FNSACC412 Prepare Operational Budgets
- Subject Code :
FNSACC412
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Unit Code/s & Name/s |
FNSACC412 Prepare Operational Budgets |
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Assessment Name |
Preparing budgets & Written tasks |
Assessment Task No. |
1 of 3 |
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Date submitted |
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Student Declaration:I declare that this assessment is my own work. Any ideas and comments made by other people have been acknowledged as references. I understand that if this statement is found to be false, it will be regarded as misconduct and will be subject to disciplinary action as outlined in the TAFE Queensland Student Rules. I understand that by emailing or submitting this assessment electronically, I agree to this Declaration in lieu of a written signature. |
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Student Signature |
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Instructions to Student |
General Instructions: This task requires you to answer the questions within this task, complete the spreadsheet and/or templates provided, and produce and present reports. Students are to complete this task in their own time, no time restrictions, and are allowed full access to notes and learning resources. In the Excel spreadsheet templates provided you are required to: Create the schedules required to: -Prepare a Budgeted Income Statement -Prepare a Cash Budget Determine budget KPIs Answer theory questions. Materials to be supplied: FNSACC412_AT1_TMP_TQOL_V2 - Excel spreadsheet template Appendix - Extract - Policies and Procedures. Work, Health and Safety: Students should observe the usual office Work, Health and Safety considerations whilst working on this assessment. Assessment Criteria: To achieve a satisfactory result, your assessor will be looking for your ability to demonstrate the following key skills/tasks/knowledge to an acceptable industry standard: Determine budget KPIs Prepare a Cash Budget and a Budgeted income statement Answer budget theory questions. Number of Attempts: You will receive up to two (2) attempts at this assessment task. Should your 1stattempt be unsatisfactory (U), your teacher will provide feedback and discuss the relevant sections / questions with you and will arrange a due date for the submission of your 2ndattempt. If your 2ndsubmission is unsatisfactory (U), or you fail to submit a 2ndattempt, you will receive an overall unsatisfactory result for this assessment task. Only one re-assessment attempt may be granted for each assessment task.For more information, refer to the Student Rules. |
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Submission details |
Insert your details on page 1 and sign the Student Declaration. Include this form with your submission, along with a copy of the marking criteria with personal information completed. Due date as advised in the Learning Management System Assessment to be submitted via TAFE Queensland Learning Management System: Username; 9 digit student number For Password: Reset password go to: https://passwordreset.tafeqld.edu.au/default.aspx |
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Instructions to Assessor |
This assignment is written based on prescribed text and additional online research. Students to complete all requirements listed in this assessment. This is an unsupervised written assessment. Assessment documents to be uploaded to Connect for marking. This is an untimed assessment. Students are allowed access to any notes, workbooks and the internet to complete the assessment. Students must complete their assessments as individuals Usual office WHS requirements should be met by students Physical conditions are at the students discretion Interactions with team members or supervisors should be limited to general instructions and clarification or explanation of the assessment requirements. Contingencies if conditions cannot be met are at the discretion of the Assessor. Please refer to marking guide to ensure consistency, validity and fairness of student outcomes. |
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Note to Student |
An overview of all Assessment Tasks relevant to this unit is located in the Unit Study Guide. |
Mandatory requirement:
Students are required to complete all Budgets on the provided Excel spreadsheet templates.
Please use supplementary resources and other accredited library and internet tools
Task 1
Management ofStaples Pty Ltdoperating in Retail business have provided you with the following information for the period 1 April - 31 July 2020. You are required to use the information to prepare a Budgeted Income Statement and Cash Budget.
Following a meeting with management and the business owners the following budget milestones were established.
(Note: Please refer to the Extract of Policies & Procedures in Appendix A on page 7)
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Accounts Balances 1 April |
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$ |
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Cash at Bank |
6,000 |
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Inventories |
21,800 |
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Accounts Receivable (net) |
12,000 |
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Prepaid Rent |
1,000 |
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Furniture & Equipment |
27,000 |
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Accumulated Depreciation - Furniture & Equipment |
4,600 |
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Plant & Machinery |
54,000 |
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Accumulated Depreciation - Plant & Machinery |
22,400 |
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Accounts Payable |
7,000 |
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Accrued Wages |
1,200 |
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Bank Loan |
48,000 |
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Share Capital |
30,000 |
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Retained Earnings |
8,600 |
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Totals |
$121,800 |
$121,800 |
Budgeted Sales:
April 25,000
May 27,000
June 20,000
July 23,500
- Cash Sales account for 50% of sales. Credit sales are collected 40% in the month of sale and 60% in the following month.
- Purchases are expected to be made at the rate of 55% of expected sales for each month and are purchased on credit. The company requires the monthly ending inventory balance to be $20,000 plus 25% of the next months purchases.
- Creditors are paid 20% in the month of purchase and 80% in the next month.
- Dividends are paid by the business at the rate of $4,000 per quarter.
- Rent on premises is $3,000 per quarter, paid on the last day of the first month of each quarter.
- Wages are normally paid as incurred and this will occur in the quarter ended 30 June. In the quarter ended 31 March, pay day fell on 25th March so 6 days wages were outstanding at 31 March and are yet to be paid. Wages are normally incurred at the rate of $5,000 per month.
