Exam Flashcards

(52 cards)

1
Q

What is payola?

A

Giving gifts or money to facilitate radio play

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2
Q

How long does a business need to retain financial records?

A

7 years (5 for employee records)

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3
Q

What records does the business need to retain?

A
Invoices
Receipts
Bank statements
Cash till receipts
Payslips
Interviews 
Position description
Reports
Tax returns
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4
Q

What information can be used for the basis of a personal budget?

A

What you spent last year plus inflation

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5
Q

What are the two tax rates for businesses?

A

30% for companies

Income - expenses = taxable income for sole traders and partnerships

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6
Q

What are the differences between employees and contractors?

A

Employee = super, tax, insurance, equipment, holiday leave, employer retains intellectual property, paid per hour usually

Contractor = responsible for own insurance, equipment, tax, can delegate to someone else, paid per job.

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7
Q

List all expenses for a sole trader

A

Rent, commodities (gas, water, electricity), kitchen supplies, equipment, furniture, stationery, phone, internet, postage, marketing, travel, per diems, tax, accountants, lawyers, staff, engineers, venue hire, session musicians

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8
Q

List potential income streams for a band

A

Royalties, music sales, merchandise sales, ticket sales, synchronisation

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9
Q

What role does ethics play in finance?

A

CSR (corporate responsibility)
Supply chain management
T-shirt economy

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10
Q

What does BAS stand for? How often do you need to complete one?

A

Business activity statement

Quarterly

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11
Q

Name four types of business structures

A

Sole trader
Partnership
Company
NFP

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12
Q

What is the ATO and what does it do?

A

Australian tax office, collects tax, issues tax return

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13
Q

Describe potential problems am established rock band might have if they don’t hold good financial records

A

Poor budgeting
May be audited
May be sued

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14
Q

Can a sole trader use personal assets to pay off a business? Briefly explain your answer.

A

Yes. Sole trader is not separate from the business.

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15
Q

In partnership business structure, how does the Australian government see the partners?

A

A court will usually decide that unless there is an agreement to the contrary, all partners are presumed equal

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16
Q

If the balance of intellectual property, investment and input is different amongst the band members, what contract could you use to avoid unfair situations?

A

Band agreement

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17
Q

What does pty and ltd mean? Answer separately and combined.

A

Pty = unlimited proprietary (private) company

Ltd = publicly limited company

Pty ltd = proprietary limited company, private company with at least one share holder with limited number of shares.

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18
Q

In relation to budgeting, how does the 60/20/20 break down and why?

A

60% expenses
20% savings
20% entertainment

Covers living costs, allows you to save and allows you to reward yourself so you don’t binge spend

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19
Q

Explain how you would register a business name and how much it would cost for one year.

A

ASIC

$34 for 1 year
$78 for 3 years

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20
Q

If a not for profit org makes a profit, where does the money get reinvested? Explain with brief example

A

Reinvested into next years budget.

Eg. APRA may choose to give more grants (give back to members)

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21
Q

Which business structure is best for an independent band - explain how it would function

A

Sole trader for lead songwriter or main investor with band members as employees

Or partnership (partnership agreement with percentages of share)

22
Q

Which business structure is not a legal entity of its own

A

Trust (not a business structure)

23
Q

Provide examples of good and bad debt

A

Good = Anything that appreciates in value, assets, property, shares, education

Bad = when you spend more money that what it’s worth, car loan, credit card load

24
Q

When band becomes successful or someone starts purchasing assets, what business structure should band change to?

A

Company, so they are not personally viable if something goes wrong and better for tax reasons

25
Which businesses may use a trust to protect clients?
``` Booking agent Collection society Financial guardian Manager Publisher Record label ```
26
If you are planing to sell your business, which structure would you change to?
Company, you can only sell a company
27
When creating a budget what would be an appropriate contingency rate?
3 months income or 10-15%
28
What does GST stand for and when should you register?
Goods and services tax When earning $75,000+
29
What percentage is GST?
10%
30
When do you need an ABN?
When you begin trading, otherwise you need a hobby form
31
What is tax liability equation for sole trader?
Income minus expenses = tax liability
32
What is the tax liability for a company?
30%
33
Which gov department website would you register an ABN
ABR aus business registry
34
What is a shelf company?
When you purchase a pre made structure with pre made constitution
35
What is a constitution?
Agreement between you and government about how your business will be run
36
What is included on an invoice?
``` Words 'tax invoice' Business name and ABN Name of person who it's addressed to Date Brief description of goods and quantity Amount payable with GST separate Their business address ```
37
What is cost plus pricing?
Add percentage (or margin) to the total cost of producing the product. Margin will allow you to break even, or make a profit
38
What is survival pricing?
When companies are desperate to stay afloat. Heavy pricing discounts. People may think the products are cheap quality.
39
What is market skimming (price skimming)?
Prices are set high to take advantage of strong demand or highly desirable products. Eg. Concert promoters will set prices high when they know a show will sell out.
40
What is market penetration? - maximum market share
Prices are set low to maximise sales and market share. Products must not have premium market position. Best suited to highly competitive markets where product quality is important but not premium
41
What is Premium pricing?
Products have a high value or perceived value and customers are prepared to pay for highest quality. Eg. Barbers Streisand
42
What are fixed costs?
Cost that remain the same regardless of the number of products you sell or manufacture Eg rent, insurance, permanent staff
43
What are variable costs?
Vary with the level of sales or production. Eg casual wages, manufacturing (per unit costs)
44
What is the equation for determining break even points?
Variable cost + (fixed cost/expected sales) = unit cost
45
What needs to be considered when setting up a business?
``` The name Business structure Registering business with ASIC Registering ABN Registering for GST (if applicable) Registering domain names Opening separate bank account Registering trademarks and copyright Partnership agreement ```
46
What is equity finance?
investor will invest for a for a share of the business
47
What is debt finance?
Debt that needs to be repaid at a predetermined rate within a fixed time frame
48
List 6 forms of equity finance
``` Own funds FF&F Trade credit Angel investors Venture capitalists Public offering ```
49
What are angle investors?
Individuals with high bet worth, interested in assisting entrepreneurs Think shark tank
50
What are venture capitalists?
Organisations that pool funds from a number of investors. Greater than a single angel investor
51
What is public offering?
When you list your company of the public stock exchange Anyone can buy shares
52
How do you work out how much a company will be taxed?
There will be a set amount | Plus, x amount of cents in every dollar over x amount