Assessment- Organise finances for the micro business
Please complete the following activities for marking. This forms part of your assessment for BSBSMB303: Organise finances for the micro business.
The following documents are related to this document.
- Unit of Competency
- Learner Guide
The activity is to be completed and uploaded to Accit Moodle. You are required to research and demonstrate a range of tasks to your teacher or assessor to show that you have the skills to meet the requirements of the unit. Specifically, you must satisfactorily complete each of the following tasks to demonstrate some of the required skills for this unit. You will need to demonstrate that you can apply the concepts discussed. You must also be prepared for further questioning from your teacher or assessor. All work in this activity must be your own, and any material taken from another source must be acknowledged. You will need to access to a computer with internet access to complete this activity. Feedback will be received from the trainer through Moodle.
Part 1
Question 1
Objective
To provide you with an opportunity to ascertain own financial position and ability to provide capital or equity for the business
Question
List the obligations that you as a micro business owner have to yourself and your family
List the obligation that you as a small business owner feel you should give your community and your industry
List two types of equity financing and outline the advantages and disadvantages.
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Type of equity financing
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Advantages
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Disadvantages
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Question 2
Objective
To provide you with an opportunity to determine level of forecast business activity over a year and the business mix.
Question
List the factors which could be taken into account when forecasting at the level of business activity
A forecast is only as good as assumption on which it is based. Explained
George wants to forecast for his business for the next 12 months. He estimates that next year the costs of goods sold will increase by 5% and delivery charges will increase by the same amount. He also expects to pay an extra 10% commission on sales. In addition, Bill estimates that all fixed cost will increase by 2% from current levels. Using this information and the information contained in the following table, complete Bill's forecast of the cost for next year.
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Cost Category
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Cost this year
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Projected cost for next year
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Variable costs:
Cost of goods sold
Sales commission
Delivery charges
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$230,934
$58,852
$13984
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Fixed cost:
Advertising
Depreciation
Insurance
Payroll taxes
Rent
Utilities
Wages
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$1,850
$13,250
$5,400
$8,200
$9,600
$17,801
$40,000
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Total Cost
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$399,871
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If George expects his business to generate an income of $400,000 next year, will the business be financially viable? If not, how much additional funding will the business need?
Question 3
Objective
To provide you with an opportunity to estimate establishment costs for the business and repayment schedule for borrowings.
Question
Choose a business idea. List the establishment costs that would be required to establish the business. Do not provide figures just the cost name.
List 5 factors which could affect the amount of investment of micro business requires
Sam and Jill have formed a partnership and intend opening a florist shop. Under each of the following headings, list a minimum of three items that they must consider when calculating their start-up costs.
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Business Setup
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Business premises
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Marketing
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Materials/ supplies/ consumables
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Staffing
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Question 4
Objective
To provide you with an opportunity to identify and calculate monthly variable and fixed costs needed to conduct business activity over a year.
Question
Choose a well-known business using the following headings list the operating cost that you think this business would incur:
• Fixed costs
• Variable costs
• Mixed/semi-variable costs
• Step costs or semi fixed costs
There is no need to undertake research specific to the business or to provide actual figures. Simply list the cost name.
List the name of each type of cost which is described.
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Description
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Type of cost
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This cost will not change regardless of the output of the business
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These costs contain a fix portion which is incurred even when the facility is unused and a variable portion that increases with usage
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These costs remain the same over a certain output level but increase to a higher level once a specific level of output has been reached
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These costs change depending on the output of the business
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What factors might impact on the ongoing costs of a business? Give examples.
Question 5
Objective
To provide you with an opportunity to understand and estimate personal drawings needed from the business.
Question
What are personal drawings?
List some items which a business owner could consider when estimating the personal drawings needed to be taken from the business
Question 6
Objective
To provide you with an opportunity to estimate monthly income generated by the business for a year, based on price per unit item or hourly charge rate for labour.
Question
Juliet started his own private investigation business he intense to charge $100 per hour to undertake surveillance services and $60 for general security work each month he expects to work 50 hrs on surveillance work and 30 hours on general security task he also intends to sell surveillance equipment such as listening device and telescopic lenses he expects to sell 20 listening devices at $100 each and 20 telescopic lens is at 150 each.
Using this method what is her likely monthly income
Question 7
Objective
To provide you with an opportunity to develop a cash flow budget for the first year of business operation and its benefit.
