Assessment 01

Question 1
How do you calculate average spend?
Average cost (AC), also known as average total cost (ATC), is the average cost per unit of output.
To find it, divide the total cost (TC) by the quantity the firm is producing (Q).

Question 2
Define the term ‘cover’:
In the world of finance, cover is the act of reducing exposure in investing, by taking an action
that limits a liability or obligation.

Question 3
What is a wastage report?

The Wastage Report helps you to monitor how much ingredient waste you are generating in
your business. When you enter an ingredient waste in the Wastage Report, the quantity wasted
will be subtracted from that ingredient's inventory stock level.

Question 4
What is the difference between the terms ‘gross’ and ‘net’.
Gross means the total or whole amount of something, whereas net means what remains from
the whole after certain deductions are made. For example, a company with revenues. In
accounting, the terms "sales" and of $10 million and expenses

Question 5
What is a ‘financial year’ in Australia?
The financial year is a time period of 12 months used for tax purposes. The Australian financial
year starts on 1 July and ends the next year on 30 June. At the end of fiscal year small business
owners wrap up their books and begin finalizing their tax time paperwork and accounting

Question 6

How often is a business required to complete a BAS?

This depends on the business. Typically, small to medium business are only required to lodge
BAS's once every quarter (4 times a year). However, businesses may elect to lodge monthly
should they wish (i.e., to keep on top of cash-flow)

Question 7
Name 2 programs you can use to manage accounts.
1. Slick Pie
 2. QuickBooks Online

Question 8
List 5 functions you can use an accounting program for.
1. Record Transactions
2. Generate Reports.
3. Create Purchase Orders.
4. Track Stock Levels
5. Monitor Account Balances

Question 9

If you do not understand how to interpret financial information what affect can this have on
your business?

  One consequence of bad reporting, or not interpret final information Risk

Management says, is wasted time.

  With a lot of human error and data flowing in from multiple sources.

  Another consequence is that inaccurate information in internal reports makes it

harder to make good decisions.

  (Forecasting/Budgeting etc.)

  Misinformation in reports or not having data can leave you blind to problems where
accurate reports would have been a red flag.

Question 10
Define each of the following terms:
Ledgers:

A ledger is the principal book or computer file for recording and totaling economic transactions
measured in terms of a monetary unit of account-by-account type, with debits and credits in
separate columns and a beginning monetary balance and ending monetary balance for each
account.

Subsidiary ledgers:
An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and
payment history of each customer to whom the business extends credit. The balance in each
customer account is periodically reconciled with the accounts receivable balance in the general
ledger to ensure accuracy.

Journals:
A journal entry is the act of keeping or making records of any transactions either economic or
non- economic. Transactions are listed in an accounting journal that shows a company's debit
and credit balances. The journal entry can consist of several recordings, each of which is either
a debit or a credit.

Transactions:
A transaction is a completed agreement between a buyer and a seller to exchange goods,
services, or financial assets.

Receipts:
A receipt is a document acknowledging that a person has received money or property in
payment following a sale or other transfer of goods or provision of a service. All receipts must
have the date of purchase on them.

Disbursements:

In accounting terms, a disbursement, also called a cash disbursement or cash payment, refers to
a wide range of payment types made in a specific period, including interest payments on loans
and operating expenses.

Invoices:
An invoice, bill or tab is a commercial document issued by a seller to a buyer, relating to a sale
transaction and indicating the products, quantities, and agreed prices for products or services
the seller had provided the buyer. Payment terms are usually stated on the invoice.

Accounts payable:
Accounts payable is money owed by a business to its suppliers shown as a liability on a
company's balance sheet. It is distinct from notes payable liabilities, which are debts created by
formal legal instrument documents.

Debtors:
Debtors Are Individuals/Companies That Have Borrowed Funds from A Business and Therefore
Owe Money.

Creditors:
Creditors are individuals/businesses that have lent funds to another company and are therefore
owed money.

Cash flow:
A cash flow is a real or virtual movement of money: a cash flow in its narrow sense is a
payment, especially from one central bank account to another.

