BSBFIM601 Manage finances

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1 ADVANCED DIPLOMA OF BUSINESS BSB60215 Study Support materials for BSBFIM601 Manage finances STUDENT HANDOUT

2 ELEMENT Elements describe the essential outcomes. 1 Plan for financial management 2 Establish budgets and allocate funds PERFORMANCE CRITERIA Performance criteria describe the performance needed to demonstrate achievement of the element. 1.1 Review and analyse previous financial data to establish areas which have generated a profit or loss 1.2 Undertake research to review reasons for previous profit and loss 1.3 Review business plan to establish critical dates and initiatives that will require or generate resources in the next financial cycle 1.4 Analyse cash flow trends 1.5 Review statutory requirements for compliance and liabilities for tax 1.6 Review existing software and its suitability for financial management 2.1 Use previous financial data to determine allocations for resources 2.2 Make informed estimates of new items for inclusion in budget 2.3 Prepare budgets in accordance with organisational requirements and statutory requirements 3 Implement budgets 3.1 Circulate budgets and ensure managers and supervisors are clear about budgets, reporting requirements and financial delegations 3.2 Manage risks by checking there are no opportunities for misappropriation of funds and that systems are in place to properly record all financial transactions 3.3 Review profit and loss statements, cash flows and ageing summaries 3.4 Revise budgets, as required, to deal with contingencies 3.5 Maintain audit trails to ensure accurate tracking and to identify discrepancies between agreed and actual allocations 3.6 Ensure compliance with due diligence 4 Report on finances 4.1 Ensure structure and format of reports are clear and conform to organisational and statutory requirements 4.2 Identify and prioritise significant issues in statements, including comparative financial performances for review and decision making 4.3 Prepare recommendations to ensure financial viability of the organisation 4.4 Evaluate the effectiveness of financial management processes

3 Financial planning and control mechanisms In a financial report three statements are needed these are the balance sheets, cash flow statements and income statements. Examples are provided below for Clearwater Pty Ltd. STANDARD SET OF FINANCIALS Documents include: 1. Profit and Loss as at 30 June Profit and Loss July 2014 to June Profit and Loss June 2015 with YTD 4. Balance Sheet as at 30 June Accounts List 6. General Ledger for June Trial Balance 8. Aged Receivables 9. Aged Payables 1. PROFIT AND LOSS AS AT 20 JUNE 2014

4 Clearwater Pty Ltd Profit & Loss Statement June 2014 Income Cost Of Sales Gross Profit $0.00 Expenses General & Admin Expenses Accounting Fees $9.09 Payroll Expenses Superannuation $ Wages & Salaries $4, Total Expenses $4, Operating Profit ($4,830.25) Other Income Other Expenses Net Profit/(Loss) ($4,830.25)

5 2. PROFIT AND LOSS JULY 2014 TO JUNE 2015 Clearwater Pty Ltd Profit & Loss Statement July 2014 through June 2015 Income Sales Income Sales - Spring Water $7, Sales - Carbonated Water $6, Sales - Water Cooler $38, Sales - Crock $5, Sales - Stands $1, Sales - Other Equip $9, Service Income Service - Coolers $1, Service - Other Income $1, Time Billing Income Travelling Time $ Total Income $72, Cost Of Sales Purchases Equipment $31, Total Cost Of Sales $31, Gross Profit $41, Expenses General & Admin Expenses Accounting Fees $ Advertising $9, Bank Charges $ Depreciation $ Office Supplies $1, Subscriptions $ Operating Expenses Car Expenses $2, Cleaning $ Electricity $2, Insurance $ Office Rental $8, Other Operating Expenses $ Photocopy $ Postage $7.50 Printing $ Telephone $1, Payroll Expenses Superannuation $6, Wages & Salaries $70, Total Expenses $106, Operating Profit ($64,636.66) Other Income Interest Income $26.80 Miscellaneous Income $62, Total Other Income $62,048.41

