Bijay SITXFIN008 AT1 Knowledge Question

SITXFIN008
interpret financial
information
© SKUP | RTO # 40471 | V1.1.2024
Next Review Dec 2024 | www.skilledup.edu.au
SITXFIN008 Interpret Financial Information 1

First published 2023
Version 1.0
RTO Works
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© SKUP | RTO # 40471 | V1.1.2024

Assessment Cover Sheet
Student Name Bijay Thapa
Student ID 108157
Student email [email protected]
Date Submitted 25/11/2024
Task Number 1
Submission attempt 1
1,2 or 3
Trainer Name Manish Srivastabha
Course (code and name) SIT40521 - Certificate IV in Kitchen Management
Unit of Competence (code- name) SITXFIN008
Student Declaration
 I declare that the work contained in this Assessment Task is my own, except where
acknowledgement of sources is made. I keep copy of these assignment submitted for my record
•  I have read the skilled up’s plagiarism policy ad I understand the consequences of engaging in plagiarism
and collusion.
•  By writing my name and date below, I have read and agreed to the above.
Student Name Bijay Thapa Date: 25/11/2024
© SKUP | RTO # 40471 | V1.1.2024

Assessment Task 1: Knowledge questions
Information for students
Knowledge questions are designed to help you demonstrate the knowledge which you have
acquired during the learning phase of this unit. Ensure that you:
• review the advice to students regarding answering knowledge questions in the Hospitality
Works Student User Guide
• comply with the due date for assessment which your assessor will provide
• adhere with your RTO’s submission guidelines
• answer all questions completely and correctly
• submit work which is original and, where necessary, properly referenced
• submit a completed cover sheet with your work
• avoid sharing your answers with other students.
i Assessment information
Information about how you should complete this assessment can be found in Appendix A of the
Hospitality Works Student User Guide. Refer to the appendix for information on:
• where this task should be completed
• the maximum time allowed for completing this assessment task
• whether or not this task is open-book.

Note: You must complete and submit an assessment cover sheet with your work. A template is
provided in Appendix B of the Student User Guide. However, if your RTO has provided you with
an assessment cover sheet, please ensure that you use that.
© SKUP | RTO # 40471 | V1.1.2024

Questions
Provide answers to all of the questions below.
1. Define the following financial terminology specific to various financial reports.
Term Definition
a. Assets. A resource that holds economic value and

are expected to yield benefits in the future
b. Liabilities. What the company owes to another party
c. Proprietorship. Having ownership of a business
d. Debtors. A company or individual that owes money
© SKUP | RTO # 40471 | V1.1.2024

Term Definition
e. Creditors. A company or individual that lends money

to another
2. List three examples of typical ‘reporting periods’ that may be used by businesses.
1.Monthly
2.Quaterly
3.Annually
3. List three examples of ‘financial years’ that may be used by different businesses.
1.Calendar year: 1 January – 31 December
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2.Fiscal year: 1 July – 30 June
3.4-4-5 Calendar year: divides the years into quarters with each quarter having two
4-week and one 5-week month
4. List five features and functions of accounting software used to manage financial operations.
1.Billing and invoicing
2.Maintaining accounting records
3.Report generating
4.Financial projections
© SKUP | RTO # 40471 | V1.1.2024

5.Payroll accounting
5. List three uses of financial information and reports in monitoring overall business performance
for an organisation.
1.Budget report
i. Compares estimated budgets to actual budgets
ii. Shows the variance between estimated and actual
iii. Helps in operational decision-making
2.Cash flow report

i. Shows income and expenses
ii. Represents the liquidity of the business
3.Labour and wages report

i. Shows money spent on staffing wages
ii. Shows labour/wages as a percentage of sales for the period
6. Explain the following operational or departmental financial activities/terms that organisations

commonly track and interpret in terms of their financial information.
© SKUP | RTO # 40471 | V1.1.2024

