITATION COMPANY LIMITED, EMBU COUNTY, KENYA. Kenya: International Academic Journal of Economics and Finance.

Interpret Financial Information

References

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