Assessment 2

FNSACC311 and FNSACC304

PROCESS FINANCIAL TRANSACTIONS AND
EXTRACT INTERIM REPORTS AND
CONDUCT BUSINESS ACTIVITIES USING A
COMPUTERISED ACCOUNTING SYSTEM

Assessment Instructions for the Candidate

Requirements
• This assessment should be completed in Microsoft Word.
• Access to the Student Portal.
• Calculator.

It is recommended that on completion of this unit, participants should be able to produce

accurate work with not more than two re-submissions.

On completion
• Upload your assessment document to the online platform.
• Remember to name the document to include the following:
(unit name and number - assessment name and number - your name).

Reasonable Adjustment
• If you are unable to complete the assessment as designed, please raise a support ticket
to discuss with your Assessor.

Assessment Outcomes
There are only two possible results of any assessment:
• Competent
• Not yet competent

Competent
An assessment of ‘Competent’ recognises that you have clearly demonstrated to your
assessor that you have current skills and knowledge as outlined in the units of competency
for which application was made.
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Not Yet Competent

If an assessment of ‘Not Yet Competent’ is made, the assessor will give you specific feedback
as to the reasons for the result. This will also provide information about gaps found in the
assessment of competency. You may also discuss options to address the gaps in competency
with your assessor.

Student Name Chris Alvarez

Date of Assessment 24-Aug-22

Assessment Overview
This unit describes the skills and knowledge required to prepare and process routine
financial documents, prepare journal entries, post journal entries to ledgers, prepare banking
and reconcile financial receipts, and extract a trial balance and interim reports; and
Conduct business activities using a computerised accounting system. This work is conducted
under supervision and encompasses entering information into the system, processing
transactions in the system, and producing reports.

Unit Elements
• Check and verify supporting documentation
• Prepare and process banking and petty cash documents
• Prepare and process payable and received invoices
• Prepare journals
• Update financial data and systems
• Prepare deposit facility and lodge flows
• Finalise trial balance and interim reports
• Obtain and enter data into computerised accounting system
• Process transactions in computerised accounting system
• Produce reports

Performance Evidence
Evidence of the ability to:
• enter and balance deposits and payments

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• reconcile banking documentation and process and balance petty cash transactions
• check and verify financial transaction supporting documentation
• apply security and safety measures when preparing and banking receipts
• prepare deposit facilities
• enter data into financial systems and process general and special (cash and credit)
journal entries, identifying and correcting errors
• process special transactions
• prepare and authorise journals and check journal processing interim reports
• extract, check and correct a trial balance
• file documentation according to organisational and regulatory requirements.
• obtain the following data to be entered into computerised accounting system:
o invoices
o adjustment notes
o payments
o receipts
o bank entries
• verify the above data using appropriate sources
• enter above data into computerised accounting system according to organisational
procedures
• process transactions in computerised accounting system
• generate financial reports required by business operations.

Knowledge Evidence
The candidate must be able to demonstrate the following knowledge to effectively complete
the tasks outlined in the elements and performance criteria of this unit.
• Key principles and practices of double-entry accounting and accrual accounting
systems
• Range of industry-accepted accounting conventions, processes and procedures for the
work tasks described in the performance evidence
• Standard industry banking procedures and guidelines, including:
o form of ‘proof of lodgement’ for different deposit methods
o industry-accepted security and safety precautions appropriate to banking
method
• Key features of legislative and regulatory requirements relating to processing financial
transactions

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• Key features of organisational policies and procedures relating to processing financial

transactions, including:
o organisational policy and procedures for preparing and processing invoices
o organisational input standards and journal authorisation procedures
o security procedures for handling electronic payments, cheques and cash
o safety procedures for specific banking methods
• Key features of routine financial reports, including:
o trial balances
o bank account reconciliation reports
o interim reports
• Key features of organisational policies and procedures relating to operating a
computerised accounting system
• Key features and characteristics of information included in required source documents
of financial data
• Key features and components of client data sources, including chart of accounts

Software
Access to MYOB is required.

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Written Questions

This assessment will enable you to demonstrate the theoretical knowledge you have learnt
throughout this unit by completing written questions.

