Finance

Question 1

Finance Reporting

Answer 1

Disclosure of Financial Results to external stakeholders. (how a company has preformed over time)

Question 2

Financial Planning

Answer 2

The Task of determining how the organisation will afford to achieve its strategic goals.

Question 3

Costs

Answer 3

Money/Resource associated with purchase or business transactions.

Question 4

Why Identify Costs?

Answer 4

To identify cost involved in production of a product/ service - Determining a price for a product/ service that makes profit

Question 5

Different types of cost?

Answer 5

Behaviour - Fixed, Variable, semi Variable

Type - Direct and Indirect

Question 6

Fixed

Answer 6

Do not vary in respect to changed in output, Eg; Rent, Insurance, Wages

Question 7

Variable

Answer 7

Change proportionally to the level of output, Eg;Materials

Question 8

Semi Variable

Answer 8

has Elements of both Fixed and Variable, Eg; Electricity might be fixed for heating, but variable when using hairdryers

Question 9

Direct

Answer 9

Directly tied to providing goods or services. Eg; Labour, Materials, Equiptment etc

Question 10

Indirect

Answer 10

Related to product / service but not fixed or traciable (Overheads) Eg; the cost of petrol to get to the job.

Question 11

Incremental costs

Answer 11

The extra cost associated with producing an additional service or unit for production.

Question 12

Sunken cost

Answer 12

A cost that cannot be recovered

Question 13

Profit and Loss Components

Answer 13

Gross and Net

Question 14

Gross

Answer 14

Total amount made as result of some activity. (Total Profit/Total Sales)

Improving gross profits;

• increase sales
• incfease prices
• pay less for imputs
• Reduce shrinkage (waste, theft, humar error)

Question 15

Net

Answer 15

Amount left over after all deductions

how to incrrease;

• Increase Gross profit
• Reduice Overheads

Question 16

Cash Flow Statement

Answer 16

Review Passed Preformence - Financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

Question 17

Cash Flow Statement (3 sections)

Answer 17

Operating Activities - amount flowing in and out of buisness from Sales and Day to Day Operational Expences. Eg; Tax Payments, employee wages, vendors and suppliers.

Investing Activities - buying or selliong of assets, Eg; Equiptment

Financing Activities - transactions involving debt, equity, and dividends.

Question 18

Cash Flow Forecast

Answer 18

Plan that shows how much money a business expects to receive in and out.

Benefits -

• Identifiction of potential problems
• Prevent and Mitigate impact
• Ensure cash is on hand

Question 19

Balance Sheet

Answer 19

Snap Shot in time - Shows how much buisness owns and has. Indicats Assets

Question 20

Budget

Answer 20

A plan of inflows and Outflows in orginisation. Can be catagorised as Favourible +, or Adverse -, depending on being on or off budget.

Question 21

Benefiuts of Budgeting

Answer 21

• Assess how business is preforming
• Make decisions based on preformance
• Identify areas of weakness
• Plan use of finances

Question 22

Types of bugets

Answer 22

Master Budget will contain all aspects

• • Sales
• Cash - in and out
• Production - output
• Materials
• Labour
• Overheads
• Marketing
• Training

Question 23

Monitoring Budget

Answer 23

1. Plan Budget
2. Compare with Actual Budget
3. Varience
4. Action

Question 24

Cost Benefit Analysis

Answer 24

Systematic approach to estimating the strengths and weaknesses of alternatives used to determine options which provide the best approach to achieving benefits while preserving savings.