Operational or departmental
Explanation
financial activities
a. Average customer spend. Calculated by adding up all customer

transactions and dividing that number by
the number of customers
Shows how much, on average, a customer
will likely spend
b. Quotations realised to sales. Sales quotes are given to customers to tell

them how much an item/service will cost
Quotations realised to sales are sales that
were made from a given quote
c. Sales performance. How effectively a sales person/team

performs
Can be measured with revenue, number of
repeat customers, customer satisfaction
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Operational or departmental
Explanation
financial activities
d. Stock levels. The amount of stock available for sale at

the moment
7. Name three examples of daily, weekly and monthly transactions that departments or
organisations commonly monitor.
1.Sales
2.Expenses
3.Wages
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8. Explain what the departmental expenditure items listed below refer to when interpreting
financial information.
Name of Expenditure Description
a. Labour. How much it cost to pay wages.refers to the costs

associated with employees and staff working in a
specific department. It encompasses all direct and
indirect expenses related to employing people. These
costs are typically categorized as part of the
operational expenses of a business
b. Stock purchased. .refers to the cost of buying inventory or goods that a

department needs to operate, produce, or resell. This
expenditure item is significant when interpreting
financial information as it reflects the cost directly
related to maintaining or growing the department's
operations. What was bought to be sold by the
company
c. Wastage. Refer to the costs or losses associated with materials,

resources, or assets that are not effectively used or are
discarded. These expenditures highlight inefficiencies
within a department and can significantly impact overall
profitability.Resources that were paid for, but not able
to be used/sold (ex: food that expired before selling)
© SKUP | RTO # 40471 | V1.1.2024

9. Describe what each of the following income descriptors means when interpreting financial
statements or reports.
Name of Income Description
a. Covers and gross income. Gross income is the total amount of money made
before accounting for taxes/expenses/etc Covers are
usually customer numbers
b. Commission earnings. Money made in exchange for making sales

(ex: a 2% commission would mean a
person gets $2 for every $100 sale they
make)
c. Occupancy and gross Gross income is the total amount of money

income.
made before accounting for
taxes/expenses/etc
Occupancy is used in accommodation to
measure the number of rooms occupied
compared to the total rooms available
© SKUP | RTO # 40471 | V1.1.2024

Name of Income Description
d. Sales. Money acquired from selling a

product/service
10. Differentiate between ‘accounts payable’ and ‘accounts receivable’.
a. Accounts payable are who the company owes money to (ex: suppliers or bank)
b. Accounts receivable are debts owed to the company by another person or
business
11. Explain the term ‘variance from budget’.
The term ‘variance from budget’ refers to the difference between the actual financial
performance (or outcomes) and the budgeted (planned or expected) figures. Variances can occur
in income, expenses, or other financial metrics, and they provide insight into how well an
organization is managing its financial plans and resources.A budget is made before an accounting
period to project the expected number of sales and expenses. Variance from the budget is the
difference between the projected budget and the actual budget (determined after the
accounting period)
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12. Outline the main purpose of the following financial reports.
Type of Financial Report Outline of Purpose
a. Budget. Shows what a company projected their

expenses would be vs. what they actually
spent
b. Cash flow. Records all the cash made and spent
c. Covers. Cover reports show the number of

customers or bookings during a certain
time period
© SKUP | RTO # 40471 | V1.1.2024

d. Expenditure. Shows the money spent in total and

divided into different categories (ex:
maintenance, product, etc.)
Helps track and manage costs
e. Labour and wages. Records the number of staff on shift

during certain times and how much the
business paid in wages because of that
f. Occupancy rates. Used for accommodation – records how

many rooms were filled/sold and
empty/unsold, and breaks down
occupancies by room type
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g. Purchases. Accounts for the wholesale purchases

made to sell to customer
h. Receivables. Keeps track of invoices issued and

payments due from customers
i. Sales. Shows how many sales were made and the amount of
money made from those sales
Can help evaluate the effectiveness of
sales campaigns
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j. Stock. Keeps a record of what products you have

on hand to be sold and the amount that
was paid for them
Comparing this to sales can show if stock
has gone missing
k. Transactions. Used in accommodation to show daily

data of check-ins/outs, methods of
payment, and room revenue
l. Transactions exempted. Shows transactions that were tax exempt
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m. Units sold. Shows how many of each product/unit has