QUESTION 1
Outline and explain typical errors that can be made when processing financial transactions
Common errors that may occur when processing financial transactions include:
Information is transposed incorrectly. It can be very common to input the incorrect
information from a purchase order or a payment receipt to a computer based accounting
system. Simply caused by not double checking information, misreading a figure or typing
wrong number.
Incorrect allocation of the transaction. When processing a transaction in a accounting system
it is usually allocated to an account code.
Effective dates are incorrectly transposed or applied. For example the effective date of the
transaction is 13/9/2022 and the transaction is entered as effective date 16/9/2022. This
compromises the integriy of the data and can have a flow on affect when balancing accounts,
running reports or using the data to make business decisions.
A transaction cannot be easily identified as an accurate and complete description has not
been given. Failing to put an appropriate descreiption for the transaction has an impact when
reconciling or balancing accounts, as the debits and credits cannot be matched up as easily.
Incorrect GST charged on items/services. Not all products and services are to be charged with
GST, charging goods and services tax on GST free items causes issues with customers and the
chart of accounts.

Note:
1. Subsidiary Entries - transactions that aren’t recorded correctly.
2. Error of Omission - forget to enter a transaction
3. Transposition Errors - two digits are reversed, eg 5636 instead of 5663
4. Rounding Errors - eg. 23.965 instead of 23.9646
5. Errors of Principle - record transactions in the wrong account
6. Errors of Reversal - entry is debited instead of being credited

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QUESTION 2
Describe the key principles of the following:

a) Double entry bookkeeping

The key principle for double entry bookkeeping is that there are always two entries for
every transaction. One entry is a debit and one is a credit. The debit and credit should
balance one another out. This means a transaction will have equal and opposite effects
in different accounts.
A debit will increase an asset or expense account and decrease a liability or equity
account. A credit will increase a liability or equity account and decrease an asset or
expense account. To satisfy the accounting equation Assets = Liabilities + Equity.
A sum of your debits and a sum of your credits must always be equal for the accounts to
balance.

b) Accrual accounting
Accrual accounting is a method which follows the key principle that states revenue or
expenses should be recorded when the transaction occurs, rather than when the cash
flows for the transaction are received.
The most common example of this is accounts that trade based on credit. The
customer receives the goods on 11/9/22 but have until 21 days after end of month (i.e.
21/10/22) to pay their bill. The transaction should be recorded on 11/9/22.

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QUESTION 3
You may need to conduct internet research or refer to your student training manuals to
answer the following questions.

Identify and describe the key features and purpose of the following:
a) Industry Codes of Practice
The purpose of industry codes of practice is to set out clear enforceable rules within an
industry in order to deliver a certain standard. They are intended to raise industry
standards and encourage consumer confidence.
Key features include:
- Codes of practice address a duty or obligation under the work health safety act
- Codes of practice should include known information about particular hazards
and risks;
- And offer control measures or risk management stratergies ensuring they remain
compliant with legislation or relevant guidelines, standards and practices.
- Codes of practice offer guidance in determining what is reasonably practicable in
the circumstances
- Complaint handling actions and penalties for non-compliance

b) The Australian Accounting Standards Board

The purpose of the AASB is to set the Australian accounting standards. These standards
provide key information surrounding industry accepted methods of conformity in regard
to prep, presentation, audit, review and compilation of general purpose financial
statements.
Key features of the AASB includes:
“- Issue Australian versions of international accounting standards board documents
- Produce standards that treat like transactions consistently
- Influence the development of international financial reporting standards
- Identify areas requiring fundamental review and introduce standards to cover those
areas
- Promote globally consistent application and interpretation of accounting standards.”

(Australian Accounting Standards Board, 2021)

These accounting standards are in place to ensure that financial statements are
comparable. Ensuring that all companies adhere to the same standard increases the
reliability of financial statements and enables more sound and economical decision
making based on accurate and consistent information.