Question 11
Define each of the following terms:
Assets:
In financial accounting, an asset is any resource owned or controlled by a business or an
economic entity. It is anything that can be utilized to produce value and that is held by an
economic entity and that could produce positive economic value

Liabilities:
In financial accounting, a liability is defined as the future sacrifices of economic benefits that the
entity is obliged to make to other entities as a result of past transactions or other past events

Equity:
In finance, equity is ownership of assets that may have debts or other liabilities attached to
them. Equity is measured for accounting purposes by subtracting liabilities from the value of the
assets.

Cost of sales:
Cost of sales (also known as cost of revenue) and COGS both track how much it costs to produce
a good or service. These costs include direct labor, direct materials such as raw materials, and
the overhead that's directly tied to a production facility or manufacturing plant

Income:
Income is the consumption and saving opportunity gained by an entity within a specified
timeframe, which is generally expressed in monetary terms

Expenses:
Expenditure is an outflow of money, or any form of fortune in general, to another person or
group to pay for an item or service, or for a category of costs. For a tenant, rent is an expense.
For students or parents, tuition is an expense

Question 12
What is Double Entry in Accountings?

Double-entry bookkeeping, in accounting, is a system of book keeping where every entry to an

account requires a corresponding and opposite entry to a different account. The double-entry
has two equal and corresponding sides known as debit and credit. The left-hand side is debit
and right- hand side is credit.

Question 13
Explain the difference between accrual and cash accounting.
   Accrual accounting means revenue and expenses are recognized and recorded when
they occur, while cash basis accounting means these line items are not documented
until cash exchanges hands.
   Cash basis accounting is easier, but accrual accounting portrays a more accurate
portrait of a company's health by including accounts payable and accounts receivable.
   The accrual method is the most used method, especially by publicly traded
companies as it smooths out earnings over time.
 Question 14
List 3 things a profit and loss statement may include.
1. Revenue (Sales/Turnover)
2. Cost of Goods Sold (Cogs)
3. Gross Profit (Revenue Minus Cogs)

Question 15
What is a balance sheet?
In financial accounting, a balance sheet is a summary of the financial balances of an individual or
organization, whether it be a sole proprietorship, a business partnership, a corporation, private
limited company, or other organization such as government or not-for-profit entity.

Question 16

What does the process of performing a bank reconciliation involve?

To do a bank reconciliation you would match the cash balances on the balance sheet to the
corresponding amount on your bank statement, determining the differences between the two in
order to make changes to the accounting records, resolve any discrepancies and identify
fraudulent transactions.

Question 17
Why must you be aware of upcoming direct debits, bank charges and unpresented cheques?
   Unpresented Cheque represents cheques that have been issued by an entity to a
customer or another third party, but which have not presented to the bank by the
reconciliation date. Entity records the payment in its cash book as soon as the cheque is
issued to the person, but the bank records the transaction when it receives the cheque.
This causes a timing difference in the recording of the payment.
   As the bank would not have recorded the unpresented cheques, the balance appearing
in bank statement

Question 18
What is the difference between fixed and variable costs? Give 2 examples of each.
Variable costs vary with the amount produced. Fixed costs remain the same, no matter how
much output a company produces. A variable cost is a company's cost that is associated with
the amount of goods or services it produces. A company's variable cost increases and decreases
with the production volume.
 Question 19
How is GST accounted for and reported to the Australian Taxation Office?

Businesses now act as tax collection agents for the Australian Taxation Office (ATO) by charging
and collecting GST on goods and services. Depending on the size of the business, they are
required to complete a Business Activity Statement (BAS) quarterly or monthly. The business
must remit the GST they have collected to the ATO with their BAS. They are also permitted to
subtract any GST they have paid to other businesses as part of their daily operations and only
have to pay the net amount to the ATO.

