FNS40211– Certificate IV in Bookkeeping

FNSBKG402A – Establish and Maintain a Cash Accounting System

Instruction to Students:
This Student Assessment Workbook for FNSBKG402A contains details of your assessment works and the guidelines for you to be able to complete this unit by achieving competency.
This learning component of Certificate IV in Bookkeeping, we offer, is delivered in classroom environment and these assessment tasks are conducted as part of the evidence gathering tool using various methods, to assess your knowledge, skill to be competent when all requirements have successfully been completed within a unit of competency requirement. The stated assessment outcomes in competency based course are: Competency when you able to demonstrate competency in the entire assessment task given in “student assessment workbook”. If you not able to demonstrate competency in all of the assessment task or any of the assessment task, you can re – attempt twice, without any charges or re – enrol in the unit of competency.
Plagiarism is the act of passing off another person’s work as that of your own. Any leaner found plagiarising work will receive a not – yet satisfactory at assessment level and not yet competency at unit of competency level.
Purpose of Assessment
¬¬To evaluate the candidate’s ability to demonstrate the knowledge and skill of Certificate IV in Bookkeeping including information participants and skills to establish and maintain a manual and computerised bookkeeping system on a cash basis. It involves all individuals who provide contract bookkeeping services across all industries and bookkeepers working directly for organisations and small business owners or managers.
Critical Assessment Task 1 – Case Study
? You must complete this task correctly to demonstrate competency in this unit.
Reith the Handyman Pty
Reith is the owner of Reith the Handyman, a one-person business that contracts with people to do a variety of jobs including repairing fences, fixing household items and small painting jobs. Reith accounts for the income from cash basis and is not registered for GST. It is located at 2321 Nicholson Street Brunswick, which is a rented property.
The business structure is sole proprietorship, owned and managed by Reith. It provides services mostly on cash basis but occasionally give credits to pensioners who have got a cash flow problem. Reith is very relaxed in collecting payments and does not charge fees for late payments which he believes will discourage new customers.
All purchases are made on cash. Reith tries to pay all suppliers within the same week of delivery. His main supplier is Superior Paint which offers a payment term of 10 days after purchase with no discount. Reith purchases all the other stuff from a local hardware store. Reith does not maintain an inventory register for sales and purchases since he does not want to employ someone and share the profit.
The company has an advertising contract with the Local Leaders. The materials purchased by Reith do not significantly contribute to his income. Reith is not considered to rely on circulating capital or trading consumables to produce income. Reith's income mainly comes from his services or personal efforts.
Reith is currently using MS Excel to manage the finance side of his business but records start getting disorganised since the rapid business growth in recent years. He would like to have a computerised accounting system in place to support the growth. Although most of the accounting information prepared by Reith has all the correct details, it is too costly to input all the data into a computerised system.
With an increase in customer base, keeping cash receipts safe has become a priority for Reith. Reith plans to employee a receptionist at the office to take phone calls and cash receipts from walk-in customers but he does not feel comfortable to let the receptionist bank the daily takings because of a few reasons. He also wants to know about some good procedures to file invoices and customer information physically on site.
1.1
Reith has approached you for assistance in accounting issues. He wants to know the type of his business and whether he should use cash accounting or accrual accounting to report his income and expenses.
1.2
Reith has provided you with an existing chart of accounts’ balances that he summarised himself:
Chart of Accounts:
Bank Account: $55,800
Income for the year: $125,000
Purchased materials: $30,550
Sub contractors: $20,500
General bills for business and himself: $25,000
What additional information or source documents may be needed to get a comprehensive chart of accounts? Is Reith’s business required to register for GST purposes based on the income for the year?
1.3
Reith would like to have a computerised accounting system in place to support his business growth. After consultation with him, you put together a list of desired functions that he put forward:
• Invoice, pay bills and track expenses
• Prepare BAS and track GST
• Import bank statement
• MS Office integration
• Advanced inventory features
• Multi-user capacity
• Advanced reporting tools
After careful consideration, you decided to recommend Accounts accounting software package to Reith. Based on the fact sheet which one has all the desired functions but has a minimal cost?
1.4
After working together with Reith, you have worked out all essential accounts with correct balances in the following:
$
Subcontractor wages 13,000
Electricity 6,000
Bank 21,627
Inventory 30,386
Tools and Equipment 4,800
Loan – Bank 30,000
Capital 22,667
Drawings 10,000
Fencing revenue 200,000
Cost of materials used 50,000
Please classify them into assets, liabilities, owner’s equity, income and expenses using the chart of accounts provided below:
Assets Liability Owner's Equity Income Expenses

1.5
Reith has raised questions over the balance of inventory as he does not believe it is accurate. What can you advise Reith to do for the accurate balance of business inventory?
1.6
Reith has received an invoice from Superior Paint for the Generic Outdoor Paint purchased on 06 June 2013.
Superior Paint
Date of purchase: 08/06/2013 PO No. 0000003 Payment Terms: 10 days after purchase
Quantity Product No Description Unit Price including GST Total including GST Tax code
8 005 Deluxe outdoor Paint $21 $168 GST