been sold
n. Variance. Compares projected numbers to actual

numbers – can be used for any report
Helps with future planning
o. Wastage. A record of what products bought weren’t

able to be sold, usually in terms of food
spoiling
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13. Explain the following terminology in relation to financial record-keeping.
Terminology Explanation
a. Ledger. A record maintained of financial transactions.In

financial record-keeping, a ledger is a central
accounting record where all financial transactions of an
organization are classified, summarized, and recorded.
It contains a series of accounts, each dedicated to a
specific type of transaction, such as assets, liabilities,
equity, revenue, and expenses. The ledger serves as
the foundation of the double-entry accounting system,
ensuring that every debit entry in one account is
matched by a corresponding credit entry in another. It
provides a detailed and organized view of the financial
activities, enabling accurate tracking, reporting, and
reconciliation of accounts. Ledgers are essential for
preparing key financial statements, such as the
balance sheet and income statement, ensuring
compliance with accounting standards and aiding in
financial decision-making.
b. Subsidiary ledgers. Keeps track of transaction and payment history of

customers that owe the business money. A subsidiary
ledger is a detailed financial record that provides a
breakdown of transactions related to a specific
category or account in the general ledger. It is used to
manage and track individual components of larger
accounts, such as accounts receivable, accounts
payable, or inventory. For example, while the general
ledger might show the total accounts receivable, the
subsidiary ledger would list each customer’s account
with their specific transactions and balances.
Subsidiary ledgers enhance financial record-keeping
by improving accuracy, providing detailed insights, and
facilitating reconciliation with the general ledger. They
are essential for ensuring that detailed financial
information aligns with the summarized data in the
main accounting system.
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c. Journals. A detailed and chronological account of all financial

transactions. In financial record-keeping, journals are
detailed records of all business transactions in
chronological order, serving as the primary entry point
in the accounting system. Each transaction is recorded
in a journal as a journal entry, which includes details
such as the date, accounts affected, amounts debited
and credited, and a brief description or reference.
Journals are essential for maintaining accurate and
organized financial records, as they capture the dual-
entry nature of accounting, ensuring every debit has a
corresponding credit. Common types of journals
include the sales journal, purchase journal, cash
receipts journal, and general journal, which collectively
document all aspects of a company's financial activities
before being summarized in the ledger accounts.
d. Transactions. An event where money has changed hands, either to

the business or from the business. In financial record-
keeping, transactions refer to any economic events or
activities that involve the exchange of value and impact
an organization's financial position. These include
activities such as sales, purchases, payments,
receipts, or transfers, which are recorded
systematically in the accounting system to ensure
accurate tracking and reporting of financial activities.
e. Receipts. Given by businesses to customers as a record of

purchase Shows items purchased, prices, payment
made. In financial record-keeping, receipts refer to the
total amount of money received by an organization
during a specific period. This includes income from
sales, services, grants, or other sources. Receipts are
recorded as part of cash flow management and help
track the organization's revenue generation and
liquidity.
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f. Disbursements. Shows that money has been delivered from one

account to another. In financial record-keeping,
disbursements refer to payments made by an
organization or individual to settle expenses, debts, or
other obligations. These can include cash payments,
checks, or electronic transfers and are recorded in the
books to track outgoing funds and ensure accurate
financial reporting.
g. Invoices. Basically a bill for products or services that will be paid

at a later date. Invoices are official documents issued
by a seller to a buyer, detailing the products or services
provided and the corresponding amount due for
payment. In financial record-keeping, invoices serve as
critical records of transactions, helping businesses
track income, monitor cash flow, and ensure accurate
accounting by documenting both sales and purchases.
h. Cash flow. The movement of money in and out of a company.