Question 20
If you received the gross amount of $220, how much GST would you have collected?
$20

Question 21

If the net amount of your product was $150. What would the gross amount be (once GST has been
added)?
$165

Question 22
List 8 financial reports you may generate to help you monitor and manage your business?
1. Sale Reports
2. Stock Reports
3. Variance Reports
4. Wastage Reports
5. Purchase Summary Reports
6. Labor and wages reports
7. Expenditure reports
8. Budget reports

Question 23

While checking this month’s figures against the previous months, you notice 2 things. The number
of covers has increased 5%, and total income has decreased by 5%.
What does this indicate about what is happening in the business?
Although the number of covers has increased 5% but total income has decrease by 5% because
customer spend less money.
Assessment 02

Task 1

Attach copies of all tasks performed to this project. (To be conducted at College
Reception for a simulated workplace)

1.Complete 2 manual credit card transactions. (To be conducted at College Reception)

Manual Credit card Processing Without Equipment

In addition, merchants can also sign out sales slips and write down credit card
information without an imprinting machine. The customer will still sign a written sales slip
to agree to the charge. In either case, the following information is required:

• The credit card number

• Expiration date
• CVV2 code (three-digit code on the back of the card)
• Billing address
• Customer signature

The sales order should also list the items or services purchased and the total amount
payable. These items are indispensable if customers have disputed charges with credit card
companies.
Manual Credit card Processing with Equipment

• Some merchants who generally think manual processing is practical may invest in a
credit card imprinting machine.
• These machines use carbon paper to swipe a heavy block on the actual card, and
then print an image on the paper to make a physical copy of the credit card on the
sales slip.

2. Give an example of merchant summary.

3. Give a summary report of EFPTOS terminal (attach copy)
4. Explain in a step by step manner how you would use a bank statement to undertake a
bank reconciliation.
You receive a bank statement, typically at the end of each month, from the bank. The
statement itemizes the cash and other deposits made into the checking account of the
business. The statement also includes bank charges such as for account servicing fees.
Once you’ve received it, follow these steps to reconcile a bank statement:
1. COMPARE THE DEPOSITS

Match the deposits in the business records with those in the bank statement. Compare the
amount of each deposit recorded in the debit side of the bank column of the cashbook with
credit side of the bank statement and credit side of the bank column with the debit side of
the bank statement. Mark the items appearing in both the records.
2. ADJUST THE BANK STATEMENTS

Adjust the balance on the bank statements to the corrected balance. For doing this, you
must add deposits in transit, deduct outstanding checks and add/deduct bank errors.
Deposits in transit are amounts that are received and recorded by the business but are not
yet recorded by the bank. They must be added to the bank statement.
Outstanding checks are those that have been written and recorded in cash account of the
business but have not yet cleared the bank account. They need to be deducted from the
bank balance. This often happens when the checks are written in the last few days of the
month.
Bank errors are mistakes made by the bank while creating the bank statement. Common
errors include entering an incorrect amount or omitting an amount from the bank
statement. Compare the cash account’s general ledger to the bank statement to spot the
errors.
3. ADJUST THE CASH ACCOUNT

The next step is to adjust the cash balance in the business account.
Adjust the cash balances in the business account by adding interest or deducting monthly
charges and overdraft fees.
To do this, businesses need to take into account the bank charges, NSF checks and errors in
accounting.
Bank charges are service charges and fees deducted for the bank’s processing of the
business’ checking account activity. This can include monthly charges or charges from
overdrawing your account. They must be deducted from your cash account. If you’ve
earned any interest on your bank account balance, they must be added to the cash account.
An NSF (not sufficient funds) check is a check that has not been honored by the bank due to
insufficient funds in the entity’s bank accounts. This means that the check amount has not
been deposited in your bank account and hence needs to be deducted from your cash
account records.
Errors in the cash account result in an incorrect amount being entered or an amount being
omitted from the records. The correction of the error will increase or decrease the cash
account in the books.
4. COMPARE THE BALANCES
After adjusting the balances as per the bank and as per the books, the adjusted amounts
should be the same. If they are still not equal, you will have to repeat the process of
reconciliation again.
Once the balances are equal, businesses need to prepare journal entries for the adjustments
to the balance per books.

Task 2

5. Complete a Business Activity Statement for your organization. Refer to the Blueberry
café statement and calculate the GST for the business activity.