Amount of GST in this invoice
$15.27
Please check this invoice for ABN, GST calculation, date of purchase and other information and make corrections as required.
Go to the ATO website and find out what should a business do if there is no ABN on the supplier’s invoice.
1.7
Reith has sent an invoice to John Fowler for work completed as described.
Reith the Handyman
Customer Name: John Fowler ABN:12345678956
Job completed date: 10/07/2013 Job No. 0000010 Payment Terms: Cash on completion
Quantity Job No Description Unit Price including GST Total including GST Tax code
1
1 001
002 First assessment
Fence Painting $50
$560 $50
$560 GST
GST
Amount of GST in this invoice
$55.45
John is having some cash flow problems and has agreed to pay for this invoice by instalment. The payment term for John is 20% every week starting on 15/07/2013. How much cash should Reith have received by 09/08/2013?
1.8
Reith has recently paid in full for the following three invoices and a Statement of Purchases and Payments is received from Superior Paint
Superior Paint ABN:56258895465
Purchase date: 03/07/2013 Invoice No. 0005460 Payment Terms: 10 days after purchase
Quantity Product No Description Unit Price including GST Total including GST Tax code
5
8
6 565
351
126 Velvet White bathroom
Pure Beige all purpose
Pure Grey all purpose $ 50
$ 40
$ 35 $ 250
$ 320
$ 210 GST
GST
GST
Amount of GST in this invoice $70.91 Total: $ 780
Superior Paint ABN:56258895465
Purchase date: 06/07/2013 Invoice No. 0005869 Payment Terms: 10 days after purchase
Quantity Product No Description Unit Price including GST Total including GST Tax code
4
5
3 575
351
126 Light Grey bathroom
Pure Beige all purpose
Pure Grey all purpose $ 45
$ 40
$ 35 $ 180
$ 200
$ 105 GST
GST
GST
Amount of GST in this invoice $44.09 Total: $ 485
Superior Paint ABN:56258895465
Purchase date: 10/07/2013 Invoice No. 0005880 Payment Terms: 10 days after purchase
Quantity Product No Description Unit Price including GST Total including GST Tax code
5
8
6 565
351
126 Velvet White bathroom
Pure Beige all purpose
Navy Blue all purpose $ 50
$ 40
$ 30 $ 250
$ 320
$ 180 GST
GST
GST
Amount of GST in this invoice $70.91 Total: $ 750
Superior Paint Pty Ltd - Statement of customer purchases and payments

Customer Reith The Handyman

Date Invoice number
Payment Reference Number
Invoice balance Amounts paid Balances
1/07/2013 $2,500.00
2/07/2013 5450 $656.00 $3,156.00
3/07/2013 5460 1159 $780.00 $656.00 $3,280.00
4/07/2013 1189 $780.00 $2,500.00
6/07/2013 5869 $485.00 $2,985.00
8/07/2013 1258 $458.00 $2,527.00
10/07/2013 5880 $750.00 $3,277.00
12/07/2013 1290 $570.00 $2,707.00
Closing balance $2,707.00
Please identify the discrepancy between paid invoices and statement of customer purchases and payments provided above. How much should the closing balance be after corrections are made?
1.9
Why is it a good idea that businesses register for express business deposits? What is the consequence for not making payments to suppliers within specified terms?
1.10
When dealing with cash receipts, if multiple account numbers are assigned to an individual receipt, what would you do to ensure the accuracy of recording?
1.11
Please give an example of physical arrangements to file the supporting documents.
1.12
In cash reconciliation, what processes are needed in order to compare the totals on the form for money collected and sales recorded?
1.13
There is usually a discrepancy between the bank statement and the cash ledger account during the reconciliation process. Please give a possible reason for the discrepancies (for examples, those transactions on the bank statement but not in cash journals).
Critical Assessment Task 2 – Written Questions
? You must complete this task correctly to demonstrate competency in this unit.
2.1
You are asked to organise a staff meeting at lunch on 17/06/2013 and the standard practice is to provide fruits and sandwiches for all participants. The business usually purchases catering supplies from a local shop Fatty Skinny and the cost for lunch varies from $60 - $120 depending on the portion size. Authorisation from Arie and Erie is essential for you to get cash from the petty cashier.
Fill out the petty cash voucher based on the information given. Give a reason as to how much is needed for the lunch.
?????????????????? ???
For
Paid to:
Authorised:
Date:
Amount:
2.2
A petty cash book has been provided with all the petty cash vouchers collected. As the business bookkeeper, you are required to conduct a reconciliation using the template given.
DATE Particulars Voucher No Receipts Payments Postage and stationery Decorations Office Expense
2013 $ $ $ $ $
Jun-01 Petty cash advance Ch 112 100
3 Envelopes 1 14.5 14.5
10 Office supplies 3 50.2 50.2
16 Ribbon 6 6.5 6.5
71.2 14.5 6.5 50.2
16 Cash on hand 28.8
??????????????????????????????
Opening balance $100
less petty cash vouchers Envelopes
Office Supplies
Ribbon
Closing balance
2.3
What organisational procedures may be involved for credit card transactions?
2.4
You have received a credit card statement from Dining Club (a credit card company)
Dining Club Page Number Page 1 of 2
Statement begins 25/02/2013
Statement ends 24/03/2013
Mr Reith Handyman Account No 5352 6652
4 Riddle Drive Enquiries 13 22 11
Melbourne
3000 Payment Due Date 20/04/2013