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c) An organisation’s Policy and Procedures manual

The purpose of a policy and procedures manual is to provide guidaince in instructions or
principles that regulate decision making, business operations and putting safe work into
action.
A policy and procedures manual plays a key role in setting expectations, enhancing
employee productivity, improving communication, reducing employee training time and
ensuring compliance with the industry laws and regulations.
Key policies and procedures may include:
- Employment procedures
- Working from home policies
- Organization culture
- Employee benefits
- Communication policies
- Payment procedures
- Workplace guidelines
- Employee code of conduct
- Technology usage procedures
Key features of a policy and procedures manual often includes:
- A description or scope of the policy/procedure
- The purpose of the policies and procedures
- Statements regarding the conditions, restrictions, expectations and exclusions
- Specify responsibilities e.g. departments, groups or specific person
- Include procedure details/steps
- Who to go to for help or reference documents

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QUESTION 4
The business owner has asked you to update the organisation’s accounting policies and
procedures manual.

Create procedures for the following:

a) Preparing and processing invoices
Preparing and Processing Invoices Procedure
Expectation
That all invoices are issued and processed to a high standard ensuring clarity,
accuracy and integrity of information.
Reason
To ensure that documents are managed in line with quality assurance processes
to meet organisational and legislative requirements.
Responsibility
All employees have a responsibility to ensure the accuracy and integrity of
information.
Accounts payable and recievable have a responsibility to ensure all invoices are
prepared and processed, ensuring appropriate authorisation of all
documentation for compliance with this procedure.
Procedure
1. Validate the details of the invoice by checking;
- Calculations are correct
- If purchasing goods, check the goods were ordered by the business by
comparing to a validated purchase request form.
- Check if the goods or services have been received.
- Check there is an ABN on the invoice
- Supplier or customer contact details are correct in company records
- The tax amount is clearly listed
- Does the packing slip match the charges on the invoice
2. Send invoices to authorized approvers to approve or reject invoices.
- Supplier invoices must be authorised by supervisor prior to entry.
3. Record the invoice in the system.
- Use supplier credit/invoice entry function to enter the items to the system.
(NOTE: the business does not hold inventory stock)
- Purchased items are allocated as expenses or assets follow the chart of accounts
guidline to ensure the goods are applied to the appropriate general ledger code.
4. Submit invoice for payment. Refer to the business’ payment procedures for more
information on the appropriate payment methods.

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5. Attach a copy of the invoice with authorisation to the transaction for reference and
auditing purposes
6. Save a pdf version of the invoice with authorisation and corresponding support
documents (i.e. purchase request, delivery docket or packing slip) in the
appropriate external file and upload a copy to the portal for filing.

b) General journal entry and authorisation

General Journal Entry and Authorisation Procedure
Expectation
That all general journal entries are approved prior to entry, to correct miss
allocations and for adjustments or corrections that cannot be performed using
the other journal types.,
Reason
To establish the requirements of preparation, review and approval of general
journal entries for the business.
Responsibility
This procedures apply to all staff with authority to raise, process, approve and
record journal entries.
Procedure
1. When preparing a journal entry check;
- Journal is valid and necessary
- Entry is compliant with relevant procedures and legislation
- The journal is accurate and timely
- The journal is coded correctly
- Includes a brief description/ reason for the adjustment
- Have complete supporting documentation
- Each journal is appropriately dated within the correct accounting period.
2. Submit the journal for approval ensuring all required sections are complete, a brief
summary is given (reason for /description) and supporting documentation is
submitted.
3. Journal approver will review the submission. If the journal is incomplete the person
preparing the journal must be notified with reason for denial.
4. Once approved process the adjustment using the double entry bookkeeping
method.
5. Upload any supporting documentation into the ledger account attaching to the
journal.

