Question

1. What are the main components of a balance sheet and how does it enable managers to make estimates of new items for inclusion in the budget?
2. What are some of the reasons that cause a business to experience poor cash flow?
3. What are the advantages of monitoring expenditure?
4. Why do organizations need a good financial record keeping system?
5. Name and give a brief description of 3 accounting software that an organization can use.
6. Describe the following terms: a. Gross profit b. Net profit c. Stock turnover
7. What are financial ratios, why are they important to managers?
8. Why is it vital to interpreting an organization’s financial ratios based on its industry overall benchmarks ratios
9. Define the term ‘What is Tax Liability’
10. Effectively auditing a budget requires an estimation process that is acceptable and/or reasonable. What are some issues to consider?
11. Explain the terms used to describe variations and what can the unfavorable variances be further classified into?
12. What are 3 pieces of financial documentation necessary to verify expenditure? Give an explanation for each.
13. To ensure that you are in a good position to negotiate your budget submission what should you do?

Answer 1

Answers.

1. Main componant of balance sheet are

The balance sheet describes a company's financial position at a certain point of time.The balance sheet usually contain following componants.

Assets- Current assets, tangible fixed assets, intangible fixed assets, investments

Liabilities- Current liabilities, long term & short term loans and advances, trade payables

Owner's equity- Common stock, preferred stock, retained earnings etc.

If the assets are more than liabilities then it will be said that the financial position of the company is viable and this will help the manager to make estiimates of the new items to be included in the budget.

2. Reasons for poor cash flows are-

a) Poor invoicing practice

b) Lack of an emergency fund

c) Not monitoring expenses

d) High debt equity ratio

e) Seasonal demand

f) Low profits

3.Advantages of monitoring expenditures-

a) Contorl unusual expenditures

b) Tracking daily expenses can hepl to save money

c) Help to set the financial goals of the company

d) Give good outlook on spending habits

e) Controlling on expenditure will automatically improve profit

4. Organisation shall do the following for good financial record system-

a) Monitor the progress of business

b) Prepare the financial statement

c) Identify the sources of income

d) Keep track of expenditure

e) Prepare tax return

f) Prepare the schedule

g) Keep an eye on invoice

5. Description of 3 accounting software

1) Zoho Books

Zoho books is online accouting software that manage your finances, keep yout GST compliants, automated business workflows and help you work collectively across departments.

Why Zoho Books is preferred because of

a) End to end accounting

b) GST Compliance

c) Integrated platform

2) Tally ERP (India's most trusted and popular software)

a)It is fast, powerful, scalable and very reliable. Tally is powerful accounting software which is driven by a technology.

b)Tally accounting software provides solution to all the problems real businesses have to encouter.

c) Finincial management is also made simplier under tally software.

3) Quick Book

a)It is desingned to manage payroll, inventory, sales and other needs of a small business. These software solutions are used to monitor expenses, create invoices and reports and track change orders and job status.

6) Term

a)Gross Profit- Gross profit is a company's profit before oprating expenses, interest payments and taxes. Gross profit is also known as gross margin

b)Net profit- The profit of compny after oprating expenses and all other charges including taxes, interest and depreciation have been deducted from total revenue. It is also called net earnings or net income

c) Stock Turnover- Stock turnover is a ratio showing how many times a company has sold and replaced inventory during given period.

7) Term Financial Ratio

Financial Ratio- it is a relative magnitude of two selected numerical values taken from enterprise's financial statements. It is used to evaluate the overall financial condition of a organization.

Importance of Financial ratio.

a) Help to analyse the probable casual relation among different items

b) Help the management to prepare budgets, to formulate policy

c) It help to take time dimension into an account by trend analysis

d) It helps to make an inter-firm comparison

e) It throws light on the degree of efficiency of the management

8) Term Tax Liablity-

A tax liability is the total amount of tax debt owned by an individual, corporation or other entity to an taxing authority