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12 Mar
2020

BSBFIM801 manage financial resources | Good Grade Guarantee!

SSBTAssessor GuideINTRODUCTIONPurposeThe purpose of this document is to guide assessors who undertake assessments for thefollowing unit(s)➢ BSBFIM801 manage financial resourcesAssessmentsThe following are the list of assessments used to assess the above unit(s)• Project• Knowledge Questioning• Case StudyIndustry contextThis unit relates to the business industry. It will provide students with the skills andknowledge to Plan or Review Administrative Systems.Recording & Reporting procedures1. Assessors must type in red to add comments to Student Guide.2. Use the Marking Guide to record student’s performance against assessment criteria.3. Competency Record Sheet (CRS) / Assessment Summary Record (ASR) fortrainees1. Record assessment outcome as “Satisfactory (S)” or “Not Satisfactory (NS)”under Result section of the CRS2. Record unit outcome as “Competent” or “Not Yet Competent”.3. Insert your full name, tick and date the competency record sheet/assessmentsummary record.1. Upload all student guide and marking guide onto Moodle. The Course coordinatorassisted by the Training Administrator will conduct verification and recording ofresults on Moodle.2. Training Administrator verifies:• Outcomes recorded on each individual marking guides tallies with theCompetency Record Sheet /student guide comments• Marking guide ticked and dated by assessor and full details are inserted• Competency Record Sheet / Marking guide ticked and dated by assessor• Marking of assessments and reporting of results must be completed withinone week of the completion of the block (refer to the course timetables forblock end dates & assessment schedules for due dates).BSBFIM801 Manage financial resources3Version 1.0SSBTAssessor GuideASSESSMENT 1 – PROJECTYour task is to write the answers to each of the following questions. Answers should exceed100 words but no more than 200 words for each question:1. Explain the major principles of accounting.BSBFIM801 Manage financial resources4Version 1.0SSBTAssessor GuideAnswers should reflect:• It is essential that you follow the basic principles of accounting when collectingdata. Accounting Concepts and Principles are a set of broad conventions thathave been devised to provide a basic framework for financial reporting. Asfinancial reporting involves significant professional judgments by accountants,these concepts and principles ensure that appropriate judgment can be made. Inorder to ensure the application of the accounting concepts and principles, majoraccounting standard-setting bodies have incorporated them into their reportingframeworks such as the IASB Framework.• Following is a list of the major accounting concepts and principles:o Relevanceo Reliabilityo Matching Concepto Timelinesso Neutralityo Faithful Representationo Prudenceo Completenesso Single Economic Entity Concepto Money Measurement Concepto Comparability/Consistencyo Understandabilityo Materialityo Going Concerno Accrualso Business EntityBSBFIM801 Manage financial resources5Version 1.0SSBTAssessor Guide2. What are financial statements?3. Explain what cash flow is.Answers might include:This document shows how changes in balance sheet accounts and income affect cash andcash equivalents and breaks down the figures to operating investing and financial activities.It includes cash that flows from operations, financing and investment and reflects what isknown as liquidity.Answers should include:• Cash flow is the process of movement of money from and into the business overa determinable period. The difference in the cash generated and that is sent outdetermines the strength of an enterprise. Although an organisation relies onprofitability to determine the viability, the availability of cash is just asimportant. Information on cash flows is important in the followingcircumstances:o Appraisal of projects through comparison of cash inflows and cashoutflowso Determination of liquidity in the company based on the availability ofcasho Substitute determinant of the profitability of a companyo Appraisal of the quality of incomes in business with credit transactionso Appraisal of the risk characteristics of a company.BSBFIM801 Manage financial resources6Version 1.0SSBTAssessor Guide4. List three (3) different communication processes or methods which could be usedwithin a company.5. What are the various reports which need to be lodged with the Australian Security andInvestment Commission to meet compliance requirements and legislativeresponsibilities?Answers might consider the three following methods:• Delivering a presentation• Writing an email to all relevant staff• Speak to individuals face to faceBSBFIM801 Manage financial resources7Version 1.0SSBTAssessor Guide6. Explain what is meant by the following:a. Cost of capitalb. Capital structurec. Working capitalAnswers should discuss the following reports:• The reports that require lodging are as follows:Document Section of the Corporations ActStatement of financial position as at the end of the year (if consolidated accounts are notrequired by Accounting Standards) 295(2) & 296(1)Statement of comprehensive income for the year (if consolidated accounts are not required
