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    Chapter 4 Revision Test 1

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    Chapter 4 Revision Test 1

    Uploaded by

    iajkdqtayqpwetecsm
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    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views3 pages

    Chapter 4 Revision Test 1

    Uploaded by

    iajkdqtayqpwetecsm

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    doc-30205

    Revision test 1
    Unit 2: Establishing a business
    Chapter 4: Legal requirements and financial considerations

    Answer all questions in the spaces provided. Use the marking scheme as a guide to the time

    you should spend on each question.

    Time allowed for the test: 30 minutes

    TOTAL 30 MARKS

    1 Explain the meaning of each of the following terms.

    (a) Domain name

    This is a website name that lets a business have a presence on the internet in which can

    help customers find your business online easily as each site name is uniqe.

    (b) Accounts receivable

    The outstanding payments owed by customers to the business.

    (c) Consumer Affairs Victoria

    (d) Progressive tax rate

    The more an individual earns, the more tax they have to pay.

    (e) Separate entity principle

    The separate entity account principle states that a business owner should have a separate

    bank account for their business and another one for their personal finances. This helps

    monitor the business cash flow and financial performance.

    (f) Inventory control

    © John Wiley & Sons Australia, Ltd 1


    Unit 2: Establishing a business Chapter 4: Legal requirements and financial considerations

    Inventory control refers to tracking the amount of stock that is coming into the business

    with the aim of minimising costs and having the right amount of materials when needed.

    (g) Overdraft facility

    This is when a bank will let a business withdraw more money than available within the

    business’s account. This is used for quick money when a business runs low on cash.

    (h) Financial control systems

    Financial control systems are processes that help track, monitor and report financial

    performance of a business.

    (i) Bookkeeping

    Bookkeeping is the act of keeping track of what goes in and out of a business in terms of

    money. Bookkeepers keep reports of the transactions and financial affairs of a business.

    (j) Auditing

    Auditing is when a person internally or externally, accesses and evaluates the internal

    controls and financial processes of a business.

    10 x 1 mark each

    2 Is it compulsory to register a business name?

    Registering a business name is compulsory unless it is under the owners own name. This
    helps the public to identify business from each other and is registered from ASIC.
    2 marks

    3 What is WorkSafe Victoria and WorkCover insurance?

    WorkSafe Victoria aim to help and stop workplace injurie in the workforce within Victoria.
    Workcover is a compulsory expense for employers in which cover for legal costs,
    medication costs and loss of income.
    2 marks

    © John Wiley & Sons Australia, Ltd 2


    Unit 2: Establishing a business Chapter 4: Legal requirements and financial considerations

    4 What is the Competition and Consumer Act 2010 (Cwlth)? Identify three issues that

    it addresses.

    The Act, created by the commonwealth aims to fair the competition for business and protects

    the rights for consumers. Issues that it addressees includes, misuse of market power, cartels

    and exclusive dealings.

    5 marks

    5 Describe a situation in which access to an overdraft facility would be beneficial for a

    business.

    A facility overdraft lets a business withdraw more money than what is available in their
    bank account. A situation, being in need of some quick cash after falling low on funds after
    spending too much on product for example. Money is needed to pay for expenses.
    2 marks

    6 Describe four record-keeping strategies that a business can use.

    A cash book where cash receipts are documented to determine cash-flow, Income
    statements which state the amount of profit made by a business over a period of time,
    balance sheets that state what the business owes and owed as well as the owner’s equity
    and hiring a bookkeeper which keeps a record of the business financial transactions.
    8 marks

    7 Identify one consequence a business may face if it fails to obey the law.

    One consequence can be huge and hefty fines that must be paid to the government.
    1 mark

    © John Wiley & Sons Australia, Ltd 3

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