1. From your personal finance notes that I have provided for you: 1.1 Explain why someone should have an Emergency Fund, 1.2 Outline the steps for creating a basic emergency fund, 1.3 Outline the...

1.1 In business it is not always necessary the surrounding condition would stay remain same and hence everyone has to face from “times of famine” that may be due to several factors such as layoff, long term illness, huge amount of financial loss, etc. Hence, it is advisable to keep a portion of fund in the name of emergency fund which allow us to handle the tough situation efficiently thereby ensuring smooth functioning of the business effectively.
1.2 The steps for creating a basic emergency fund are as follows:
a) Emergency fund should always include in the financial plan and should have enough amount of money to deal with the situation.
b) This money is used as Murphy’s Law Repellent which states that anything which creates adverse effects would not be fruitful for the business.
c) It’s not easy to cope in difficult times thereby making it expensive.
1.3 The steps for a fully funded emergency fund are that
· Emergency fund should consist of 3-6 monthly expenses.
· It acts as insurance for the financial plan.
· If the income is less than $70000 then fully fund emergency fund will be in between $7000- $10000.
2 Debt Snowball is a process where the payments are considered as per its requirements and whatever items which fall in the luxury category would get excluded from the list. In this process, first make the category of the debt payment which is small so that it is easy to balance. This procedure will give relaxation in few terms. In last approach the larger payments.
Tony has following outstanding debts which he has to pay. Hence, target the first small payments and then go for larger payments. Also, exclude the list of luxury items as this is the time of meeting necessary requirements.
First pay $250 on his Nordstrom’s account.
Second pay $700 on his Dillard’s account.
Third pay $1200 on his Macy’s account.
Fourth pay $2500 on his visa.
Fifth pay $4300 on his Master card account.
Do not pay for $14000 on car note as this come under luxury item.
3 Accounting cycle consists of six processes thereby helping management to prepare and maintain financial statements up to date. The lists of six processes are as follows:
a) Bookkeeping
In this process, every transaction of business gets recorded efficiently. However, only recording of transactions is not enough but also every transaction should get properly classified, summarised and interpreted as every transaction create the impact on the financial statements. Hence, one should be very careful regarding maintenance of bookkeeping. It is very necessary that the financial statements of the business should reflects true and fair value thereby giving a transparent picture to the management or any other concerned parties to take further decision.
b) Bookkeepers responsibility
Bookkeepers need to segregate the paper work into meaningful categories.
Record the data available in the document source such as sales bill, purchase bill, etc.
A Journal is the main centre where every transaction is initially recorded. So basically journal is the base point of the financial statement.
c) Double- Entry Bookkeeping
In this process, every transaction will impact two accounts at the same time one is debit and another is...