Total sales-------- 150000

Total sales including GST 132000
GST fees sales 18000

Total expenses 105000

Expenses including GST 100000
Capital purchases 10000
GST fee expenses 5000

PAYG (Salary expenses)

Calculate the GST payable on sales = Total sales including GST – (Expenses including GST +
Capital purchases) / 11= GST payable.
GST payable on sales = 132,000.00 – (100,000.00 + 10,000.00)
11
= 132,000.00 – 110,000.00
11
= 2,000.00

Task 3

Attach copies of all tasks performed to this project.

a) Prepare a Profit and Loss Statement

Calculate gross profit = sales – cost of sales

= 80,000.00 –
20,000.00 =
60,000.00

Calculate after labour profit= gross profit – labour cost

= 60,000.00 –
19,000.00 =
41,000.00

Calculate profit before tax = after labour profit – operating expenses

= 41,000.00 – 12,600.00
= 28,400.00

b) From the balance sheet provided below

Calculate and explain the following:

1. Total current assets
A total current asset is the aggregate amount of all cash, receivables,
prepaid expenses, and inventory on an organization's balance sheet. These
assets are classified as current assets if there is an expectation that they will be
converted into cash within one year

Answer: 28,500.00
2. Total noncurrent assets
Noncurrent assets are a company's long-term investments that have a useful life of
more than one year. Noncurrent assets cannot be converted to cash easily. They are
required for the long-term needs of a business and include things like land and heavy
equipment.
Answer: 234,000.00

3. Total assets
 Total assets are the sum of all current and noncurrent assets that a company owns.
They are reported on the company balance sheet. The total asset figure is based on
the purchase price of the listed assets, and not the fair market value
Answer: 262,500.00

4. Total current liabilities

Current liabilities of a company consist of short-term financial obligations that are

typically due within one year. Current liabilities are listed on the balance sheet and
are paid from the revenue generated from the operating activities of a company.
Answer: 33,000.00

5. Total noncurrent liabilities

A non-current liability refers to the financial obligations in a company's
balance sheet that are not expected to be paid within one year. Non-current
liabilities are due in the long term, compared to short-term liabilities, which are
due within one year.

Answer: 229,500.00
Top of the Town Hotel

Balance sheet 30th June 2016

Assets Equities
Current Assets Current Liabilities
Cash at Bank 5,000.00 Accounts payable 4,000.00
Cash on hand 10,000.00 Borrowings (current) 2,000.00
Cash on deposit 1,000.00 Accrued income 20,000.00
Inventories 0 Advanced deposit 2,000.00
Prepaid expenses 10,000.00 Bank Overdraft 0
Accounts receivable 2,000.00 Tax payable 4,000.00
Provision for doubtful 500.00 1,000.00
debts
0
Total Current Liabilities
Total Current assets
28,500.00 33,000.00
Noncurrent assets Noncurrent liabilities

Land Borrowings (long term)

Buildings Other
Motor vehicles
Furniture
Equipment
0 224,500.00
150,000.0 5,000.00
Total noncurrent assets 0 Total noncurrent liabilities
32,000.00
12,000.00
40,000.00

234,000.00 229,500.00

Total Assets 262,500.00 Total Liabilities 262,500.00

Task 4

Using the Profit and Loss statement you have produced, provide an analysis
of the business performance during the trading period or year to date. Refer
to Income statement provided below:

To Calculate the following business performance ratios:

a) Costs of goods sold

Formulae: COGS %=cost of goods sold / sales x

100 17,500 / 75,000 X 100 = 23.33%

b) Labour cost percentage

Formulae: Labour Cost Percentage = Labour / Sales

x 100 21,000 / 75,000 X 100 = 28%

c) Prime Cost

Formulae: Prime Cost = COGS + Total Labour

Cost 17,500 + 21,000 = 38,500.00

d) Gross profit margin

Formulae: Gross Profit = Total Revenue – COGS

75,000 – 17,500 = 57,500.00

Gross Profit Margin = (Gross Profit / Total Revenue) x 100

(57,500 / 75,000) X 100 = 76.67%

e) Net profit margin.

Formulae: Net Profit Margin = (Gross Sales – Operating Expense) / Gross Sales
(75,000 – 15,600) / 75,000 = 0.792
 PART (B)

1. Average customer spend

What is the meaning of average customer spending in a restaurant?

Average customer spend is calculated by the total amount spent in the business
for the day and dividing it by the number of customers who spent money in your
business for the day.