6 Other Expenses Private Use $ Total Other Expenses $ Net Profit/(Loss) ($2,734.25)

7 3. PROFIT AND LOSS JUNE 2015 WITH YEAR TO DATE Clearwater Pty Ltd Profit & Loss [With Year to Date] June 2015 Selected Period % of Sales Year to Date % of YTD Sales Income Sales Income Sales - Spring Water $0.00 NA $7, % Sales - Carbonated Water $0.00 NA $6, % Sales - Water Cooler $0.00 NA $38, % Sales - Crock $0.00 NA $5, % Sales - Stands $0.00 NA $1, % Sales - Other Equip $0.00 NA $9, % Service Income Service - Coolers $0.00 NA $1, % Service - Other Income $0.00 NA $1, % Time Billing Income Travelling Time $0.00 NA $ % Total Income $0.00 NA $72, % Cost Of Sales Purchases Equipment $0.00 NA $31, % Total Cost Of Sales $0.00 NA $31, % Gross Profit $0.00 NA $41, % Expenses General & Admin Expenses Accounting Fees $9.09 NA $ % Advertising $0.00 NA $9, % Bank Charges $0.00 NA $ % Depreciation $0.00 NA $ % Office Supplies $0.00 NA $1, % Subscriptions $0.00 NA $ % Operating Expenses Car Expenses $0.00 NA $2, % Cleaning $0.00 NA $ % Electricity $0.00 NA $2, % Insurance $0.00 NA $ % Office Rental $0.00 NA $8, % Other Operating $0.00 NA $ % Expenses Photocopy $0.00 NA $ % Postage $0.00 NA $ % Printing $0.00 NA $ % Telephone $0.00 NA $1, % Payroll Expenses Superannuation $ NA $6, % Wages & Salaries $4, NA $70, % Total Expenses $4, NA $106, % Operating Profit ($4,830.25) NA ($64,636.66) %

8 Other Income Interest Income $0.00 NA $ % Miscellaneous Income $0.00 NA $62, % Total Other Income $0.00 NA $62, % Other Expenses Private Use $0.00 NA $ % Total Other Expenses $0.00 NA $ % Net Profit/(Loss) ($4,830.25) NA ($2,734.25) -3.80%

9 4. BALANCE SHEET AS AT 20 JUNE 2015 Clearwater Pty Ltd Balance Sheet As of June 2015 Assets Current Assets General Cheque Account 1 $97, General Cheque Account 2 $150, Clearwater Provision Account $64, Clearwater Investment Account $20, Electronic Clearing Account ($31,954.87) Payroll Cheque Account ($14,953.48) Inventory $22, Trade Debtors $8, Total Current Assets $314, Withholding Credits Voluntary Withholding Credits $ Total Withholding Credits $ Furniture & Fittings F & F - At Cost $1, Total Furniture & Fittings $1, Total Assets $316, Liabilities Current Liabilities Payroll Liabilities PAYG Withholdings Payable $18, Superannuation Payable $9, Total Payroll Liabilities $27, Trade Creditors $31, Total Current Liabilities $59, GST Liabilities GST Collected $13, GST Paid ($7,659.47) Sales Tax Payable $ Voluntary Withholdings Payable $ ABN Withholding Payable $1, Luxury Car Tax Payable $2, Total GST Liabilities $10, Total Liabilities $69, Net Assets $247, Equity Current Earnings ($2,734.25) Historical Balancing Account $250, Total Equity $247,265.75

