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Chapter 15 BME ATAR YR 11 > Monitoring Operations > Flashcards

Monitoring Operations Flashcards

1
Q

What are financial reports?

A

The objective of financial reporting is to track, analyse and report your business income.

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2
Q

What does financial position equal to?

A

Stability

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3
Q

What does financial performance equal?

A

Profitability

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4
Q

What does cash flow equal?

A

Liquidity

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5
Q

Explain financial position of the business?

A
  • A business organisation will show its total assets and equities in the form of a balance sheet or statement of financial position.
  • This report gives essential information about the organisation’s financial stability and shows the financial position at a point in time.
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6
Q

What is a balance sheet comprised of:

A
  • Assets
  • Liabilities
  • Equity
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7
Q

Explain assets

A
  • Assets are the items your company owns that can provide future economic benefits.
  • They are of value
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8
Q

Give examples of assets

A
  • inventory
  • furniture
  • machinery
  • buildings
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9
Q

Explain liabilities

A
  • Debts owed by the business to other entities.

- And other financial obligations.

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10
Q

Give example of liabilities

A
  • overdraft
  • loan
  • mortgage
  • wages.
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11
Q

Explain equity

A
  • The owners share of the business.

- It is calculated by subtracting liabilities from assets.

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12
Q

Give example of equity

A
  • capital
  • drawings
  • profit/loss
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13
Q

What is capital?

A

the owner’s investment of funds and other assets

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14
Q

What is drawings?

A

The amount remaining when all the expenses have been subtracted from income for the accounting period.

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15
Q

What is the profit?

A

The amount remaining when all the expenses have been subtracted from income for the accounting period.

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16
Q

Explain the financial performance of the business

A

• A business will show income and expenses in the form of an income statement, also called a Profit and Loss Statement or a Statement of Financial Performance.

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17
Q

What is business’ profitability?

A

This gives important information about the profit or loss that the business has earned

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18
Q

What is the Profit and Loss statement composed of?

A
  • Income

- Expenses

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19
Q

What is income?

A

The money received by the business

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20
Q

Give examples of income

A
  • sales
  • fees
  • interest.
21
Q

What is expenses?

A

Are payments or costs incurred by the business

22
Q

What are examples of expenses

A
  • the cost of sales
  • rent, wages
  • internet
  • water.
23
Q

What expenses have Income Statement/Profit and Loss statement classified?

A
  • Selling
  • Administrative
  • Fiancial
24
Q

What is an example of selling?

A
  • Petrol
  • Vehicle repairs
  • Advertising
  • Maintenance
25
Q

What is an example of administrative?

A
  • Office
  • Rates
  • Power
  • Phone
  • Internet
  • Rent.
26
Q

What is an example of financial?

A
  • Intrest

- Bad debts

27
Q

What information do the balance sheet and income statement provide?

A

Important information about the financial position and performance of the organisation.

28
Q

What is calculated in the income statement?

A

The excess of income over expenditure for a business being profit

29
Q

What is cash flow?

A

the amount of cash entering and leaving the business

30
Q

What are the five elements of financial statements?

A
  • Assets
  • Liabilities
  • Equity
  • Income
  • Expense.
31
Q

What does the fiances of the business revolve around?

A

Revolve around either profitability or liquidity

32
Q

How does a business show cash flow?

A

A business organisation will show cash inflows and outflows in the form of a Statement of Cash Flows.

33
Q

Explain the Statement of Cash Flows

A

A financial report that gives important information about the liquidity of the organisation and shows the cash coming in and going out of the business over a period of time.

34
Q

What is monitoring success?

A

Monitoring or control is one of the most important elements of a manager’s role in a business.

The business will monitor the structures that it has set up to determine how the mission statement and goals are being achieved.

35
Q

What are the additional subsidiary considerations in monitoring of success?

A
  • Human resources
  • Finances
  • Marketing
36
Q

What is control mechanisms?

A

Control mechanisms are the policies and procedures in the business that are used to regulate activities.

37
Q

Why are control mechanisms important?

A
  • They are important in a business because they allow the business and its managers to check, regulate and record how the business is performing against required standards.
  • The business needs to undergo regular review, to ensure that it is meeting business objectives
38
Q

What are the important areas of business control?

A
  • Product
  • Processes
  • Physical locations
  • Physical resources
  • Human resources
  • Finances.
39
Q

What is an example of control mechanisms?

A

A firm may require two signatures on checks more than $10, 000 or have one person log journal entries and another person review the entries.

  • These policies help prevent fraud and errors.
40
Q

What is used to measure and monitor performance

A

Control mechanisms such as ratio analysis, budgets, financial statements, and key performance indicators

41
Q

What is a budget?

A

A budget is a forecast of the financial position and performance of the business.

42
Q

What can budgets project?

A

Project the capital needs, income, expenses, or cash flows for a period of time into the future.

43
Q

What are budgets used for?

A

Planning
Monitoring
Controlling.

44
Q

What does a budget variance report do?

A

Compares budget estimates with the actual results, for a particular financial report.

45
Q

What are favourable variances?

A

Occur when the actual result is better than the estimated amount, for example, if sales are higher than expected or if expenses are lower than expected.

46
Q

What are unfavourable variances?

A

Occur when the actual result is worse than the estimated amount for example if cash inflows are lower than predicted or cash outflows are higher than predicted.

47
Q

What is a budget prepared on?

A

A budget is prepared based on current expectations of markets and sales, a review of past results and trends, and new trends and potential markets.

48
Q

What is the purpose of a Budgeted Balance Sheet?

A

If the business needs to plan for future income and expenses, it will complete a Budgeted Balance Sheet.

49
Q

If the business needs to plan for future income and expenses, it prepares what?

A

Budgeted Income Statement.

Chapter 15 BME ATAR YR 11 (1 decks)

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