Prepare financial statements for non-reporting entities FNSACC414
- Subject Code :
FNSACC414
Assessment Task
Portfolio of Evidence
FNSACC414
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Unit Code/s & Name/s |
FNSACC414 Prepare financial statements for non-reporting entities |
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Assessment Name |
Assessment 1 |
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1 of 2 |
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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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PRIVACY STATEMENT: TAFE Queensland is collecting your personal information on this form for the purpose of assessment. In accordance with the Information Privacy Act 2009 (Qld), your personal information will only be accessed by staff employed by TAFE Queensland for the purposes of conducting assessment. Your information will not be provided to any other person or agency unless you have provided TAFE Queensland with permission, if authorised under our Privacy Policy (available at https://tafeqld.edu.au/global/privacy-policy.html) or disclosure is otherwise permitted or required by law. Your information will be stored securely. If you wish to access or correct any of your information, discuss how it has been managed or have a concern or complaint about the way the information has been collected, used, stored, or disclosed, please contact the TAFE Queensland Privacy Officer at privacy@tafeqld.edu.au |
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Instructions to Student |
This task requires that you complete book keeping activities for Clients following Policies and Procedures for GPC Bookkeeping Services. You are required to use task Templates and assessment paper using a font not smaller than 11 points. All templates to be modified to align with the policies and procedures. Tasks are completed in Students own time. There are no time restrictions and full access to notes and learning resources Interactions with team members or supervisors should be limited to general instructions and clarification or explanation of the assessment requirements. Materials to be supplied: Assessment Task Microsoft Excel template FNSACC414_AT2_TMP_TQM_V3 Policies and procedure document Assessment Marking Criteria Learning resources Work, Health and Safety: Follow TAFE Queensland Student Rules Access TAFE Queensland Student Services for any additional Conduct risk assessments prior to any assessment task to ensure the safety of all participants and the environment ensure an ergonomically safe work environment to complete all assessment tasks 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: Prepare financial statements and associated workings Explain and demonstrate understanding of different types of non-reporting entities and the organisational policies and procedures required for these entities |
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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 your marking criteria sheet (with personal details completed). Due Dates: Refer to Unit Study Guide Assessment to be submitted via: TAFE Queensland Learning Management System (Connect): https://connect.tafeqld.edu.au/d2l/login Username: 9 digit student number For Password: Reset password go to: |
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Instructions to Assessor |
This assessment is written based on client activities provided in the task sheet. The tasks are supported by a 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. |
Part A: Induction Activities
Youve recently been employed as a Bookkeeper for GPC Bookkeeping Services. As part of the induction process, you are required to compile a small report on the following items:
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1. Classify the following as Asset, liability, revenue, expenses or owners equity. |
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2. List three (3) Financial statements that business entities use on a regular basis. For each statement, explain at least two (2) advantages and at least two (2) disadvantages of using the statement. |
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3. What purpose do financial statements have for the following users: |
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4. Name the Governing body that issues Accounting Standards. |
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Australian Accounting Standards Board. |
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5. a) With reference to Statement of Accounting Concepts (SAC) 1 define a Reporting Entity and contrast it to a Non-Reporting Entity. |
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The Statement of Accounting Concepts define the concept of a reporting entity and establish a benchmark for the minimum required quality of financial reporting for these entities. It also defines the circumstances in which an entity should be defined as a reporting entity. Reporting entities are all entities (including economic entities) that are dependent on general purpose financial reports to make and evaluate decisions about the allocation of resources. These reports contain financial statements that follow all the requirements of the Australian Account Standard, and are designed to meet information needs of a wide range of users, and have high disclosure requirements. Entities that determine they do not meet the definition of a reporting entity, as per the Statement of Accounting Concepts, are able to prepare Special Purpose Financial Reports. While these do not meet the full requirements of the Australian Account Standards, they do provide adequate financial records. The main reporting benefit for non reporting entities, is being able to avoid the preparation of consolidated financial statements and disclosing related party transactions. https://www.aasb.gov.au/admin/file/content102/c3/SAC1_8-90_2001V.pdf |
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b) With reference to Corporations Act 2001 what is a reporting entity and contrast it to a |
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As per section 292 of the Corporations Act 2001, a reporting entity is: All disclosing entities All public companies All large proprietary companies All registered schemes Small proprietary companies, if controlled by a foreign company Small proprietary companies, who have Crowd Sourced Funding shareholders Small proprietary companies that have been directed to do so under S293 or S294. Any company that does not meet the above criteria is not required to produce annual financial reports as per the Corporations Act, but must maintain adequate financial records for at least seven years under S286. |
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c) Explain the reporting requirements for reporting entities and non-reporting entities. |
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d) Research online and complete the table below: |
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6. a) Identify two (2) key pieces of legislation affecting taxable transactions. b) For each legislation in a) summarise the key features / areas covered. Please provide at least four (4) features (All legislations names to be written in full including the year of incorporation). |
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Part B: Client 1 Activities
Our Client Delizios Delicatessen has provided a three year worth of financial data. Delizio asked for some ratio analysis work on his previous performance. He also requires information on how his small business performed against industry based on available industry information.
