BSBFIN601
SHORT ANSWER QUESTIONS:
1. Identify 4 phases of reviewing a financial statement
Phase of Reviewing Financial
Statements
i. Choose a financial statement
analysis technique
ii. Gather every documents
iii. Process and complete all the
data
iv.      Conduct research and
report findings
2. Identify 4 (four) ethical standards for financial probity
How Each Phase is Conducted to Establish
and Review Profits and Losses
      There are two main approaches to financial
statement analysis. One is horizontal and vertical
analysis. While vertical analysis reports expenses
and assets as a percentage of the overall
financial statement, horizontal analysis compares
data sets across specific time periods. Vertical
analysis is helpful for comparing several company
areas to one another, whereas horizontal analysis
is good for analyzing financial information over a
predetermined period (such as sales over the
previous five years).
The ratio method is the second approach. This
might assist us in analyzing numerous business-
related aspects and comparing them to one
another or even to organizations in your sector.
E.g: Accounts payable ratio, which demonstrates
how quickly a company pays it’s suppliers.
     A financial statement analysis consists of
numerous components, many of which come from
separated areas of business. We’ll need to audit
data from several departments and sometimes
even other organizations to be able to accurately
determine a company’s financial situation,
including:
- Supplier invoices and contracts
- Annual budgets
- Profit and loss statement
     Once all of the paperwork has been
collected, it must be evaluated. There are
numerous programs available that can assist a
business in preparing and understanding its
financial statements. Excel and Access
databases are adequate for small business, but
as the company grows, it will require a more
robust solution which can not only handle the
data but also assist in its presentation.
     The end goal of the process is to produce a
financial statement analysis report. This should
be based on the data we gathered and
compared, and should aid business leaders in
making decisions about the company’s future.
Ethical Standard for Financial Workplace Task That Will Demonstrate
Probity Adherence to Ethical Standard
      The finance and accounting team should
i.    Integrity  
have integrity because they must provide
accurate data to investors and other
stakeholders. Especially when they are
presenting a profit and loss statement of the
company.
     Accounting and financial professionals must
ii.    Competence
not only have the training and experience
necessary for their jobs, but they also need to
keep learning new information that may have an
impact on their practices in order to be competent
in their roles. Especially when they are presenting
budget planning to the investors.
     Working for a corporation owned by a
iii.     Objectivity 
family, for instance, would not appear neutral and
could raise questions about the finance
professional's motivations even if they are
capable of acting honestly. All associations of
financial professionals caution against dishonest
methods, such as changing records to portray a
predetermined result, even though it is often
impossible to prevent conflicts of interest, such as
in the case of a family business. When the
accountant presents the profit and loss statement
is one illustration. They are unable to alter or
manipulate all the data and records.
     Financial experts have a lot of access to
iv.      Confidentiality
personal data when working with a client's
financial data. This contains not just financial data
but also employee names and contact details as
well as the names and locations of businesses
the company collaborates with. Financial
professionals are required by ethical standards to
keep that information private until they are
directed to do so by a court of law. One
illustration is when the finance department is
interacting with a client invoice. They are not
permitted to share all of the invoice details to third
parties.
3. Three financial declarations a business can make to ensure financial probity

Financial Declaration Conditions That Indicate That the Need to

Make Each Identified Financial Declaration
      Selecting a new finance director, for
i. The Finance Director is in
instance, during a time of change or when the
charge of developing, current finance director is leaving. To keep the
implementing, and maintaining financial industry performing well, this must be
effective internal control done.
systems that prevent and
detect fraud.
     The terms of the board of directors have
ii.  The Board Directors are
ended or continued.
responsible for ensuring the
financial performance of Trust,
including its assets, overseeing
The Trust’s money is well spent
and to prevent losses, misuse,
and fraud.   
     When there is a suspected fraud and the
iii.      Staff are responsible for
case is continued in the court.
assisting in the investigation of
alleged fraud and be able to
provide witness statements.
4. Principles of Accounting and Financial Systems

Question 4
Answer the questions about the following principles of accounting and financial systems.