10 5. ACCOUNTS LIST Clearwater Pty Ltd Accounts List [Detail] As of 30/06/2015 Account # Account Type Dr/Cr Header/Detail Level Balance Tax Code Assets Asset Debit Header 1 $316, Current Assets Asset Debit Header 2 $314, General Cheque Account 1 Bank Debit Detail 3 $97, N-T General Cheque Account 2 Bank Debit Detail 3 $150, N-T Clearwater Provision Account Bank Debit Detail 3 $64, N-T Clearwater Investment Bank Debit Detail 3 $20, N-T Account Electronic Clearing Account Bank Debit Detail 3 -$31, N-T Payroll Cheque Account Bank Debit Detail 3 -$14, N-T Inventory Other Debit Detail 3 $22, N-T Asset Trade Debtors Accounts Debit Detail 3 $8, N-T Receivable Withholding Credits Asset Debit Header 2 $ Voluntary Withholding Credits Other Debit Detail 3 $ N-T Asset Furniture & Fittings Asset Debit Header 2 $1, F & F - At Cost Other Asset Debit Detail 3 $1, N-T Liabilities Credit Header 1 $69, Current Liabilities Credit Header 2 $59, Payroll Liabilities Credit Header 3 $27, PAYG Withholdings Payable Other Credit Detail 4 $18, N-T Superannuation Payable Other Credit Detail 4 $9, N-T Trade Creditors Accounts Credit Detail 3 $31, N-T Payable GST Liabilities Credit Header 2 $10, GST Collected Other Credit Detail 3 $13, N-T GST Paid Other Credit Detail 3 -$7, N-T Sales Tax Payable Other Credit Detail 3 $ N-T Voluntary Withholdings Other Credit Detail 3 $ N-T Payable ABN Withholding Payable Other Credit Detail 3 $1, N-T Luxury Car Tax Payable Other Credit Detail 3 $2, N-T Equity Equity Credit Header 1 $247, Current Earnings Equity Credit Detail 2 -$2, N-T Historical Balancing Account Equity Credit Detail 2 $250, N-T Income Income Credit Header 1 $72, Sales Income Income Credit Header 2 $68, Sales - Spring Water Income Credit Detail 3 $7, GST Sales - Carbonated Water Income Credit Detail 3 $6, GST Sales - Water Cooler Income Credit Detail 3 $38, GST

11 Sales - Crock Income Credit Detail 3 $5, GST Sales - Stands Income Credit Detail 3 $1, GST Sales - Other Equip Income Credit Detail 3 $9, GST Service Income Income Credit Header 2 $3, Service - Coolers Income Credit Detail 3 $1, GST Service - Other Income Income Credit Detail 3 $1, GST Time Billing Income Income Credit Header 2 $ Travelling Time Income Credit Detail 3 $ GST Cost Of Sales Cost of Sales Purchases Cost of Sales Equipment Cost of Sales Debit Header 1 $31, Debit Header 2 $31, Debit Detail 3 $31, N-T Expenses Expense Debit Header 1 $106, General & Admin Expenses Expense Debit Header 2 $12, Accounting Fees Expense Debit Detail 3 $ GST Advertising Expense Debit Detail 3 $9, GST Bank Charges Expense Debit Detail 3 $ GST Depreciation Expense Debit Detail 3 $ GST Office Supplies Expense Debit Detail 3 $1, GST Subscriptions Expense Debit Detail 3 $ GST Operating Expenses Expense Debit Header 2 $16, Car Expenses Expense Debit Detail 3 $2, GST Cleaning Expense Debit Detail 3 $ GST Electricity Expense Debit Detail 3 $2, GST Insurance Expense Debit Detail 3 $ GST Office Rental Expense Debit Detail 3 $8, GST Other Operating Expenses Expense Debit Detail 3 $ GST Photocopy Expense Debit Detail 3 $ N-T Postage Expense Debit Detail 3 $7.50 GST Printing Expense Debit Detail 3 $ GST Telephone Expense Debit Detail 3 $1, GST Payroll Expenses Expense Debit Header 2 $6, Superannuation Expense Debit Detail 3 $6, N-T Wages & Salaries Expense Debit Detail 2 $70, N-T Other Income Other Income Interest Income Other Income Miscellaneous Income Other Income Other Expenses Other Expense Private Use Other Expense Credit Header 1 $62, Credit Detail 2 $26.80 N-T Credit Detail 2 $62, N-T Debit Header 1 $ Debit Detail 2 $ N-T

12 6. GENERAL LEDGER FOR JUNE 2010 Clearwater Pty Ltd General Ledger [Summary] 1/06/2015 To 30/06/2015 Acct# Account Name Beginning Balance Total Debit Total Credit Net Activity Ending Balance General Cheque Account 1 $97, $0.00 $0.00 $0.00 $97, General Cheque Account 2 $150, $0.00 $0.00 $0.00 $150, Petty Cash $0.00 $0.00 $0.00 $0.00 $ Clearwater Provision Account $64, $0.00 $0.00 $0.00 $64, Clearwater Investment $20, $0.00 $0.00 $0.00 $20, Account Undeposited Funds $0.00 $0.00 $0.00 $0.00 $ Electronic Clearing Account $29,069.79cr $0.00 $2, $2,885.08cr $31,954.87cr Payroll Cheque Account $14,953.48cr $0.00 $0.00 $0.00 $14,953.48cr Less Prov'n for Doubtful $0.00 $0.00 $0.00 $0.00 $0.00 Debts Inventory $22, $0.00 $0.00 $0.00 $22, Prepaid Insurance $0.00 $0.00 $0.00 $0.00 $ Deposits with Suppliers $0.00 $0.00 $0.00 $0.00 $ Trade Debtors $8, $0.00 $0.00 $0.00 $8, Voluntary Withholding $ $0.00 $0.00 $0.00 $ Credits ABN Withholding Credits $0.00 $0.00 $0.00 $0.00 $ F & F - At Cost $1, $0.00 $0.00 $0.00 $1, F & F - Accum Dep'n $0.00 $0.00 $0.00 $0.00 $ P & E - At Cost $0.00 $0.00 $0.00 $0.00 $ P & E - Accum Dep'n $0.00 $0.00 $0.00 $0.00 $ M V - At Cost $0.00 $0.00 $0.00 $0.00 $ M V - Accum Dep'n $0.00 $0.00 $0.00 $0.00 $ Computer Equipment $0.00 $0.00 $0.00 $0.00 $0.00 Original Computer Equipment Accum $0.00 $0.00 $0.00 $0.00 $0.00 Dep'n American Express $0.00 $0.00 $0.00 $0.00 $ Bank Card $0.00 $0.00 $0.00 $0.00 $ Master Card $0.00 $0.00 $0.00 $0.00 $ Visa Card $0.00 $0.00 $0.00 $0.00 $ PAYG Withholdings Payable $16,939.00cr $0.00 $1, $1,148.00cr $18,087.00cr Payroll Deductions Payable $0.00 $0.00 $0.00 $0.00 $ Superannuation Payable $8,957.46cr $0.00 $ $798.08cr $9,755.54cr Union Fees Payable $0.00 $0.00 $0.00 $0.00 $ Workers Compensation $0.00 $0.00 $0.00 $0.00 $0.00 Payable Deposits Collected $0.00 $0.00 $0.00 $0.00 $ Trade Creditors $31,408.75cr $0.00 $0.00 $0.00 $31,408.75cr Bank Loans $0.00 $0.00 $0.00 $0.00 $ Other Long Term Liabilities $0.00 $0.00 $0.00 $0.00 $ GST Collected $13,212.23cr $0.00 $0.00 $0.00 $13,212.23cr GST Paid $7, $0.91 $0.00 $0.91 $7, Sales Tax Payable $257.51cr $0.00 $0.00 $0.00 $257.51cr Import Duty Payable $0.00 $0.00 $0.00 $0.00 $ Voluntary Withholdings $391.00cr $0.00 $0.00 $0.00 $391.00cr Payable ABN Withholding Payable $1,291.00cr $0.00 $0.00 $0.00 $1,291.00cr Luxury Car Tax Payable $2,752.96cr $0.00 $0.00 $0.00 $2,752.96cr

13 Payroll Liabilities $0.00 $0.00 $0.00 $0.00 $ Retained Earnings $0.00 $0.00 $0.00 $0.00 $ Current Earnings $2,096.00cr $0.00 $0.00 $0.00 $2,096.00cr Historical Balancing Account $250,000.00cr $0.00 $0.00 $0.00 $250,000.00cr Sales - Spring Water $7,397.13cr $0.00 $0.00 $0.00 $7,397.13cr Sales - Carbonated Water $6,194.86cr $0.00 $0.00 $0.00 $6,194.86cr Sales - Water Cooler $38,702.81cr $0.00 $0.00 $0.00 $38,702.81cr Sales - Crock $5,709.10cr $0.00 $0.00 $0.00 $5,709.10cr Sales - Stands $1,334.54cr $0.00 $0.00 $0.00 $1,334.54cr Sales - Other Equip $9,492.73cr $0.00 $0.00 $0.00 $9,492.73cr Freight $0.00 $0.00 $0.00 $0.00 $ Service - Coolers $1,628.90cr $0.00 $0.00 $0.00 $1,628.90cr Service - Other Income $1,890.44cr $0.00 $0.00 $0.00 $1,890.44cr Consultancy Income $0.00 $0.00 $0.00 $0.00 $ Travelling Time $312.94cr $0.00 $0.00 $0.00 $312.94cr Secretarial Income $0.00 $0.00 $0.00 $0.00 $ Km Travelled $0.00 $0.00 $0.00 $0.00 $ Photocopying Income $0.00 $0.00 $0.00 $0.00 $ Equipment $31, $0.00 $0.00 $0.00 $31, Water $0.00 $0.00 $0.00 $0.00 $ Discounts Given $0.00 $0.00 $0.00 $0.00 $ Inventory Adjustment $0.00 $0.00 $0.00 $0.00 $ Purchase Returns & $0.00 $0.00 $0.00 $0.00 $0.00 Allowance Accounting Fees $ $9.09 $0.00 $9.09 $ Advertising $9, $0.00 $0.00 $0.00 $9, Bad Debts $0.00 $0.00 $0.00 $0.00 $ Bank Charges $ $0.00 $0.00 $0.00 $ Depreciation $ $0.00 $0.00 $0.00 $ Discounts Taken $0.00 $0.00 $0.00 $0.00 $ Freight Paid $0.00 $0.00 $0.00 $0.00 $ Late Fees Paid $0.00 $0.00 $0.00 $0.00 $ Office Supplies $1, $0.00 $0.00 $0.00 $1, Other General Expenses $0.00 $0.00 $0.00 $0.00 $ Subscriptions $ $0.00 $0.00 $0.00 $ Repair & Maintenance $0.00 $0.00 $0.00 $0.00 $ Car Expenses $2, $0.00 $0.00 $0.00 $2, Cleaning $ $0.00 $0.00 $0.00 $ Electricity $2, $0.00 $0.00 $0.00 $2, Insurance $ $0.00 $0.00 $0.00 $ Office Rental $8, $0.00 $0.00 $0.00 $8, Other Operating Expenses $ $0.00 $0.00 $0.00 $ Photocopy $ $0.00 $0.00 $0.00 $ Postage $7.50 $0.00 $0.00 $0.00 $ Printing $ $0.00 $0.00 $0.00 $ Telephone $1, $0.00 $0.00 $0.00 $1, Wages & Salaries $0.00 $0.00 $0.00 $0.00 $ Other Employment Expenses $0.00 $0.00 $0.00 $0.00 $ Superannuation $5, $ $0.00 $ $6, Penalties $0.00 $0.00 $0.00 $0.00 $ Sub-Contractors $0.00 $0.00 $0.00 $0.00 $ Workers Compensation $0.00 $0.00 $0.00 $0.00 $ Wages & Salaries $65, $4, $0.00 $4, $70, Employment Expenses $0.00 $0.00 $0.00 $0.00 $ Interest Income $26.80cr $0.00 $0.00 $0.00 $26.80cr Miscellaneous Income $62,021.61cr $0.00 $0.00 $0.00 $62,021.61cr Interest Expense $0.00 $0.00 $0.00 $0.00 $ Income Tax Payable $0.00 $0.00 $0.00 $0.00 $ Private Use $ $0.00 $0.00 $0.00 $ $4, $4,831.16