Question
Explain the benefits of regularly comparing a cash flow budget to actual cash flow
Complete the following table with details of:
• Total cash inflows for each month
• Total cash outflows for each month
• Opening cash balance for each month (the opening balance for January is $15,000)
• The closing cash balance for each month
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January 20XX
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February 20XX
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March 20XX
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April 20XX
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May 20XX
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June 20XX
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Cash inflows
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Revenue from product sales
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$40000
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$38000
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$35000
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$25000
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$15000
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$12000
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Revenue from service sales
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$8000
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$8000
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$8000
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$6000
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$5000
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$3000
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Total cash inflows
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Cash outflows
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Cash payments to trade suppliers
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$10000
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$9000
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$8000
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$7000
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$7000
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$6500
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Management draws
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$2000
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$2000
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$2000
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$2000
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$2000
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$4000
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Salaries and wages
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$4000
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$3000
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$2000
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$2000
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$2000
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$2000
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Promotion expense
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$0
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$0
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$200
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$500
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$500
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$500
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Professional fees
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$0
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$0
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$0
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$500
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$0
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$400
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Rent/mortgage payments
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$2000
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$2000
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$2000
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$2000
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$2000
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$2000
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Insurance paid
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$1000
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$1000
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$1000
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$1000
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$1000
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$1000
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Telecommunications payments
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$400
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$400
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$370
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$350
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$340
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$320
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Utilities payments
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$300
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$300
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$300
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$300
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$300
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$300
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Major purchases
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$0
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$0
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$0
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$17000
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$0
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$0
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Total cash outflows
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Reconciliation of cash flow
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Opening cash balance
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$15000
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Add: total cash inflow
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Deduct: total cash outflow
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Closing cash balance
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Using your calculations from the previous table, answer weather each of the following statement is true or false.
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Statement
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True or false
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There were some months in which the business did not have enough funds to pay expenses.
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The closing cash balance in April was higher than the closing cash balance in March.
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If the business owner spent $20,000 on trade suppliers in May, this could indicate something is not right with the business.
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Due to the decrease in sales throughout the first six months of the year, the business had a lower cash balance at the end of June that it had at the beginning of January.
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Question 8
Objective
To provide you with an opportunity toseek professional advice to estimate goods and services tax and operating finance required for the business.
Question
Even though there is an upfront cost associated with using a professional adviser you can potentially save a micro business a lot of money. Explain why.
List 5 organisations which could provide professional advice on GST or operating finance.
Question 9
Objective
To provide you with an opportunity to estimate required funding to establish and run the business based on expected sales and activity levels, available finances and commitments.
Question
Why is it important to estimate required funding to establish and operate a business?
You and a partner operate a micro business. Explain the steps you can take to ensure that you work together effectively to organise finances for your business.
Question 10
Objective
To provide you with an opportunity to investigate methods of accessing alternative sources of finance.
Question
Create a step by step process for investigating and securing finance for a micro business.
Other than Equity financing what are some alternative source of financing.
Explain the advantages and disadvantages of using a regulated lender such as a bank or Credit Union.
Question 11
Objective
To provide you with an opportunity to identify strategies for meeting financial obligations.
Question
List five financial obligation of a business.
List four strategies which will help the business owners to meet financial obligations.
Question 12
Objective
To provide you with an opportunity to implement plans to access available funds as required.
Question
What are three of the costs associated with securing Finance?
Question 13
Objective
To provide you with an opportunity to monitor business profitability.
Question
Use the following representation of an invoice to answer the questions.
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Tax invoice
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17 July 20XX
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Rupert's Bakery
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ABN 88 999 000 222
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32 Old Main Road
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Teal Town
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Phone 4565 4321
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- Daily Teal Town Newspaper
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$1.50
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Milk
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$3.00
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Apples
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$1.75
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$2.00
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Total
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$8.25
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Cash
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$9.00
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Change
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$0.75
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Total GST paid
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$0.35
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Is the invoice a tax invoice?
What is the suppliers ABN?
How much GST is included in this invoice?
Were all items taxed?
Part 2
Project
Objective To provide you with an opportunity to demonstrate your knowledge of the entire unit.
Project For this assessment, you are to create report for your Bed and Breakfast business (±1500 words). You could work in a small group of 2 - 3 people and your reportshould be submitted to ACCIT Moodle.
You want to start a bed and breakfast establishment using a property you own on Kangaroo Island. You estimate that it will cost approximately $80,000to establish and operate the business for the first year. You forecast that you will generate $40,000 in income during that time.
You determine that you will need to obtain funds from an external source. Who will you approach to provide funds? What are the advantages or disadvantages of choosing that method? What are the costs of obtaining that type of finance?
• Prepare a statement which you will provide to the person or organisation you will approach to provide funds in which you:
• Provide details of your own personal financial situation and list any commitments which you have incurred which could affect your ability to invest money or time in your business venture
• Estimate the personal drawings you will need to take from the business
• Give information about the likely type of establishment and operating costs for the business
• Provide information about strategies you will adopt to meet your financial obligations in the future
• Give details of the people or organisations you might approach to advice you.