Explain if the source of cash sustainable and list any


Investigate and discuss the importance of review and evaluation of financial performance planning monitoring.

Assessment description

This assessment requires candidates to answer the questions to demonstrate their knowledge and skills in regards to the effectiveness of financial management processes.

Procedure

1. Read the budgeted figures and complete the table.

2. Look for any outstanding variances and list possible reasons and preventive measures you would take.

3. Look at different scenarios and at the processes involved.

4. Complete an evaluation grid looking at improvements to processes.

5. Complete the short answer questions.

Specifications
• relevant skills are identified
• a demonstrated understanding of specific and transferable skills
• specific development opportunities are suggested.

Case study

Below are the 2008 budgeted cash flow figures from the Jolimont accountancy firm, as was the example in the workbook. Can you use the figures from the income statement below, to complete the actual figures for Jolimont accountancy firm for 2008? Look at where the cash for the company has come from and explain if this is a sustainable cash resource for the business. List any outstanding variances for the business and possibilities for the variances. What corrective measures would you put in place to help control these costs in the future?

The below table requires full completion. In the first part new actuals need to be calculated based on your recommendations of decreasing expenses.
The first 2008 column is the actuals and the second column is the predicted budget, the third is the variance that you calculate act-bud = variance

JOLIMONT ACCOUNTANCY FIRM

2008                      2008                     Total

$                          $                          $

Cash flows from operating activities

Collections from debtors                                                210,000

Collections from cash sales                                             160,000

Interest received                                                             2,300

Payments to creditors                                                  -121,000

Wages and salaries                                                       -16,000

Interest Payments                                                           -3,500

Other operating expenses paid                                         -17,000

Income tax paid                                                           -21,000

Total cash flows from operating expenses                          193,800

Cash flows from investing activities

Proceeds from sale of property

Payment for motor vehicle

Purchase of shares in Singh's Ltd                                     -12,000

Total cash flows from investing activities                              -12000

Cash from financing activities

Proceeds from call on shares                                               7,000

Loan from Abbotsford Mortgage Co.

Loan repayments                                                         -14,000

Dividends Paid                                                             -28,000

GST Collections                                                              12,400

GST Paid                                                                    -13,800

ATO-GST Settlement                                                         -1,400

Total cash flows from financing activities                           -36,400

Net change in cash                                                       145,400

Opening bank balance                                                   559,220

Closing bank balance                                                    704,620

Account

Debit

Credit

Cash flows from operating activity

 

 

Collections form debtors

180,000

 

Collections from cash sales

170,000

 

Interest received

2,300

 

Payments to creditors

 

139,000

Wages and salaries

 

21,000

Interest expense

 

10,900

Other operating expenses paid

 

48,120

Income tax paid

 

39,984

Total cash flow from operating activity

93,296

 

Cash flow from investing

 

18,000

Purchase of shares in Singh's Ltd

 

 

Total cash flow from investing activity

 

 

Cash flows from financing

21,000

 

Proceeds from call on shares

180,000

 

Loan from Abbotsford Mortgage Co.

 

23,000

Loan repayments

 

41,000

Dividends paid

16,000

 

GST collected

 

14,000

GST paid

 

2,000

ATO GST settlement (refund)

137,000

 

Total cash flow from financing activities

212,296

 

Net change in cash flows

559,220

 

Opening bank balance

771,516

 

Closing bank balance

 

 

1. Explain if the source of cash sustainable, and list any outstanding variances you have noticed below:3-4 variances required.

2. Now in the space provided, list the corrective measures you would implement and why:

Write down what processes and data you would analyse when looking at the following scenarios and write down any improvements you could include to ensure that the problem would be less likely to occur in the future. Using these improvements, complete the evaluation grid below.

1. An employee who has been paid too much annual leave:

2. A large tax liability owed to the ATO:

3. An inflated budgeted expense account:

4. A sales representative's overpaid bonus:

5. A large bank overdraft:

6. A trial balance that does not balance:

7. Overstated bad debts allowance:

8. Understated accounts payable:

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Explain if the source of cash sustainable and list any
Reference No:- TGS0993172

Expected delivery within 24 Hours