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man61fmod6-1_1formative_assessmentmod.pdf
Student Number: -
Formative Assessment
Module 6
Introduction to Financial Management
Assignment No. MAN61FMod6-1 Initial:
Student Number: -
Question 1: Answer the following short questions regarding financial management
1.1 The primary financial objective of any business is to:
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1.2 Name 5 secondary objectives of financial management.
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1.3. Explain 5 steps that can be taken to ensure that a business maintains a positive cash flow.
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1.4 Name 4 reasons why budgets are drawn up.
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Total question1: /15
Initial:
Student Number: - Question 2: Basic financial concepts: Match the following terms (a-j) to the most accurate description (2.1 – 2.10)
a) Solvency b) Fixed assets c) Liquidity d) Working capital e) Assets f) Profitability g) Fixed overhead expenses h) Capital i) Variable expenses j) Current assets
2.1 Stock of raw materials, stock of finished goods, work in progress, prepaid expenses
and deposits, cash on hand and at bank and outstanding debtors.
2.2 Items that are purchased to facilitate the running of the business (they are not pur-
chased for resale)
2.3 The ability of a business to pay off its debt at any given time, even if all its activities
should stop.
2.4 The relationship between the net income earned over a certain period, and the capital
used in that period to generate income.
2.5 The money available to the business for the purchase of goods and services with a
view to generating an income for the business.
2.6 The economic resources that an enterprise owns
2.7 Expenses that must be paid whether the business is trading or not.
2.8 The company’s ability to keep making all its required payments regularly and on time.
2.9 Money used to acquire current assets such as stock or financing debtors.
2.10 Expenditure directly related to the manufacturing or sales processes of a company
Total question 2 /10
Question 3:
Carefully read each of the following statements and state whether they are true (T) or false (F): No Statement 3.1 The amount of an expense account is decreased by entries on the debit side. 3.2 The amount of an income account is increased by entries on the debit side. 3.3 An enforceable claim against others, such as account receivable is classified as an asset.
3.4 The acid test measures the ability of an organisation to meet its current liabilities without the
most non-liquid item of current assets. 3.5 Solvency ratios investigate the effectiveness of employment of assets to realise sales
Total question 3 /5
Initial:
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Question 4: Classify (√) the following accounts as asset, liability, income or expense accounts:
ACCOUNT ASSET LIABILITY INCOME EXPENSE
Sales
Loan from bank
Telephone
Rental paid
Discounts given
Stationary in store
Postage
Equipment
Total question 4 /4
Question 5: Choose the concept (a-f) that match the statements (5.1-5.6): a. Fixed asset register b. Journals c. Income statements d. Cash flow statements e. Ledgers f. Balance sheets
5.1 Diaries of the day-to-day transactions of the business.
5.2 Summarise and categorise the information entered into journals.
5.3 Reflect the profit/loss made by company for a specific period.
5.4 Examples of ledgers.
5.5 Project the flow of money in a business for specified future period.
5.6 Snapshots of businesses at close of business on a specified day.
Total question 5 /6
Initial:
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Question 6: Compile a pre-adjustment trail balance for Catherine’s Cake Emporium.
The following balances appear in her general ledger on 31 July: Bank (favourable) R13 000 Capital R20 000 Salaries R 8 000 Vehicles R35 000 Creditors R32 000 Debtors R 3 000 Sales R 7 000
Account Debit Credit
Total question 6: /10
Total Formative 6: /50
Initial:
