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BSBSMB303

Organise finances for the micro business

Assessment 1

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Assessment 1
To be administered by the Trainer/Assessor after the completion of all formal information presentation
Unit/s of Competency:	BSBSMB303: Organise finances for the micro business
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Assessment 1 – BSBSMB303: Organise finances for the micro business

Please complete the following activities for marking. This forms part of your assessment for BSBSMB303: Organise finances for the micro business.

The following documents are related to this document.

· BSBSMB303 Unit of Competency

· BSBSMB303 Learner Guide

The activity is to be completed and uploaded to Accit Moodle. You are required to research and demonstrate a range of tasks to your teacher or assessor to show that you have the skills to meet the requirements of the unit. Specifically, you must satisfactorily complete each of the following tasks to demonstrate some of the required skills for this unit. You will need to demonstrate that you can apply the concepts discussed. You must also be prepared for further questioning from your teacher or assessor. All work in this activity must be your own, and any material taken from another source must be acknowledged. You will need to access to a computer with internet access to complete this activity. Feedback will be received from the trainer through Moodle.

Declaration

I declare that no part of this assessment has been copied from another person’s work with the exception of where I have listed or referenced documents or work and that no part of this assessment has been written for me by another person. During your online submission, there will be a checkbox which you will have to click to agree with the above condition.

Question 1

Objective

To provide you with an opportunity to ascertain own financial position and ability to provide capital or equity for the business

Question

List the obligations that you as a micro business owner have to yourself and your family

List the obligation that you as a small business owner feel you should give your community and your industry

List two types of equity financing and outline the advantages and disadvantages.

Type of equity financing	Advantages	Disadvantages

Question 2

Objective

To provide you with an opportunity to determine level of forecast business activity over a year and the business mix.

Question

List the factors which could be taken into account when forecasting at the level of business activity

A forecast is only as good as assumption on which it is based. Explained

George wants to forecast for his business for the next 12 months. He estimates that next year the costs of goods sold will increase by 5% and delivery charges will increase by the same amount. He also expects to pay an extra 10% commission on sales. In addition, Bill estimates that all fixed cost will increase by 2% from current levels. Using this information and the information contained in the following table, complete Bill’s forecast of the cost for next year.

Cost Category Cost this year	Projected cost for next year
Variable costs: Cost of goods sold $230,934 Sales commission $58,852 Delivery charges $13984
Fixed cost: Advertising $1,850 Depreciation $13,250 Insurance $5,400 Payroll taxes $8,200 Rent $9,600 Utilities $17,801 Wages $40,000
Total Cost $399,871

If George expects his business to generate an income of $400,000 next year, will the business be financially viable? If not, how much additional funding will the business need?

Question 3

Objective

To provide you with an opportunity to estimate establishment costs for the business and repayment schedule for borrowings.

Question

Choose a business idea. List the establishment costs that would be required to establish the business. Do not provide figures just the cost name.

List 5 factors which could affect the amount of investment of micro business requires

Sam and Jill have formed a partnership and intend opening a florist shop. Under each of the following headings, list a minimum of three items that they must consider when calculating their start-up costs.

Business Setup	Business premises	Marketing	Materials/ supplies/ consumables	Staffing

Question 4

Objective

To provide you with an opportunity to identify and calculate monthly variable and fixed costs needed to conduct business activity over a year.

Question

Choose a well-known business using the following headings list the operating cost that you think this business would incur:

• Fixed costs

• Variable costs

• Mixed/semi-variable costs

• Step costs or semi fixed costs

There is no need to undertake research specific to the business or to provide actual figures. Simply list the cost name.

List the name of each type of cost which is described.

Description	Type of cost
This cost will not change regardless of the output of the business
These costs contain a fix portion which is incurred even when the facility is unused and a variable portion that increases with usage
These costs remain the same over a certain output level but increase to a higher level once a specific level of output has been reached
These costs change depending on the output of the business

What factors might impact on the ongoing costs of a business? Give examples.

Question 5

Objective

To provide you with an opportunity to understand and estimate personal drawings needed from the business.

Question

What are personal drawings?

List some items which a business owner could consider when estimating the personal drawings needed to be taken from the business

Question 6

Objective

To provide you with an opportunity to estimate monthly income generated by the business for a year, based on price per unit item or hourly charge rate for labour.

Question

Juliet started his own private investigation business he intense to charge $100 per hour to undertake surveillance services and $60 for general security work each month he expects to work 50 hrs on surveillance work and 30 hours on general security task he also intends to sell surveillance equipment such as listening device and telescopic lenses he expects to sell 20 listening devices at $100 each and 20 telescopic lens is at 150 each.

Using this method what is her likely monthly income

Question 7

Objective

To provide you with an opportunity to develop a cash flow budget for the first year of business operation and its benefit.

Question

Explain the benefits of regularly comparing a cash flow budget to actual cash flow

Complete the following table with details of:

· Total cash inflows for each month

· Total cash outflows for each month

· Opening cash balance for each month (the opening balance for January is $15,000)

· The closing cash balance for each month

	January 20XX	February 20XX	March 20XX	April 20XX	May 20XX	June 20XX
Cash inflows
Revenue from product sales	$40000	$38000	$35000	$25000	$15000	$12000
Revenue from service sales	$8000	$8000	$8000	$6000	$5000	$3000
Total cash inflows

Cash outflows
Cash payments to trade suppliers	$10000	$9000	$8000	$7000	$7000	$6500
Management draws	$2000	$2000	$2000	$2000	$2000	$4000
Salaries and wages	$4000	$3000	$2000	$2000	$2000	$2000
Promotion expense	$0	$0	$200	$500	$500	$500
Professional fees	$0	$0	$0	$500	$0	$400
Rent/mortgage payments	$2000	$2000	$2000	$2000	$2000	$2000
Insurance paid	$1000	$1000	$1000	$1000	$1000	$1000
Telecommunications payments	$400	$400	$370	$350	$340	$320
Utilities payments	$300	$300	$300	$300	$300	$300
Major purchases	$0	$0	$0	$17000	$0	$0
Total cash outflows
Reconciliation of cash flow
Opening cash balance	$15000
Add: total cash inflow
Deduct: total cash outflow
Closing cash balance

Using your calculations from the previous table, answer weather each of the following statement is true or false.

Statement	True or false
There were some months in which the business did not have enough funds to pay expenses.
The closing cash balance in April was higher than the closing cash balance in March.
If the business owner spent $20,000 on trade suppliers in May, this could indicate something is not right with the business.
Due to the decrease in sales throughout the first six months of the year, the business had a lower cash balance at the end of June that it had at the beginning of January.

Question 8

Objective

To provide you with an opportunity to seek professional advice to estimate goods and services tax and operating finance required for the business.

Question

Even though there is an upfront cost associated with using a professional adviser you can potentially save a micro business a lot of money. Explain why.

List 5 organisations which could provide professional advice on GST or operating finance.

Question 9

Objective

To provide you with an opportunity to estimate required funding to establish and run the business based on expected sales and activity levels, available finances and commitments.

Question

Why is it important to estimate required funding to establish and operate a business?

You and a partner operate a micro business. Explain the steps you can take to ensure that you work together effectively to organise finances for your business.

Question 10

Objective

To provide you with an opportunity to investigate methods of accessing alternative sources of finance.

Question

Create a step by step process for investigating and securing finance for a micro business.

Other than Equity financing what are some alternative source of financing.

Explain the advantages and disadvantages of using a regulated lender such as a bank or Credit Union.

Question 11

Objective

To provide you with an opportunity to identify strategies for meeting financial obligations.

Question

List five financial obligation of a business.

List four strategies which will help the business owners to meet financial obligations.

Question 12

Objective

To provide you with an opportunity to implement plans to access available funds as required.

Question

What are three of the costs associated with securing Finance?

Question 13

Objective

To provide you with an opportunity to monitor business profitability.

Question

Use the following representation of an invoice to answer the questions.

Is the invoice a tax invoice?

What is the suppliers ABN?

How much GST is included in this invoice?

Were all items taxed?

Comments: Comments will be provided in Feedback File

This declaration will appear when you click submit in ACCIT Moodle. You must click the checkbox to submit.
Student Declaration: This assignment is my own work, except where I have acknowledged the use of the works of other people. I have retained a copy for further reference.

Assessor: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback	Signature: (Please insert a digital signature)
	Date:

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