a. Recognition of revenue
Describe when revenue is earned.
      According to the revenue recognition principle, revenue should only be
recognized when it has been earned rather than when the related cash is
collected. For its typical charge of $100, a snow removal firm might clear the
parking lot of a business. Even if it doesn't anticipate receiving money from the
customer for a few weeks, it can record the revenue as soon as the ploughing is
finished. The accrual basis of accounting incorporates this idea.
b. Recognition of expenses
Describe when an expense occurred.
     According to the principle of expense recognition, expenses must be
recorded in the same period as the revenues to which they are related. A company
spends $10,000 on goods, which it then sells for $15,000 the next month.
According to the principle of expense recognition, the $10,000 cost shouldn't be
recorded as an expense until the subsequent month, when the associated revenue
is likewise recorded. A failure to do so will result in expenses being overstated by
$10,000 in the current month and understated by $10,000 in the following month.
c. Accrual accounting
Explain why transactions are recorded as they occur even if payment has not yet
been received by the workplace/organisation.
     There would be no need for accruals if businesses got cash payments for all
revenues at the same time as they were earned and paid cash for all expenses as
they were incurred. Although most businesses have some revenues in a given
year that were earned (i.e., goods or services were supplied), but for which
payment was not received, they must account those unpaid revenues. Instead of
focusing on the timing of the actual cash flows associated with sales and
expenses, accrual accounting aims to match them to the time periods in which
they were incurred.
d. Going concern
Explain why it is always assumed that an organisation will continue to operate for
the foreseeable future.
     Because it is important to all of the stakeholders. For instance, to the
shareholders, the idea of a going concern is essential since it is the stability of the
company. This presumption may have an impact on the company's stock price and
its capacity to raise money or attract new investors. To the regulator, it is really
important to watch all of the activities of the company and making a better policy.

e. Monetary unit
Explain why items in a financial system must have a monetary value.

     The elements of the balance sheet are determined by the monetary unit
assumption. Particularly, revenue must be noted in such format so that it can be
stated in monetary terms. Because it cannot be determined automatically from
other accounts on a balance sheet, this is a crucial factor for a company
organisation to take into account.Every financial transaction that occurs within an
entity is recorded. The financial statement preparation process is aided by the
money measurement concept. It is simpler to compare the outcomes of one period
to another when more transactions are recorded. It serves as the foundation for
legal proof.
5. Identify two workplace task that are accomplished by financial management software:

Function of Financial Workplace Task Accomplished Purpose of Workplace Task in

Management Software by Financial Management Managing Finances in
Software Workplace/Organisation
      Make sure that these
Budgeting 1.    Develop budget and
budget activities are in line with
forecast   long-term financial goals and
anticipated cash flows.
Forecasts are also created to
support long-term budget
management and business
expansion.
     In order to offer
2.      Conduct cost-benefit
recommendations and direct
analysis. executive decision-making, the
budgeting team in this
component of the work
evaluates current spending and
cash flow, market and financial
predictions, and overall
corporate goals. Its aims are to
direct advice on choices like
moving, opening up new
markets, or increasing staff.

Function of Financial Workplace Task Accomplished Purpose of Workplace Task

Management Software by Financial Management in Managing Finances in
Software Workplace/Organisation
     To manage the
Cash flow 1. Track and manage the
company's finances (cash
management company's cash inflow and balance) and provide direction
outflow. for all future financial decisions,
including lending and
investment.
     To help the auditing team
2. Assisting annual audit.
to monitor and analyse financial
reports and ensure adherence
to tax regulation.

     To ensure all of the

Financial reporting 1. Consolidate the entries and
entries and the accounts have
accounts that will be used been collected well.
in the financial statements.

     To provide and to deliver

2. Collaborate with
highly valuable financial reports
departments, gather and to all stakeholders and support
analyse all financial data, the business in achieving its

6. Identify three sections of financial budget
Section of Financial
Budget
i. Capital Expenditures
Budget  formal plan which conducts an
ii.     Cash Budget
 
iii.      Budgeted
Balance Sheet
7. Identify six business categories that are required to register for GST
financial objectives.
create unique reports, and
conduct relevant research.
Information Contained in Each
Section
   Capital expenditure is a
organisation's purchases of fixed
assets. A company uses this
budget as a component of its
yearly budget, which is used to
plan its activities for the following
year.  
     The cash budget is a short-
term, internal-only financial plan
that is typically created once
each month. It serves as a tool to
assist the company in managing
its net working capital. The cash
budget displays to the company
how much cash will be available
at the end of each month or how
much it will need to borrow.
     A budgeted balance sheet
is a financial report that
estimates the assets, liabilities,
and equity of a company for the
foreseeable future. Inflation and,
presumably, capacity growth or
decline are taken into account
when calculating this estimated
value.
How This Information is
Used by Organisation to
Monitor Finances
Plan the budget for the
following year, Upgrades
to current assets, the
building of new buildings,
and the purchase of
equipment for new hires
  To determine if
business operations and
other activities will
generate enough cash to
fulfil anticipated cash
needs. If not,
management needs to
find more financing.
  It might expose certain
undesirable financial
circumstances that
management or
leadership would wish to
remain under wraps. It
serves as a crucial
mathematical check for
the precision of all the
other schedules and aids
founders in calculating a
number of crucial financial
ratios.
 a. Identify the six business categories that are required to register for GST.