14 7. TRIAL BALANCE Clearwater Pty Ltd Trial Balance June 2015 Account Debit Credit YTD Debit YTD Credit General Cheque Account 1 $0.00 $97, General Cheque Account 2 $0.00 $150, Clearwater Provision Account $0.00 $64, Clearwater Investment Account $0.00 $20, Electronic Clearing Account $2, $31, Payroll Cheque Account $0.00 $14, Inventory $0.00 $22, Trade Debtors $0.00 $8, Voluntary Withholding Credits $0.00 $ F & F - At Cost $0.00 $1, PAYG Withholdings Payable $1, $18, Superannuation Payable $ $9, Trade Creditors $0.00 $31, GST Collected $0.00 $13, GST Paid $0.91 $7, Sales Tax Payable $0.00 $ Voluntary Withholdings Payable $0.00 $ ABN Withholding Payable $0.00 $1, Luxury Car Tax Payable $0.00 $2, Historical Balancing Account $0.00 $250, Sales - Spring Water $0.00 $7, Sales - Carbonated Water $0.00 $6, Sales - Water Cooler $0.00 $38, Sales - Crock $0.00 $5, Sales - Stands $0.00 $1, Sales - Other Equip $0.00 $9, Service - Coolers $0.00 $1, Service - Other Income $0.00 $1, Travelling Time $0.00 $ Equipment $0.00 $31, Accounting Fees $9.09 $ Advertising $0.00 $9, Bank Charges $0.00 $ Depreciation $0.00 $ Office Supplies $0.00 $1, Subscriptions $0.00 $ Car Expenses $0.00 $2, Cleaning $0.00 $ Electricity $0.00 $2, Insurance $0.00 $ Office Rental $0.00 $8, Other Operating Expenses $0.00 $ Photocopy $0.00 $ Postage $0.00 $7.50 Printing $0.00 $ Telephone $0.00 $1, Superannuation $ $6, Wages & Salaries $4, $70, Interest Income $0.00 $26.80 Miscellaneous Income $0.00 $62, Private Use $0.00 $ Total: $4, $4, $508, $508,776.20

15 8. AGED RECEIVABLES Clearwater Pty Ltd Aged Receivables [Summary] 30/06/2015 Name Total Due A-Z Stationery Supplies $1, $0.00 $20.25 $0.00 $1, James Cameron $2, $0.00 $0.00 $0.00 $2, Cash Sales ($269.50) $0.00 $0.00 $0.00 ($269.50) Chelsea Mosset ($162.50) $0.00 $0.00 $0.00 ($162.50) Chris Davis $ $0.00 $0.00 $0.00 $ Footloose Dance Studio $ $0.00 $0.00 $0.00 $ Island Way Motel $2, $0.00 $0.00 $0.00 $2, Leisure Landscape Nursery $ $0.00 $0.00 $0.00 $ My Town Reality $ $0.00 $0.00 $0.00 $ The Motor Company $ $0.00 $0.00 $ $0.00 Total: $8, $0.00 $20.25 $ $7, Ageing Percent: $0.00 $0.00 $0.10 $ AGED PAYABLES Clearwater Pty Ltd Aged Payables [Summary] 30/06/2015 Name Total Due Clear & Bright Filters $ $0.00 $0.00 $0.00 $ Curbys Super Stands $ $0.00 $0.00 $0.00 $ Huston & Huston Packaging $ $0.00 $0.00 $0.00 $ Mojo Advertising $1, $0.00 $0.00 $0.00 $1, Mountain Spring $8, $0.00 $0.00 $0.00 $8, Underwater Springs Pty Ltd $20, $0.00 $0.00 $0.00 $20, Total: $31, $0.00 $0.00 $0.00 $31, Ageing Percent: $0.00 $0.00 $0.00 $1.00

You will also have to reconcile the superannuation and donations for June.

PART C Report on Payroll Activities [see next page] Task 13: Using your Payroll Checklist, reconcile wages, deductions and superannuation for the year. [see attached] You will also have to reconcile the