Assessment 3 BSBFIM601

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Assessment 3 BSBFIM601

BSBFIM601

Assessment 3

1In your own words, describe responsibility accounting?

Responsibility accounting establishes a sound and fair system of performance evaluation of each manager and personnel. The performance of each responsibility center is measured and presented periodically on performance report. 

Responsibility accounting emphasizes on the individual achievement-based performance evaluation. Therefore, the job becomes more challenging for the employees and motivates them to use their full potentiality in achieving the results. 

2Detail 4 different types of budgets, and their purposes.

Sales Budget:

A sales budget is an estimate of expected total sales revenue and selling expenses of the firm. It is known as a nerve centre or backbone of the enterprise. It is the starting point on which other budgets are also based. It is a forecasting of sales for the period both in quantity and value. It shows what product will be sold, in what quantities, and at what prices.

Production budget:

Production budget is prepared on the basis of the sales budget. But it also takes into account the stock levels required to be maintained. It contains the manufacturing programmes of the enterprise. It is helpful in anticipating the cost of production.

Financial budget:

This budget shows the requirement of capital for both long-term and short-term needs of the enterprise at various points of time in future. Its objective is to ensure regular supply of adequate funds at the right time. 

Overheads budget:

It includes the estimated costs of indirect materials, indirect labour and indirect factory expenses needed during the budget period for the attainment of budgeted production targets. In other words, an estimate of factory overheads, distribution overheads and administrative overheads is known as the overheads budget. 

3What information would you require to plan and prepare a budget for a new business? Detail where this information would come from.

Projected expenses. The amount of money you expect to spend in the coming fiscal year, broken down into the categories you expect to spend it in – salaries, office expenses, etc.

Projected income. The amount of money you expect to take in for the coming fiscal year, broken down by sources — i.e. the amount you expect from each funding source, including not only grants and contracts, but also your own fundraising efforts, memberships, and sales of goods or services.

The interaction of expenses and income. What gets funded from which sources? In many cases, this is a condition of the funding: a funder agrees to provide money for a specific position, for instance, or for particular activities or items. If funding comes with restrictions, it’s important to build those restrictions into your budget, so that you can make sure to spend the money as you’ve told the funder you would.

Adjustments to reflect reality as the year goes on. Your budget will likely begin with estimates, and as the year progresses, those estimates need to be adjusted to be as accurate as possible to keep track of what’s really happening.

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Assessment 3 BSBFIM601
Last updated: Feb 2024

Page 1

be as accurate as possible to keep track of what’s really happening.

4Describe what external factors should be taken into consideration when planning and preparing a budget.

Outside influences that can impact a business. Various external factors can impact the ability of a business or investment to achieve its strategic goals and objectives. These external factors might include competition; social, legal and technological changes, and the economic and political environment.

5What are the financial reporting cycles relevant to your Industry?

  • Transactions
  • Financial transactions start the process. Transactions can include the sale or return of a product, the purchase of supplies for business activities, or any other financial activity that involves the exchange of the company’s assets, the establishment or payoff of a debt, or the deposit from or payout of money to the company’s owners.

  • Journal entries
  • The transaction is listed in the appropriate journal, maintaining the journal’s chronological order of transactions. The journal is also known as the “book of original entry” and is the first place a transaction is listed.

  • Posting
  • The transactions are posted to the account that it impacts. These accounts are part of the General Ledger, where you can find a summary of all the business’s accounts.

  • Trial balance
  • At the end of the accounting period (which may be a month, quarter, or year depending on a business’s practices), you calculate a trial balance.

  • Worksheet
  • Unfortunately, many times your first calculation of the trial balance shows that the books aren’t in balance. If that’s the case, you look for errors and make corrections called adjustments, which are tracked on a worksheet.

    Adjustments are also made to account for the depreciation of assets and to adjust for one-time payments (such as insurance) that should be allocated on a monthly basis to more accurately match monthly expenses with monthly revenues. After you make and record adjustments, you take another trial balance to be sure the accounts are in balance.

  • Adjusting journal entries
  • You post any corrections needed to the affected accounts once your trial balance shows the accounts will be balanced once the adjustments needed are made to the accounts. You don’t need to make adjusting entries until the trial balance process is completed and all needed corrections and adjustments have been identified.

  • Financial statements
  • You prepare the balance sheet and income statement using the corrected account balances.

  • Closing the books
  • You close the books for the revenue and expense accounts and begin the entire cycle again with zero balances in those accounts.

    6Describe 2 different capital investment evaluation techniques

    Net Present Value (NPV) – this capital investment appraisal technique measures the cash in-flow, whether excess or shortfall, after the routine finance commitments are met with. All capital investment appraisals have a single objective – drive…

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    Assessment 3 BSBFIM601
    Last updated: Feb 2024

    Page 2

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