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Workingeffectively infinanceAnswers to chapter activities

© Osborne Books Limited, 2016

2 w o r k i n g e f f e c t i v e l y i n f i n a n c e t u t o r z o n e

The finance function – roles andresponsibilities1

1.2 Management Financial accounting accounting

Drawing up budgets 4

Producing the trial balance 4

Calculating the costs of producing a product 4

Financial planning for the future 4

Managing the accounts of trade receivables 4

1.1 External Internal

The Sales Department of the organisation 4

The Sales Department of a customer 4

The finance company who lends money to the organisation 4

The Finance Department of a supplier 4

The HR Department of the organisation 4

c h a p t e r a c t i v i t i e s a n s w e r s 3

1.3Department needing information Accounting information provided

Sales Department The insurance costs of running the business

Administration Department Customers who are exceeding their credit limit

Production Department The cost of material

1.4 (b) An independent accountant appointed by a business who checks the accounts of that business

1.5 Fiona Robin (Finance Director) Managing Director

Don Everdene (Payroll Line Manager) Accounts Manager

David Barry (Sales Ledger Assistant) Accounts Line Manager

1.6 (c) Limits on hours spent driving maintenance vehicles

1.7 (b) Cash forecast figures

1.8 (a) Sales & Marketing

1.9 (a) Signing arrangements for issuing of cheques(c) Retaining written records for a specific period of time

1.11 (a) Direct costs of manufacturing an item(b) Indirect costs of manufacturing an item

1.10

Finance function Finance activity

Purchases ledger Topping up an imprest system

Payroll Checking supplier invoices

Petty cash Maintaining a cash book

Issuing invoices

Preparing budget reports

Deducting tax


1.12

1.13

Managing Director

Human Resources DirectorMarketing Director

Finance Manager Administration ManagerSales Manager

Accounts Line Managers Sales Representatives

Accounts Assistants Administration AssistantsSales AdministrationAssistants

Finance Director

Statement of profit or loss

Statement of financialposition

Statement of cash flows

The amount of moneyflowing into and out of a

business

The income less expensesfor a financial period

The net worth of thebusiness, how it is financed

and how much it owes


Effectively working in the financefunction2

2.1 (b) The organisation being able to pay debts when they are due

2.2 (a) Chasing up late payments due from customers

(b) Completing the VAT Return on time to avoid a fine

(e) Paying money received from customers into the bank promptly

(g) Negotiating long credit terms with suppliers

2.3 (b) Employee code of conduct(c) Energy saving instructions and guidance

2.4 Employers are bound by the Health & Safety at Work Act which ensures that the workplace is asafe place in which to work. The Working Time Regulations also affect employers and set downrestrictions on the hours that employees will be expected to work. The Living wage regulationsprotects employees by setting out the lowest amounts employers are allowed to pay theiremployees. Confidentiality is important in the workplace and this principle is supported in law bythe Data Protection Act.

2.5 (b) The ability to repay its debts when they are due

2.6 (b) True; (a), (c) and (d) False

2.7 (b) The money a business has in the bank, plus the amounts owed by its customers, plusinventories, less the amounts that must be paid to suppliers

2.8 (d) 6 years


Financial information, documentationand data security3

3.1 (a), (b), (d), (e) and (g)

3.2 (a), (b), (c) and (i)

3.3 (f), (h) and (j)

3.4 A bank statement is an external document received from the bank.It shows the customer’s balance at both the start and end of the period.A debit balance will mean that the account is overdrawn and it will have interest deducted.

3.5 (a) and (d) True; (b) and (c) False

3.6 Budget Actual Variance Adverse Favourable

£ £ £

Direct Material 12,000 10,000 2,000 4

Direct Labour 11,000 15,000 4,000 4

3.7 (b) and (c) True; (a) and (d) False

3.8 The total receipts for May are £12,700 and the total payments for May are £6,500.The net cash flow for the month of May is £6,200.The balance carried forward at the end of May and brought forward at the beginning of June is£13,200.The balance carried forward at the end of June is £6,900.

3.9 (a) True; (b), (c) and (d) False

3.10 (b) Ensuring all personal data is kept confidential and only used for its intended purpose.


Effective business communications4

4.1 (b) It’s time to do some revision(d) I love coffee; its aroma makes me think of dark rich chocolate

4.2 (a) To study accounting is too difficult and learning to drive is too(c) To lose one set of keys is bad luck but to lose two sets of keys is a disaster

4.3 (b) There is no point worrying about their chances of winning their game(c) There seems to be some misunderstanding whether they’re eligible or not

4.4From [email protected]

To

Subject

For the attention of Finance Department staff

Please attend a meeting to be held in

at . This meeting is

and will lead the way to significant changes in the way the

Department is operated in the future.