by Accounting Standards)
295(2) & 296(1)
Statement of cash flows for the year (if consolidated accounts are not required by
Accounting Standards)
295(2) & 296(1)
Statement of changes in equity if consolidated accounts are not required by Accounting
Standards)
295(2) & 296(1)
Consolidated financial statements, if required by accounting standards– which may includeparent entity financial information where [CO10/654] conditions are met. 295(2) & 296(1)Notes to financial statements (disclosure required by the regulations, notes required by theaccounting standards, and any other information necessary to give a true and fair view)295(3)Directors’ declaration that the financial statements comply with accounting standards, givea true and fair view, there are reasonable grounds to believe the company/scheme/entitywill be able to pay its debts, the financial statements have been made in accordance withthe Corporations Act 295(4)Directors’ report, including the auditor’s independence declaration 298-300AAuditor’s report 301 & 308BSBFIM801 Manage financial resources8Version 1.0SSBTAssessor Guide7. What is meant by investing and finance decisions?
Answers should reflect:• Cost of capital is the required return necessary to make a capital budget projectworthwhile. This includes the cost of debt and cost of equity. Most company’suse debt, common equity and preferred equity to fund new projects. It isimportant to keep in mind the effect of capital structure when a capitalbudgeting decision is being made.
Answers will include:• Capital structure is the mix of the company’s long-term debt, specific short-termdebt, common equity and preferred equity. Capital structure is often known asthe company’s debt-to-equity ratio and it provides insight into the way in whicha company is prepared to take risks.
Answers should explain:• Working capital is a measure of both a company’s efficiency and its short-termfinancial health and is calculated as follows:o Working capital = current assets – current liabilities• The working capital ratio is made up of current assets / current liabilities and itindicates whether a company has enough short-term assets to cover its shortterm debt. Anything below 1 indicates negative working capital and anythingover 2 means that the company is not investing its excess assets. Net workingcapital should be a ratio between 1.2 and 2.0.
BSBFIM801 Manage financial resources9Version 1.0SSBTAssessor Guide8. What is the goal of financial resource management?9. Outline the key principles of finance that relate to most organisation’s operations.Answers should explain:• Investing decisions – this includes both short-term and long-term reallocationsof company funds. Short-term investment decisions include the level of currentassets necessary for day-to-day operations; on the other hand, long-terminvestment decisions could refer to fixed asset purchases, mergers, acquisitionsand company reorganizations• Financing decisions – this decision is dependent on the size of the company, thefinance options available to the company and the needs of the company. Whenmaking financial decisions, you need to consider the best finance mix or capitalstructure for the company. The important elements to consider include:o The nature and riskiness of the business operationo The capital structure (debt-to-equity ratio) desiredo The length of time that assets will be neededo The cost of alternative financingAnswers should reflect:The primary goal of financial management is to plan, direct, organize, monitor and controlthe company’s current and future financial resources and events. This involves applying thebasic principles of management in financial activities such as purchases, sales, capitalexpansion, inventory values, financial reporting and profit distribution. The overallobjectives are to work on both short-term and long-term activities that seek to maximizevalue creation from financial resources.BSBFIM801 Manage financial resources10Version 1.0SSBTAssessor Guide10. What is meant by risk and return?Answers will consider the following key principles of financial management:• Organize the finances – utilizing budgets and financial reports• Spend less than the income – track the company’s costs• Put the company’s money to work – make investment decisions that are sound• Understand the risks taken – develop risk management contingencies• Diversification – find ways to diversify the income• Meet legislative and regulatory requirements – ensure your company remainscompliant• Plan for the unexpected – undertake forecasting processesAnswers may include, but are not limited to:Low levels of uncertainty or risks are associated with low potential returns, whereas highlevels of uncertainty or risk are commonly associated with high potential returns. If theinvestor is willing to accept the possibility of losses the investments could render higherprofits. Risk tolerance differs from person to person and companies decisions will beaffected by their overall goals and levels of incomeBSBFIM801 Manage financial resources11Version 1.0

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