ACCOUNTING UNIT 2

Question 1

What is cash surplus?

Answer 1

an excess of cash receipts over cash payments, leading to an increase in a positive bank balance or a decrease in bank overdraft THIS IS GOOD!!

Question 2

What is cash deficit?

Answer 2

an excess of cash payments over cash receipts leading to a decrease in a positive bank balance or an increase in bank overdraft THIS IS BAD!!!

Question 3

Does mortgage include or have GST?
EXPLAIN WHY

Answer 3

NO because it isn’t a good or a service

Question 4

What are in the cash payments journal?

Answer 4

Cash payments

Question 5

What are in the cash receipts journal?

Answer 5

cash received

Question 6

Cash receipts definition

Answer 6

accounting record that summarizes all transactions where cash is received from other entities during a particular reporting period

Question 7

Cash payments definition

Answer 7

accounting record that summaries all transactions where cash is received from other entities during a particular reporting period

Question 8

What actions can u undertake when theirs a cash deficit or a low closing bank balance or both

Answer 8

Effective advertising to boost fees
Reduce loan repayments ‘
Reduce drawings
Purchase more inventory of supplies using credit facilities
Ask the owner to make a cash contribution
Borrow cash from bank (LAST OPTION)
Organise a Bank Overdraft Facility

Question 9

What actions can u undertake when theirs a cash surplus or high closing bank balance

Answer 9

Higher loan repayments to reduce debt
The owner can take greater drawings in cash from the business
Upgrade/ purchase newer non-current assets
Expand the business operations or open a new store in a new location

Question 10

GST RECEIVED

Answer 10

GST received FROM CUSTOMERS on cash transactions

Question 11

GST PAID

Answer 11

GST paid by the business TO SUPPLIERS on cash transactions

Question 12

GST RECIEVABLE

Answer 12

GST owed to the business by the ATO when the amount of GST the business has paid to its suppliers is greater than the GST it has been received from customers

CURRENT ASSET

Question 13

GST PAYABLE

Answer 13

GST owed by the business to the ATO when the amount of GST the business has RECIEVED on it’s fees is greater than the GST it has paid to its suppliers
CURRENT LIABILITY

Question 14

GST REFUND

Answer 14

a cash receipt from the ATO to clear GST receivable (cash receipt)

Question 15

GST SETTLEMENT

Answer 15

a payment made to the ATO by a small business to settle GST PAYABLE (cash payments )

Question 16

GST FORMULA

Answer 16

Opening balance of GST:
+ GST received from customers
- GST paid to suppliers
+ GS refund ( to settle previous GST receivable)
- GST settlement ( to settle previous GST payable)
= GST BALANCE

Question 17

Expenses
DEFINITION
EXAMPLES

Answer 17

is a decrease in assets (or in increasing liabilities) that reduces owners equity (EXCPET DRAWINGS ARE NOT ADDED)
NO LASTING BENEFIT CONTINOUS PAYING BACK
wages
electricity
insurance on loan

Question 18

Revenue
DEFINITION
EXAMPLES

Answer 18

an increase in assets (bank or Accounts receivable) or reduction in liabilities that leads to an increase in owners equity(except for capital contribution)
SALES
FEES
INTRESET ON INVESTEMENT
only these 3 in Y10

Question 19

What is the template of OE’s section of Balance sheet

Answer 19

Capital ___
Plus/ Less NET PROFIT ___thevalue__
total of this ______________
Less Drawings ____ Total Overall ____

Question 20

Net Profit margin FORMULA

AND WHAT DOES IT MEASURE

Answer 20

NPM= Net Profit/ Net Sales x100
Provides indication of the profitability of the business that asses ability of a business to generate a profit against a base of sales

Question 21

STRATEGIES TO IMPROVE PROFITABILITY

Answer 21

1. Renegotiate with existing supplier to secure cheaper price for supplies
   2.Change supplies to access a cheaper price for materials
2. Buy materials in bulk to access a discount making materials
3. Review staff rostering in order to decrease wages
4. Effective marketing/ advertising to boost sales
5. Improve service delivery in order to build positive word to mouth in the market- boost sales