What are the benefits of average customer spend?

• Calculate for the budget of restaurants

• It help for the Forecasting
• Reduce cost
• Reduce wastage

2. Departmental expenditure

• labour
• Stock purchased (cost of goods sold)
• Operating expenses

The importance of labour cost while calculating departmental expenditure

The cost of labor is the sum of all wages paid to employees, as well as the cost of
employee benefits and payroll taxes paid by an employer.
Labor cost control reduces the cost of production of products manufactured or
services rendered. Labor cost control ensures the satisfaction of the workers by
creating a good working environment in the factory. Labor cost control helps to adopt
the fair system of wage payment and to minimize labor turnover.
Why is cost important to calculate?

Accumulation analysis and proper control over labour cost are most importance to
every organization for the fulfillment of following purposes,
• To use direct labor cost as a basis for increasing the efficiency of workers

• To identify direct labour cost with product, job or process for ascertaining
cost of production as accurately as possible
 • To use direct labour cost as a basis for absorption of overhead, if desired

• To use direct labour as a basis for comparison with past labour cost and for
substitution proposes

• To determine the amount of indirect labour cost to be treated as overhead

• To reduce the labour turnover

What is included in operating expenses in a restaurant?

• Gas
• Water
• Interest expenses
• Maintenance
• Cleaning
• Fuel
• Vehicle repairs
• Electricity
• Miscellaneous
• Advertising

3. Departmental income

• Sales
• Gross income

What information does sales figure give you over a period of time?

Sales reports keep management in the loop on sales activities so they can see what’s
enabling and hindering their team’s success. Regular sales reporting allows businesses
to answer some of the most important questions they need to address to fuel their
growth, such as:
• Who are our ideal customer?
• Where are our best leads coming from?
• What motivates new customers to buy?
• What factors prevent a prospect from buying?
 • Are individual reps making their quotas?
• Is the team on track to meet specific sales goals?
• What is our top sales rep doing that the rest of the team can replicate?
• How do sales this quarter compare to previous periods?
• What is our forecast for the next period or quarter?

Why is calculating gross income important to ascertain the financial outcome of a

restaurant.

When analysing the profitability and financial performance of an entity, it is

important to consider Gross Profit. This is because it demonstrates the efficiency of
the business in making use of its labour, raw material and other supplies.
Gross income is important to your financial success. If you’re looking to apply for a
mortgage, your gross income is key to knowing how much you can afford. Mortgage
lenders and landlords use your gross income to determine your financial reliability.
Lenders want to know what percentage of your income will go to a mortgage
payment.
4. Outstanding accounts

• accounts receivable

• accounts payable

What is the important of calculating accounts receivable and playable?

Accounts payable is a current liability account that keeps track of money that you owe
to any third party. The third parties can be banks, companies, or even someone who
you borrowed money from. One common example of accounts payable are purchases
made for goods or services from other companies. Depending on the terms for
repayment, the amounts are typically due immediately or within a short period of
time.
Accounts receivable is a current asset account that keeps track of money that third
parties owe to you. Again, these third parties can be banks, companies, or even
people who borrowed money from you. One common example is the amount owed
to you for goods sold or services your company provides to generate revenue.
5. Sales performance

What is the trend in sales growth from the following sales figures provided?
 Sale year 1 – 2,186,601.00
Sales year 2 – 2,351,541.00
Sales year 3 – 2,573,024.00

Use the following formulae to calculate the sale growth percentage.

Sales growth percentage = Sales year 2 / Sales year1 x 100= answer-100

= {(2,351,541.00 / 2,186,601.00) X 100} - 100

= 107.54 – 100

= 7.54 %

Sales growth percentage = Sales year 3 / Sales year2 x 100= answer-100

= {(2,573,024.00 / 2,351,541.00) X 100} - 100

= 109.42 – 100

= 9.42 %
6. Variance from budget
What is the importance of interpreting budget variances?

Variance analysis is important to assist with managing budgets by controlling

budgeted versus actual costs. Variances between planned and actual costs might lead
to adjusting business goals, objectives or strategies.
Formula= Budget –Actual = variance