planning and implementing - processes

Question 1

What falls under planning and implementing

Answer 1

FBFRF “Fresh bacon fried rice food”

• financial needs
• budgets
• financial risks
• record systems
• Financial controls

Question 2

financial needs

Answer 2

refers to identifying the financial actions that need to be taken

-done through the evaluation of balance sheets, income statements and cash flow statements

• determines the business’s short-term liquidity and long-term commitments

Question 3

budgets

Answer 3

A financial plan that provides information in quantitative terms about the requirements to achieve a goal

• indicates expenditures so that adjustments can be made

Operating budgets: the main activities of a business

Project budgets: special projects that is different to everyday activities

Financial budgets: relate to the financial data of a business

Question 4

financial controls

Answer 4

policies and procedures that ensure the plans of a business will be achieved in the most efficient way

includes:
- approval of major transactions
-payment authorisation processes

Ultimately, to ensure that problems and losses do not exist eg theft, fraud, errors in recording

Question 5

record systems

Answer 5

refers to the mechanisms that exist to ensure that data is recorded

required by the ATO to keep certain records for a minimum of 5 years

record systems allowed a business to store data including sales, records, expenses, assets, liabilities and product information

Question 6

financial risks

Answer 6

refers to the risk of a business being unable to cover its financial obligations

• involves considering the amount of liabilities, when liabilities are due, economic conditions and the level of CA needed to finance operations
• if financial managers do not assess properly the business will face cash shortages and not be able to repay debts

Question 7

matching the terms and source of finance to the business purpose

Answer 7

Refers to ensuring that the correct source of finance is matched to its purpose

Requires the business to consider:
- availability and flexibility of funds
- level of external control
- set up and interest costs

eg short term = overdraft, long term = morgage