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QUESTION 5
Describe the key features of the following reports:

a) Balance Sheet
A balance sheet shows the financial position of an organisation at a specific point in time
in terms of assets and liabilities.
A balance sheet consists of transactions recorded under two sides, assets and liabilities.
The total of both sides should always be equal. A balance sheet should demonstrate the
following equation: Assets = Liabilities + Owner’s Equity. Offering a snapshot and
itemesed account of business operations.
Balance sheets are typically prepared after trading and profit and loss accounts are
prepared.

b) Profit & Loss

A profit and loss statement shows the performance of the business over a specific period.
Profit and Loss statements include:
- Revenue or earnings from the sale of goods or services
- Expenses or costs made or incurred to generate revenue
Profit and loss statements demonstrate income and expense that arise during a specific
period. The statement is determined by the revenue less any expenses equation.

c) Trial Balance
A trial balance is performed to ensure the journals are accurate prior to running financial
statements. It is a summary of debit and credit balances.
Trial balance includes:
- The closing balance of the ledger accounts (including income, expense, asset,
liabilities and owners equity)
- Trial balance should fulfil the equation Credits = Debits
- Debits are to the left of the statement while credits are typically to the right hand
side.
Trial balances can be used to make financial decisions surrounding the business and
therefore must be up to date and accurate at all times. The trial balance is typically
prepared at the end of the accounting year but it can also be prepared anytime it is
requested.

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QUESTION 6
Explain the security procedures for handling:
• Electronic payments
• Cheques
• Cash deposits.
Electronic Payments
Security procedures for handling electronic payments includes:
- Electronic payments should be approved prior to processing in the accounting system and
a second approval is required prior to making payment with internet banking system.
- All electronic payments and deposits need proof of transaction. This provides security for
the business if a payment is quered or denied in the event there is an error with the
transaction.
- The business’ electronic payment accounts should have restricted access secured with the
use of password access. To add an extra layer of security passwords should be changed
regularly to protect against potential cybercriminals
- When making electronic payments using a credit card for a customer or the business the
CVV number should be provided to aid in validating the payment.
- Double checking the bank and billing information prior to processing payment is a security
measure that should be put into routine.
- When receiving invoices from new suppliers or new suppliers that send invoices that look
suspicious. Contacting the company and having an employee verify their bank details
provides another layer of security for the business.
Cheques
Security procedures for handling cheque payments includes:
- The cheque book and cheques should be kept in a safe or a secure location at all times
until banked.
- Cheques are a legal document it is important to check all information is completed
correctly prior to submitting a deposit. Always check trading name of who the check is
being made out to is correct, dates and the written and numerical amounts are the same
and all sugnatures are complete.
- Security for cheques is also provided by placing two lines across the check with not
negotiable written. Meaning the bank can only take the amount stipulated on the cheque.
- When receiving cheques for processing it is important to check the cheque number
correlates with the source document and with the customer account details.
- Procedures should be in place to follow up cheques that haven’t been cashed within a
certain period.
- Cheques can only be signed by an authorized signatory of the account. Cheques signed by
unauthorised personnel are deemed as invalid. This prevents people within the company
from spending money where it shouldn’t be going.
- Any changes to a cheque must be initialled, failure to do so can make the cheque void

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Cash Deposits
Security procedures for handling cash deposits includes:
- Petty cash or any cash kept on premises is to be kept in a locked petty cash box which is
secured in a safe at the close of business each day.
- Do not leave cash out unattended this minimises the risk of potential robbers.
- When banking, especially for a business with a high turn over, ensure random and frequent
deposits are generated throughout the day. This will minimise the amount of cash on
premises and minimise the risk to the business by not sticking to a time schedule.
- Ensure the bag used to make a deposit differs each deposit so that potential robbers
cannot recognise that a deposit is being made
- If possible use a bank near by to make deposits
- Where possible, to minimise risk ensure cash deposits are not always made by the same
person, change vehicles, time schedules and route to bank.
- Always obtain proof of lodgement for the business records.

QUESTION 7
Describe two types of ‘proof of lodgement’ in banking.
1) Bank Deposit Reciept
A bank deposit receipt is a receipt/docket issued by the bank to a cash/cheque depositer once a
transaction is completed. The docket provides details of the date, time, amount deposited and to
which account the deposit was made. The receipt also provides evidence of the money paid incase
of counting errors in a transaction.
2) Verified Transaction Listing
This is a listing provided by the bank in the form of either a printed or electronic document. The
document will include a listing of all transactions for the date or date range. The verified transaction
lisiting provides a second line of evidence to the company in the unlikely event an issue is raised by
an auditor.

You have now completed this Assessment

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