Assessment - Manage budgets and forecasts
Q1. What are the major objectives of a budget system?
Q2. Describe the features of cash, revenues and expenditures. Give examples of each category with a linked budget objective.
Q3. Consider the first line example in this table. Complete the table describing the items listed in the first column by making selections from the following terms.
Category = Cash/ Revenue/ Expenditure or Capital
Financial Statement = Cash flow/ Financial performance/ Financial position/ Capital
Objective = Increase/ Report Revenue/ Manage Expenditures/ Cash and/or Capital
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Item
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Category
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Financial Statement
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Objective
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Sale of retail clothes by EFTPOS
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Revenue
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Financial performance
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Report Revenue
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Investment in five year project
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Replace chair in client waiting room
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Periodic transfers between bank accounts
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Sale of office building
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Community service fees
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Sale of office building
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Community service fees
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Q4. Explain how organisational goals determine the master budget.
Q5. You are responsible for the manufacturing budget preparation. What other forecast or budget/affects the raw materials budget and in what way? How would a growth in the sales forecast affect the raw materials budget? What will this growth mean to the budgeted statement of financial performance and what should be considered in terms of the capacity of the production department and costs across all departments?
Q6. The disability manager, Helene, is constantly asking you to increase her budget. You have explained to her on a number of occasions that the board has officially adopted the budget. What will you do if her request begins to take up too much of your time?
Q7. What accounting standard is relevant to the presentation of financial statements including budgets?
Q8. You present the financials at the annual general meeting. Separately list three groups of stakeholders you expect to be at this event. How should each group be treated/ what would you expect from them?
Q9. How can the sales forecast spreadsheet be used to show which period profit milestones occur?
Q10. How can management use budgets to encourage staff to meet profit/ sales milestones?
Q11. Describe the benefits of using graphs to explain budget spreadsheets.
Q12. Which budget is the GST amount transferred to:
a. For cash payment?
b. At the end of the period?
Q13. What needs to be covered when researching information for the cash flow budget?
Q14. Identify four factors of management intention in regard to the cash flow budget.
Q15. Who is legally responsible for supervising the budget?
Q16. Voyager is a Telco with an innovation that will generate it significant market share growth. This will result in many new customers in several new areas. Telco is aiming for much higher incomes. Consequently, it has adopted an organisational expansion policy seeking to maximise income. Voyager is about the revenue forecast but unsure of their total budget expenses.
Explain to Voyager executives the importance of considering related expenses and discuss some of their controls as planning for its aggressive revenue expansion policy
Q17. Describe how balances are transferred into and out of the budgeted statement of cash flows to explain the statement and how the closing cash is calculated.
Q18. How can timesheets assist the accountant to make the annual reporting timeline?
Q19. What is the budget calendar?
Q20. Describe how the accountant assists decision making by identifying budget trends.
Q21. What three steps should be undertaken when making assumptions about feasibility?
Q22. The business Challenger Co. is expanding. The marketing manager advises the junior accountant that a new sales region will double the revenue assumption and that there are no foreseeable expenditures. What is the significance of the revenue assumption to completing the sales forecast? What steps should the junior accountant take in preparing the assumption for the sales forecast?
Q23. What is unusual about the related expense assumption for Challenger's expansion?
Q24. List several criteria management might use to complete the project selection process
Q25. Prepare a budget versus actual variance analysis report for the end of March for the community services organisation Discoverer. They made an original assumption based on the respite manager's undertaking that a new food expense would be year to date $900 with the actual amount spent $2,700 at the 31.3.20XX. Include food for this month separately on the report for $300 actual and only $100 budgeted. Include whether the amount is favourable (F) or unfavourable (U), show the percentage (%).
Q26. Prepare a request for budget revision form to accompany the variance report. Note that the request is due to a new program which had an original incorrect assumption.
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Discoverer
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Management Assumption and Control worksheet
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Request for assumption revision/financial control use
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Budget name
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Account
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Food
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Expense budget
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Details
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Assumption/ recommended control
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Authorise and sign by
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Student name
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Date:
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Q27. How frequently should the budget review occur? Under what conditions is this different and when will the review occur in that case?
Q28. When are rolling budgets appropriate and inappropriate? What other factor must be considered when adopting a policy for using them?