i. When a company or venture has a GST turnover of $75,000 or more (gross

income from all enterprises minus GST).

ii. When a new firm is being launched and the revenue expectation will exceed
the GST level in the first year of operation.

iii. When a business reaches the GST threshold.   

iv. When a non-profit organisation generates at least $150,000 in GST revenue

annually.

v. A business which provides taxi or limousine travel for passengers (including

ride-sourcing) regardless of the GST turnover.

vi. When a company or a firm wants to collect gasoline tax credits.

7b. List the six actions the ATO requires a business qualified for GST to do.
 a. List the six actions the ATO requires a business qualified for GST to do.

i. Enrol in the GST.

ii. Ascertain whether the sales of their company are subject to taxation and
include GST in the calculation of taxable sales.

iii. Generate tax invoices for taxable sales and acquire tax invoices for commercial
purchases.

iv. Reclaiming GST credits for GST that was paid on business purchases. 

v. Record GST receipts and set aside GST funds for payment when due.

vi. Lodge activity statements or yearly reports to list sales and purchases, pay
GST, and then get a GST refund.

C. Identify how much time a business has to register for GST after qualifying.

When a business GST turnover exceeds the applicable threshold, it has 21 days to
register.

8. Australian Tax Office (ATO) requirements on Company Tax

a. Briefly explain how you can determine the amount of company tax your
 workplace/organisation is required to pay.
The sort of business your place of employment or organisation is determines the
amount of a corporation tax that must be paid:

- All businesses, corporate unit trusts, and public trading trusts are subject to the
entire company tax rate of 30 percent.

- Within a specific time frame, base rate organisations and small business entities
are subject to a lower company tax rate of 25%. The business organisation must
be one of the following in order to take advantage of the reduced company tax rate
of 25%: - Base rate Entities (2021-2022 income year)

b. Briefly explain the difference in the company tax that an Australian resident
company and a non-resident company is subject to.
- An Australian-resident business is subject to company tax at a rate decided
by the Australian government.

- A non-resident corporation pays the same amount of tax on its income with
an Australian source that a resident firm does. Under specific conditions,
such as industry or firm structure, taxable income and the tax rate may
differ.

9. Difference between PAYG instalments and PAYG withholding

a. Briefly explain the difference between PAYG instalments and PAYG withholding.
     PAYG instalment is a system that allows a business to meet their income tax
obligations through regular payments made throughout the year. Meanwhile,
PAYG withholding is a system that allows a business to withhold income tax from
an employee or contractor’s salary or wages and pay all these withheld amounts to
the ATO later. 

B. Complete the table below.

i. Identify the two ways a business can pay PAYG instalments.
ii. Briefly describe how a business can use each identified way to pay PAYG
instalments.
Way to Pay PAYG Instalments How to Use This Way to Pay PAYG
Instalments
     The Australian Taxation Office (ATO)
i.  Automatic entry
will enrol a business in the PAYG
instalment system if its income exceeds the
threshold when you file your income tax
return. They'll inform the company of:

- The methods you can choose from to

determine your instalment amount and the
frequency at which you must lodge and pay

- The ATO will immediately remove you

from the PAYG instalments system if your
income no longer matches the threshold.

     Planning beforehand might lower the

ii.  Voluntary entry 
company's risk of being hit with a big tax bill
after filing its tax return. If the business
owner is starting a new firm or hopes to turn
a profit, voluntary entry is an excellent idea.
The business owner can ask to enter the
PAYG instalment system by:

- online using my-Gov external if the

business owner is a sole trader.
- by calling the ATO on 13 28 66.
- through the registered tax or business
activity statement (BAS) agent.

C. Identify the four payments tax is withheld from under PAYG withholding.
i. Payments to employees, company directors and officeholders

ii. Payments to workers under a labour-hire agreement    

iii. Payments to other workers under voluntary agreements   

iv. Payments to business where an Australian Business Number (ABN) has not
been quoted in relation to a supply