Minimum Payment $80.56

Dining Club Statement
Overdue Opening Balance New Charges Payment/Refund Closing Balance
$0.00 $7.03 $3,520.30 -$3,514.60 $12.73
Date Reference No Transaction Details Amount
5-Mar 115588zzxx Purchase from DIG group 1200.00
10-Mar 155888sss Flight CZ3225 89.66
16-Mar 5689gazd Retail fashion 946.62
19-Mar 5689dddz Purchase from DIG group 1153.61
Credit limit $ 2,500.00
Available credit $ 2,487.27
Credit card register record (The business uses credit cards from two companies: Dining Club (DC) and Eating Club (EC))
Date Supplier/biller Transaction Details Card Type Amount
$
2-Mar Council waste Waste management expense EC 425.00
4-Mar DIG International Purchase from DIG group DC 1200.00
5-Mar South Water Water usage EC 560.00
9-Mar Air Asian Flight CZ3225 DC 98.66
14-Mar DJ Sponsorship Retail fashion DC 946.62
16-Mar Rent A Car Car rental for airport pickup EC 156.35
17-Mar DIG International Purchase from DIG group DC 153.61
Reconcile credit card statement and make corrections to the credit card register record (Assuming the Dining Club Statement is error free)
Correction 1
Correction 2
More corrections if applicable
2.5
Fatty Skinny is a local catering business of which the owner does the bookkeeping and micro-management. As a part of the normal operation, a monthly bank reconciliation is required to conduct for June 2013. You have the following documents provided:
• Cash receipts journal
• Cash payments journal
• Cash at bank ledger
• Bank statement from Many Bank – the owner assumes the banking information provided by Many Bank is always correct so any transaction listed on the bank statement need to be recorded in the accounting system.
Cash Receipts Journal
Date Particulars Rec No Debtors Sales GST Collected Sundries Bank
2013
Jun-13 Cash CCR 350 35 385
12 Cash CRR 900 90 990
15 M. Long 79 2,610.00 2,610.00
16 Commission CRR 767 767
28 Cash CRR 3,436.00 344 3,780.00

Cash Payments Journal
Date Particulars Chq No Creditors Stock Wages
Payable GST
Paid Sundries Bank
2013
Jun-04 Cash 429 750 750
6 K. Lewis 430 10,700.00 10,700.00
8 W. Sweeney 431 136.36 13.64 150
11 Cheque 432 1,200.00 1,200.00
12 Watson’s Estate Rent 433 60 600 660
18 Cash 435 890 890
B. Mitchell 437 357 35.7 392.7
30 Cheque 438 1,176.00 1,176.00

Many Bank
Date Particulars Cheque No Withdrawal Deposit Balance
Jun-01 Balance 9000
5 C/C 385 9,385.00
427 750 8,635.00
432 1,200.00 7,435.00
12 C/C 990 8,425.00
Bank Interest 45 8,470.00
430 10,700.00 -2,230.00
-2,230.00
15 C/C 2,610.00 380.00
380.00
16 C/C 767 1,147.00
23 435 890 257.00
433 660 -403.00
28 Account Keeping Fee 6.5 -409.50
C/C 3,780.00 3,370.50
437 392.7 2,977.80
a) Carry out bank reconciliation by following the correct steps and complete the reconciliation statement and cash at bank ledger.
b) According to our past experience, a correctly processed cheque should be presented in the bank statement in no more than 3 days and any cheque that takes longer requires immediate attention. Please identify the cheques that require immediate attention and state the possible reasons of them not appearing in the bank statement.
Cash at bank ledger
Date Debit Credit Balance
1/06/2013 9,000.00 DR

Balance as per bank statement $ 2,977.80
Plus deposits not yet credited
Less un-presented cheques
Cheque No and amount
Balance as per bank account ledger

2.6
What type of businesses should use cash accounting for their reporting?
2.7
Discrepancies in invoices are usually caused by incorrect entries. Please give three examples of those incorrect entries and explain with your own words.
2.8
Based on the Tax Agent Services Act 2009 in the Theory Appendix, explain your understanding of a BAS service.
2.9
What may be the reasons to modify an existing chart of accounts?