I am submitting my assignment, containing three tasks. Each task need to be answered separately. Each task is to be answered according to Assessor's checklist provided. Budget sheet related to each...

Assessment Task 1
Introduction
Big Red Bicycle Pty Ltd is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market. The company has the aim to achieve a profit before tax of $1000000. The risks that the company foresees is poor sales because of the economic downturn and increased expenses particularly the wages expenses. The company also plans to expand oversees.
Budget and Financial plan
The budget of the company is usually prepared after the approval of the CEO and the senior management and is prepared on the basis of the business plan. The company also analyses the previous period results before preparing the budget and the company makes a correlation between the financial data which helps the company to identify the key performance metrics. The company prepares the budget after consulting the budget team along with the help of the CEO and CFO.
Discussion - Accounting Principles
While preparing the budget the company takes care of different principles which includes the going concern principles, historical cost, converism and matching principles.
Discussion – Financial Statements
There are four major financial statements that are prepared by the company which includes the profit and loss statement, balance sheet, cash flow statement and statement of change in owner’s equity.
Profit and loss statement is the statement which reports all the operating and non operating revenues and expenses of the company which incur during the year.
Balance sheet is the statement of financial position which tells about the financial position of the company at a particular point of time. It reports all the assets, liabilities and equity held by the company at a particular point of time.
Cash flow statements is the statement which is prepared as per the cash basis. It reports all the cash inflows and outflows of the company through the three major activities which includes the cash flow from operating activities, cash flow from investing activities and cash flow from financing activities.
Statement of owner’s equity is the statement which shows the changes in the equity over the period because of the issue of shares, net income and dividends payments.
Describing Basic accounting principles
Going concern principles: Going concern principle states that the company forecast and works that it will continue its work and has no plans to close the business in the near future. The company has forecasted its sales considering the scenario and plans to work in future.
Historical costs: The company reports its assets at the historical costs which is used while preparing CAPEX budget.
Converism: The company is conservative to report its revenues, because of the economic down turn the company believes that the company would be having lower sales.
Matching principles: All the expenses are matched up with the income and are reported when incurred.
Budget projection
The budget projection is based on:
· Sales in the first quarter (Q1), third quarter (Q3), and the fourth quarter (Q4) are generally 30% less than the second quarter (Q2).
· Sales in Q2 depend on completion of 90% of repair and maintenance.
· Sales for Q2 have been estimated to be $1,000,000.
· Commission negotiated with members of the sales team is now at 2.5%.
    Big Red Bicycle
    Master Budget FY 2011/2012
     
    FY
    Q1
    Q2
    Q3
    Q4
    REVENUE
     
     
     
     
     
     
    Commissions
     77,500
     17,500
     25,000
     17,500
     17,500
     
    Direct wages fixed
     2,00,000
     50,000
     50,000
     50,000
     50,000
     
    Sales
     31,00,000
     7,00,000
     10,00,000
     7,00,000
     7,00,000
     
    Cost of Goods Sold
     4,00,000
     1,00,000
     1,00,000
     1,00,000
     1,00,000
    Gross Profit
     24,22,500
     5,32,500
     8,25,000
     5,32,500
     5,32,500
    EXPENSES
     
     
     
     
     
    General & Administrative Expenses
     
     
     
     
     
     
    Travel
     20,000
     5,000
     5,000
     5,000
     5,000
     
    Legal Fees
     5,000
     1,250
     1,250
     1,250
     1,250
     
    Bank Charges
     600
     150
     150
     150
     150
     
    Office Supplies
     5,000
     1,250
     1,250
     1,250
     1,250
     
    Postage & Printing
     400
     100
     100
     100
     100
     
    Dues & Subscriptions
     500
     125
     125
     125
     125
     
    Telephone
     10,000
     2,500
     2,500
     2,500
     2,500
     
    Repairs & Maintenance
     50,000
     25,000
     25,000
     
     
     
    Payroll Tax
     25,000
     6,250
     6,250
     6,250
     6,250
    Marketing Expenses
     
     
     
     
     
     
    Advertising
     2,00,000
     50,000
     50,000
     50,000
     50,000
    Employment Expenses
     
     
     
     
     
     
    Superannuation
     45,000
     11,250
     11,250
     11,250
     11,250
     
    Wages & Salaries
     5,00,000
     1,25,000
     1,25,000
     1,25,000
     1,25,000
     
    Staff Amenities
     20,000
     5,000
     5,000
     5,000
     5,000
    Occupancy Costs
     
     
     
     
     
     
    Electricity
     40,000
     10,000
     10,000
     10,000
     10,000
     
    Insurance
     1,00,000
     25,000
     25,000
     25,000
     25,000
     
    Rates
     1,00,000
     25,000
     25,000
     25,000
     25,000
     
    Rent
     2,00,000
     50,000
     50,000
     50,000
     50,000
     
    Water
     30,000
     7,500
     7,500
     7,500
     7,500
     
    Waste Removal
     50,000
     12,500
     12,500
     12,500
     12,500
    TOTAL EXPENSES
     14,01,500
     3,62,875
     3,62,875
     3,37,875
     3,37,875
    NET PROFIT (BEFORE INTEREST & TAX)
     10,21,000
     1,69,625
     4,62,125
     1,94,625
     1,94,625
    Income Tax Expense (25%Net)
     2,55,250
     42,406
     1,15,531
     48,656
     48,656
    NET PROFIT AFTER TAX
     7,65,750
     1,27,219
     3,46,594
     1,45,969
     1,45,969
Coaching in role play
There are many parties which are involved in preparing the financial budgets and master budget of the company. The budgets are prepared in consent with the budget committee and the senior management of the company.
Relevant legislation and ATO requirements
The company needs to pay the taxes and should have superannuation guarantee amnesty. The company performs and follows all the ATO requirements.
Key requirements for financial record keeping and auditing
The key requirements for financial record keeping and auditing includes:
· Governing documents
· Financial reports
· Cash book records of daily records including the receipts and payments.
· The tax invoices includes the income tax records.
· All the records related to employees including the TFN declarations, PAGY withholding, superannuation and fringe benefits.
· All the banking records including the cheque books, bank reconciliation, deposit books
· Registration and accompanied documents
· Contracts and agreements
· Tax concession documents
· debtors and creditors lists, Stakeholders records, expenses lists
· Audit reports
Principles and techniques in managing
Budgeting:
Budgeting is prepared considering the previous results and the current conditions of the company. The budgets are prepared as per the forecasted sales, revenues and expenses of the company.
Cash flows:
Cash flow statements is the statement which is prepared as per the cash basis. It reports all the cash inflows and outflows of the company through the three major activities which includes the cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. The cash flow statements needs to consider all the cash inflows and outflows related to the cash flow from operating activities, cash flow from financing activities and cash flow from investing activities. All the cash inflows are classified and reported under each category, as any cash flow incurs, the company should report it under the cash account which can help in preparing the cash flow statements.
Electronic spreadsheets
Electronic spreadsheet are recorded on the basis of the daily transactions that the company incus. All the transactions should be reported electronically which can help in preparing the spreadsheets.
GST:
The GST is recorded on the monthly GST reporting which is reported at 10% of the goods and services sold.
Ledgers and financial statements
The ledger is prepared along with the journal entries of the transactions that is incurred by the company. It includes the recording and posting of all the revenues, expenses, assets, liabilities and equity in their respective ledgers which helps the company to prepare the financial statements.
These ledgers helps in preparing the financial statements of the company which includes the profit and loss account, balance sheet and cash flow statements.
Balance sheet is the statement of financial position which tells about the financial position of the company at a particular point of time. It reports all the...