Imogen Strega

Senior Finance Manager

the Conference Hall

compulsory4

10.30 on 3 December 3

1

2

[email protected]

Staff meeting

Regards 5


4.5incorrect word correction

Cumberbatch Clutterback

month’s months

gratefull grateful

recieving receiving

faithfully sincerely

4.6 (b) Regards

4.7

Section title Section contents

A single page stating what the report is about, whowrote it, and the date it was written.

A short explanation (often for managers andexecutives) summarising the areas the report

examines.

This section tells the reader how the report cameabout and explains the nature of the tasks and the

people involved.

This sets out the information gathered by the reportand is the basis for the conclusions.

This sets out and analyses the results of theinvestigations of the report.

The suggested course(s) of action which are basedon the report.

Conclusions

Recommendations

Additional information which supports the report but isnot contained in the findings.

Appendices

Summary (Executive)

Title page


4.8 (a) Your Line Manager has requested a meeting to discuss next month’s

budget forecasts. He is currently out of the office and would like to knowyour availability tomorrow.

(b) A supplier has left a message to say that an invoice has been paid butthey don’t know which invoice it relates to.

(c) The sales manager would like to know how much is outstanding on tencustomer accounts.

(d) You need to remind yourself to process the petty cash payments onFriday as the cashier will be on holiday.

Email

Telephone

Report

Note

1 0 w o r k i n g e f f e c t i v e l y i n f i n a n c e t u t o r z o n e

5.1 (a) 176 (b) 175(c) 176(d) 176 (e) 176 (f) 175

5.2 (a) 31.46 (b) 31.45 (c) 31.44 (d) 97.77 (e) 97.74 (f) 97.71

5.3 (a) 1/2

(b) 50%

(c) 1:1

(d) 2/3

(e) 67%

5.4 Total amount VAT amount Net amount

£ £ £

(a) 36.00 6.00 30.00

(b) 102.00 17.00 85.00

(c) 10.74 1.79 8.95

(d) 21.48 3.58 17.90

(e) 11.40 1.90 9.50

(f) 378.00 63.00 315.00

Calculations and spreadhseets5

c h a p t e r a c t i v i t i e s a n s w e r s 1 1

Workings:(a) 36 ÷ 6 = £6 (VAT), Net = £36 – £6(b) £17 x 5 = £85 (Net), Total = £17 + £85(c) £8.95 x 20% = £1.79 (VAT), Total = £1.79 + £8.95(d) £17.90 x 20% = £3.58 (VAT), Total = £3.58 + £17.90(e) £1.90 x 5 = £9.50 (Net), Total = £1.90 + £9.50(f) £378 ÷ 6 = £63 (VAT), Net = £378 – 63

5.6 Monthly sales Monthly sales £ %March 14,600 15.60April 15,800 16.88May 13,500 14.42June 18,100 19.34July 17,300 18.48August 14,300 15.28 Total 93,600 100.00

5.5 Price Trade Trade VAT Total (before discount) discount discount £ % £ £ £

Alexandra Ltd 140.00 5% 7.00 26.60 159.60Maddie and Co 160.00 4% 6.40 30.72 184.32Vapo Tool Ltd 175.00 10% 17.50 31.50 189.00Digital Settings Ltd 190.00 20% 38.00 30.40 182.40


5.7 Target sales Actual sales Actual sales in Employee entitled excess of the to a bonus? target Yes/No £ £ %

Alan Bench 10,000 10,900 9% No

David Wear 12,000 11,100 (7.5%) or 0% No

Danielle Barker 5,000 6,500 30% Yes

Alisha Singh 14,000 17,220 23% Yes

5.8 £64.00 / 250 = 25.6p per unit

5.9

5.10 Year 1 11% Year 2 8% Year 3 7%


6.1 Priority Task number (1 to 4)

Priority 1 4

Priority 2 3

Priority 3 2

Priority 4 1

6.2 (b) The Finance Director asks for some costing figures to be sent to him for a meeting which is taking place in two hours time

6.3

Recording future activities for future reference diary

Activities planned for a one day sales conference action plan

A list of activities that have to be done by you ‘to do’ list

A list of activities to be done by different people schedule

6.4 (c) A task that is urgent and important

6.5 Effectiveness is getting the result that you want, which in the case of a workplace means targetsare met and the workforce well motivated.

Efficiency means getting a job done with the minimum waste of effort and resources.