Cash flow refers to the movement of cash into and out
of a business over a specific period. It is a crucial
element in financial record-keeping, as it tracks the
liquidity of a business, ensuring there is enough cash
to meet obligations, invest in opportunities, and
maintain operations. Monitoring cash flow helps in
assessing financial health and avoiding liquidity crises.
14. Explain what a ‘chart of accounts’ is.
© SKUP | RTO # 40471 | V1.1.2024

An index of all financial accounts. Helps keep track of where money comes from and goeA chart
of accounts is a structured list of all the accounts used by an organization to record financial
transactions in its general ledger. It categorizes financial data into different sections such as
assets, liabilities, equity, revenue, and expenses, making it easier to organize and track the
company's financial activities. The chart of accounts serves as the foundation for the
accounting system, allowing for consistent reporting, accurate financial analysis, and the
efficient preparation of financial statements. Each account is typically assigned a unique code
or number for quick identification and organization.s
© SKUP | RTO # 40471 | V1.1.2024

15. List the five account categories in the General ledger.
1.Assets
2.Liabilities
3.Equity
4.Expenses
5.Revenue
© SKUP | RTO # 40471 | V1.1.2024

16. Explain the following key elements of accounting.
Key Element Explanation
a. Basic rules for double-entry All transactions entered in business records must be
accounting. entered into at least two accounts. The basic rules of
double-entry accounting state that every financial
transaction impacts at least two accounts: one account
is debited, and another is credited. Debits must always
equal credits, ensuring the accounting equation
(Assets = Liabilities + Equity) remains balanced. This
method provides an accurate and complete record of
financial activity, helping to prevent errors and detect
discrepancies in the financial statements.
b. Concept of debits and credits. A debit increases assets and decreases liability
A credit increases liability and decreases assets.
The concepts of debits and credits are fundamental in
accounting to record financial transactions. A debit
increases asset or expense accounts and decreases
liability, equity, or revenue accounts, while a credit
does the opposite, decreasing asset or expense
accounts and increasing liability, equity, or revenue
accounts. These entries ensure that the accounting
equation (Assets = Liabilities + Equity) remains
balanced after every transaction.
17. Explain the difference between the ‘accrual’ and ‘cash’ accounting methods.
The accrual accounting method records revenues and expenses when they are earned or
incurred, regardless of when cash is actually received or paid. In contrast, cash accounting
only recognizes revenues and expenses when cash is received or paid, providing a more
immediate view of cash flow. Accrual accounting offers a more accurate long-term picture
of a business's financial performance, while cash accounting focuses on short-term cash
management.Accrual accounting records income and expenses when they occur (ex:
getting an invoice, but not having paid it yet), but cash accounting records when the actual
money is received or paid out
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18. Complete the table below by providing information on the topics listed for a ‘Profit and Loss
Statement’.
Topic Information
a. Purpose. To show sales and expenses for a period

so gross and net profit can be calculated
b. How these reports are You need to put in all revenue and
generated.
expenses (usually on a spreadsheet) and
can either calculate totals or profits
manually, or use an accounting software
(like xero) to get these numbers
Using sales numbers and
receipts/invoices for expenses
c. Format. Spreadsheet
© SKUP | RTO # 40471 | V1.1.2024

Topic Information
d. Features. Revenue/income/sales, cost of goods

sold, gross profit, fixed expenses, total
expenses, net profit
e. Key information. Revenue/income/sales, cost of goods

sold, gross profit, fixed expenses, total
expenses, net profit
19. Complete the table below by providing information on the topics listed for a ‘Balance Sheet’.
Topic Information
a. Purpose. Show assets, liabilities, and equity of the

business at a given time
Shows a picture of the overall financial
position of the organisation at that point in
time
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Topic Information
b. How these reports are Calculating monetary amount of assets

generated.
like cash, inventory, property value,
vehicles, or equipment/tools
Calculating liabilities (money owed)
through accounts payable, income tax,
loans
Net assets are the total assets minus the
total liabilities
c. Format. Spreadsheet
d. Features. Current assets, fixed assets, total assets,

current/short-term liabilities, long-term
liabilities, total liabilities, net assets
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Topic Information
e. Key information. Current assets, fixed assets, total assets,

current/short-term liabilities, long-term
liabilities, total liabilities, net assets
20. In relation to record-keeping and accounting explain the purpose of ‘reconciliations’.
Reconciliations in accounting are the process of comparing two sets of financial

records to ensure accuracy and consistency, typically between bank statements and
the company's general ledger. The purpose is to identify discrepancies, such as
missing transactions or errors, and correct them to ensure that the financial records
are accurate and up-to-date. Regular reconciliations help maintain the integrity of
financial data, support accurate reporting, and prevent fraud or mismanagement.
Reconciliation is comparing data entered to their supporting documents (like
receipts). This is important to find and resolve any discrepancies that might have
occurred in accounting.
© SKUP | RTO # 40471 | V1.1.2024