- The following are paid as incurred: electricity $400 per month, interest on loan $180 per month and cleaning contractor $200 per month. The loan principal is paid at the rate of $2,000 per quarter.
- Depreciation is charged at 10% per annum on the cost of the furniture and equipment and 15% per annum on the cost of the plant and machinery.
- New machinery will be purchased for cash on 30th June for $10,000
Requirements:
- In an Excel spreadsheet template provided you are required to:
Complete the schedules required to:
- Prepare a Budgeted Income Statement
- Prepare a Cash Budget
(All other budgets and schedules provided in the template must be completed).
- Suggest 2 (two) ways to the management of Staples Pty Ltd. where the business is sensitive (prone) to changes in input data and provide 4 (four) KPIs.
Task 2 Research task:
(All answers to be typed in a word document)
Please use supplementary resources and other accredited library and internet tools
You are required to provide detailed responses including examples to support your explanations to questions below. One or two line responses will not be acceptable.
Instruction:
- Explain what is meant by the term Budget
Assume you are employed by a white goods distributor and have been asked to prepare a list of controllable (those things that the business can directly influence) and uncontrollable (those things that the business cant directly influence) factors that might affect the sales of refrigerators in the coming year. Supply a list for the next management meeting. You must supply at least 3 controllable and 3 uncontrollable factors. - Explain the principles of double-entry bookkeeping and how they affect the budgeting process. (approx..100 words).
With reference to Staples Pty Ltd s Policies and Procedure (Appendix A), what are the key features of organisational policies and procedures. In your response provide 4 critical procedures to be followed in preparing budgets for this organisation.
(Please refer to thePolicies & Procedures of Staples Pty Ltd in Appendix Aand describe 4 critical procedures to be followed in preparation of the budget).
APPENDIX A
EXTRACT - POLICIES & PROCEDURES
Procedure for Financial Administration and Budgeting
Policy
Staples Pty Ltd a Retail Business has implemented this policy to ensure that financial administration is completed in accordance with legal, ethical and accounting requirements.
Processing of financial transactions
All Employees must ensure financial transactions are recorded accurately and timely.
Confidentiality
Employees should perform their duties with honesty and integrity.
Financial Reporting
Financial statements should be prepared in accordance with the Australian Accounting Standards AASB101.
Accrual basis
All transactions should be prepared on an accruals basis and are based on historical costs.
GST
Staples Pty Ltd. is registered for GST and therefore must account for GST in all applicable transactions and on Financial Statements.
Budgets
Staples Pty Ltd budget process will include consultation and communication with managers from all departments.
Quantitative forecasting methods are applied using statistical measures to project future outcomes and trends. Forecasting techniques also include internal/controllable factors and external /uncontrollable factors. Final results are purely affected by the numbers inputted and therefore, a high degree of accuracy of financial reporting is required by the Board of Director.
Set Timelines
Budgets will be monitoredweeklyto identify all Key Performance Indicators.
All Budgets must be prepared 6 months prior to the start of the next financial year.
Budgetary Control
The Board of directors prepares a strategic plan for the future. This is the most important feature of a budgetary planning and control system. The plan enables the board of directors to:
- Look ahead, set out detailed plans to achieve the targets for each department, operation and (ideally) each manager, anticipate and give the organisation purpose and direction.
- Promote coordination and communication with the divisional mangers.
- Clearly define areas of responsibility, so all managers responsible for the budget are made accountable to achieve by using the management by exception principle for Variance reporting.
- budget targets for the operations under their personal control.
The Board of Directors applies control techniques by comparing actual results with budgets. Variances from the budget should be investigated. The reasons for the differences can be divided into controllable and non-controllable factors and prompt remedial action should be taken for variances.
The budgeting process is also used to motivate staff, improve resources allocation processes and time management by using the management by exception principle for Variance reporting.
Performance review
Significant performances (plus or minus 3%) and/or financial variances are to be reported monthly as a formal short report to the Board of directors. This report should include a description of the variance, the reasons behind it, the steps taken to remedy it (if required) and future steps to be taken to prevent the variance from recurring.
From the monthly variance reports, all significant variances a will be sent to the key manager who can exercise, monitor and find the reasons for the variance and make revisions to the budgets with the approval of the Board of directors
Key Performance Indicator (KPI), is another tool Staples Board of Directors use to keep track of a company's financial performance. KPIs are measures by which the Board can monitor its progress throughout a specified period of time, namely a financial year. The KPIs also help the directors to plan future spending. Focus in areas in the business that may need improvement, identify any opportunities and challenges and assess whether the customers are happy or not.
The KPIs fixed to monitor financial performance are:
- Revenue Growth
- Revenue per customer segment (credit and Cash),
- Profitability: Gross profit margins & Net profit margins
- Working Capital Ratio: Current Assets, Current Liabilities 2:1
- Debtors ageing
- Creditors ageing
- Net Cash Flow
Exceptional Circumstances
If circumstances arise internally/externally during the financial year, which may have a significant impact on current financial year budget estimates, a revised budget is to be prepared immediately for the Board of directors approval.
Errors and Omissions
All errors and omissions detected in financial reports must be referred to the company accountant or immediate supervisor before any corrections are attempted.