Planning and managing your work6


6.6A client has dropped off a pile of invoices and you have been asked to put them indate order so they can be processed next week

The Payroll Manager has asked you to check the overtime rates for the employeesof a client who need to be paid this week

There are three VAT returns that need to be submitted by the end of next month. Thethree clients need telephoning to remind them to bring in the relevant paperwork

The receptionist is off sick and you have been asked to answer the telephone anddistribute the mail

3

2

4

1

6.7 (a)

WEDNESDAY AFTERNOON AND THURSDAY ‘TO DO’ LIST (in order of completion)

Task 1 Preparing the figures for the Line Manager

Task 2 Posting to the ledgers using a computer accounting program

Task 3 Dealing with emails and the post and processing purchase orders

Task 4 Checking documents received

Task 5 Preparing bank payments to suppliers

Task 6 Getting quotes from suppliers

(b) (c) You would not be providing the necessary support to your work team

6.8 (a) (d) Speak to the Line Manager, explaining the situation and suggesting that sheallocates some of the work to a colleague who has time available to help out

(b) (c) Invoices sent out late could mean that payments received from credit customers maybe delayed


Interpersonal skills and teamwork77.1 (b) Members are familiar with the departmental Policies and Procedures

(c) Members are good communicators

(f) Members support their colleagues if they need help

7.2 (b) Tactfully point out to him that he is breaking the company Code of Conduct; it may be possible that he does not realise that he is breaking it

7.3 By you By manager

You know for sure that one of your colleagues has been takingcash out of the petty cash box and forging vouchers 4

You notice that one of your colleagues is not checking supplierinvoices properly 4

You are asked to cover for a colleague who is on paternity leaveand normally deals with the payroll processing; you have little 4

experience of payroll but say that you are happy to do it

7.4 (c) The Grievance Procedure

7.5 In order to start the CPD process you must identify your development needs.This will enable you to identify your objectives.As the CPD process carries on you will hopefully achieve your objectivesand then be able to assess your achievements.


Attending an external college spreadsheetevening class

Work-shadowing the Credit Control LineManager

Studying for a Level 3 AAT qualification bytaking a home-study course

Reading textbooks on bookkeeping in yourspare time

Attending a Customer Services Skills Course atthe local Chamber of Commerce

Taking part in a team building event - paintballing

Italian language course - evening class

Work-shadowing a senior colleague whooperates the department’s computer accounting

You are a very politeperson by nature butfind it difficult to talk tocustomers over thetelephone, particularlywhen it comes toasking them aboutoverdue invoices.

You have an excellentgrasp of the credit control

procedures in yourorganisation and wouldlike to get promoted in

that area of the accountsfunction.

7.6 (b) Specific, Measurable, Achievable, Realistic, Time bound

7.7


7.8 Dale Punctuality and reliabilityLucy Respecting othersKevin Presenting a professional imageSadie Gaining confidence

7.9 (a) 1 Work-shadowing (ie working alongside someone else operating the Sage computeraccounting system in your office)

3 Attending a week’s full-time Sage course at the local Chamber of Commerce trainingcentre

(b) The best option: 3 The second best option: 1

7.10 1 poor working conditions: (c) Meg 2 poor management: (b) Alan3 different working styles: (d) Rajit4 personality clashes: (a) Mavis

7.11 (a) Pleasant, cooperative, hard-working and respectful of the opinions of others


Ethics, sustainability and corporatesocial responsibility8

8.1 Situation Principle

The auditors find out that the Sales Manager has claimed for more expenses than she actually incurred honesty

The Accounts Manager allows a customer extra discount and it is found that the customer is the Accounts Manager’s close friend objectivity

A person applies for an Accounts Assistant job with a company and claims he is a fully qualified AAT member. In fact he has not professional yet completed his exams behaviour

8.2 (a) An unknown person telephones the office and asks for the telephone number of one of your

colleagues. He says he is an old friend just back from the USA. (b) One of your customers, whom you know well, telephones the office and asks for the

telephone number of another customer. He says he has lost the number but knows you musthave it.

8.3 (a) (a) Accept the wine with thanks and share it out among your colleagues(b) (b) Politely decline the offer of the tickets, and say that you are not in a position to

receive gifts in this way

8.4 (b) You are having a meal out with friends and you tell them the rate of commission your agencytakes when selling holidays to Southern Italy

(c) Your partner knows the Manager of the agency and asks if you know how much theManager earns. You give an approximate figure

8.5 (b) Recycling plastic packaging (c) Encouraging cycling to work (e) Using Fair Trade coffee in the staff room (f) Organising a staff half marathon to raise money for charity


8.6 Extra cost Saves money

Turning off electrical equipment when it is not needed 4

Using another company to recycle paper waste 4

The use of fuel-efficient delivery vehicles 4

8.7 (a) and (c) are true, (b) and (d) are false

8.8 A Corporate Social Responsibility document will contain details of all a company does to promotesustainability. It will include details of purchasing materials from renewable sources and reducingemissions from vehicles. There is also a social aspect of sustainability and many companiesrecord their sponsorship and donations to charitable causes, the arts and sport. Companies arelikely also to become involved in staff development and training, for example sending them onaccounting courses.

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