Delizios financial information has been extracted From Delizios MYOB software and copied into a Microsoft excel file FNSACC414_AT1_TMP_TQM_V3 as per GPC Bookkeeping Services policies and procedures
The financial data provided are comparative Profit and Loss and Balance Sheet figures for the 2020, 2021 and 2022 financial years.
Following the GPC Bookkeeping Services policies and procedures
You are required to:
- Complete the Liquidity, Profitability and Activity Ratio Calculations for Delizio using the Microsoft Excel template provided on the Part B tab. You have to write down the formulas in full for each ratio.
- Calculate the ratios listed on the sheet for the 2021 and 2022 financial years and record them on the sheet. Include all your workings for each ratio; and record all answers to 2 decimal places.
- Provide short comments on what the Liquidity, Profitability and Activity ratios indicate about the operation of Delizios business, the current position of the business and the future prospects. Also highlight any areas of concern on Delizios business performance.
- Delizio has also requested additional information on how his business is performing against similar Delicatessen businesses in Australia.
Using the Australian Tax Offices Small Business benchmark website:
Australian Taxation Office l 2021-22 benchmarks
Using the available data from the website above:
- Write down the Financial Year dates provided.
- Find the benchmark figures for a Delicatessen.
- Note down the following figures for a business with a turnover equivalent to Delizios:
- Average Cost of Sales
- Average total expenses.
- Gross Profit ratio
- Calculate the benchmark Gross Profit ratio using the calculation:
100% Average Cost of Sales
41%
- Compare the benchmark Gross Profit ratio calculated in i) to Delizios Gross Profit ratio previously calculated on your spreadsheet. Comment on Delizios performance compared to the industry standard (benchmark Gross Profit ratio).
Compared to the benchmark, Delizios Gross Profit ratio is lower than other businesses within their annual turnover range (250,001-$500,000) with a ratio of 33%
- Net Profit ratio
- Calculate the Benchmark Net Profit ratio using the calculation:
100% Average total expense
13%
- Compare the benchmark Net Profit ratio calculated in i) to Delizios Net Profit ratio previously calculated on your spreadsheet. Comment on Delizios performance compared to the industry standard (benchmark Net Profit ratio).
Delizios Net profit ratio is between 8-9%, much lower than the industry standard for these years of 13%.
- Write a short report to Delizio explaining the advantages and disadvantages (minimum of three) of using ratios and comparison techniques to analyse and present financial data.
Ensure the policies and procedures are followed in producing this report.
Delizio Delicatessen
Report Use of Ratios for reporting periods 2021/2022
Dear Client,
Gathering data for a business using ratios provides a quantitative analysis of the data you have provided within your financial statements. This method of reporting has its advantages and disadvantages including.
- Allows us to estimate budgets for your business by analysing previous trends
- Helps determine how efficiently your business is operation.
- Helps to compare your business to others based on industry benchmarks
The disadvantages of this method include:
- It can complicate financial statements with the use of rations and percentages.
- Ration analysis focuses on past information, while most business are focused on current and future data
Please review this information and reach out to me if you have any questions or concerns about future reporting.
Thank you,
Amy Townsend
Part C: Client 2 Activities
In the Microsoft excel file FNSACC414_AT1_TMP_TQM_V3 you have been provided with a summary of transactions for Henry & Henry for the year ended 30 June 2021 Extracted from their QuickBooks accounting Software.
Henry & Henry are a partnership providing legal services in South-East Queensland.
It has been noted that from financial information received there are missing files for accounts receivable (debtors) receipts and accounts records for payments to accounts payable (creditors). The client has confirmed that the records are missing from their end.
Henry & Henry have requested our services to prepare and produce annual cash flow statements in accordance with AASB 107 Statement of Cash Flows. Henry & Henry have to demonstrate (to their external stakeholders) their ability to meet their cash flow requirements.
IGNORE GST FOR THIS TASK.
Following GPC Bookkeeping Services Policies and Procedures, you are required to:
- In light of the missing client data, use the general Ledger reconstruction techniques to verify the amounts paid to accounts payable and cash received from Accounts receivable.
- a) Reconstruct the Account Receivable General Ledger Account and
- b) Reconstruct the Accounts Payable General Ledger Account.
- With verified amounts in part 1 workout the total receipts from customers and total Payments period.
- Prepare a Cash Flow Statement for the year ended 30 June 2021 in a form consistent with AASB 107.
- Prepare a Reconciliation of Net Profit with Net Cash Flows from Operating Activities.
All activities to be completed on the template provided.
End of Assessment