21. List three different types of reconciliation other than a bank reconciliation that an organisation
might undertake as part of its business monitoring activities.
1.Vendor reconciliation
2.Business-specific reconciliation
3.Customer reconciliation
22. Explain how to treat ‘unpresented cheques’ when undertaking a bank reconciliation.
An unpresented cheque is a cheque that has not yet cleared through the bank. When
making a bank reconciliation, you would deduct any unpresented cheques from the
bank cash balance. When undertaking a bank reconciliation, unpresented cheques
(cheques issued by the business but not yet cleared by the bank) are treated as
adjustments. These cheques should be subtracted from the bank's cash balance since
they represent payments that have been accounted for in the business's books but not
yet processed by the bank. The adjustment ensures that the bank balance in the
reconciliation reflects only transactions that have been fully cleared.
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23. Explain what is meant by ‘bank charges’ and describe how to treat them when undertaking a
bank reconciliation.
Bank charges are service fees from the bank for processing the business account or
the account being overdrawn. All bank charges need to be accounted for on a bank
reconciliation. Bank charges refer to fees that a bank imposes on an account holder
for various services, such as account maintenance, overdrafts, or transaction
processing. When undertaking a bank reconciliation, these charges are typically
recorded as expenses in the business's accounting records, and they are subtracted
from the bank’s balance to reflect the actual amount of cash available. The charges
should be adjusted in the reconciliation to align the company’s books with the bank’s
records.
© SKUP | RTO # 40471 | V1.1.2024

24. Describe how the listed items must be treated when doing a bank reconciliation.
Items How they must be treated
a. Direct debits on bank statement Direct debits need to be accounted for in

the bank reconciliation
b. Direct credit on bank statement Direct credits need to be accounted for in

the bank reconciliation
25. Explain the ‘concept of costing’.
Costing accounts for all costs involved in business processes or products. The concept of
costing refers to the process of determining the cost of producing a product or providing a
service. It involves tracking, measuring, and analyzing the costs associated with each stage of
production or service delivery to understand how much it costs to create or deliver goods or
services. Costing is crucial for setting prices, controlling expenses, and improving profitability.
© SKUP | RTO # 40471 | V1.1.2024

26. Differentiate between ‘fixed costs’ and ‘variable costs’.
a. Fixed costs are always the same amount and paid at the same time, for example: rent
b. Variable costs are different amounts and can be paid on a schedule or be
unplanned, for example: gas bill, or repairs
27. List three accounting requirements that apply to goods and services tax (GST).
1.Register for GST
2.Issue tax invoices
3.Collect and remit GST
28. Outline the reporting requirements that apply to goods and services tax (GST).
© SKUP | RTO # 40471 | V1.1.2024

a. Must report:
i. Total sales
ii. GST on sales
iii. GST on purchases
© SKUP | RTO # 40471 | V1.1.2024

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© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 1

© 2023 RTO Works

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 2

Student email [email protected]

Date Submitted 25/11/2024

Trainer Name Manish Srivastabha

Course (code and name) SIT40521 - Certificate IV in Kitchen Management

Unit of Competence (code- name) SITXFIN008

Student Name Bijay Thapa Date: 25/11/2024

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 3

• adhere with your RTO’s submission guidelines

• answer all questions completely and correctly

• submit work which is original and, where necessary, properly referenced

• submit a completed cover sheet with your work

• avoid sharing your answers with other students.

• where this task should be completed

• the maximum time allowed for completing this assessment task

• whether or not this task is open-book.

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 4

1. Define the following financial terminology specific to various financial reports.

a. Assets. A resource that holds economic value and

b. Liabilities. What the company owes to another party

c. Proprietorship. Having ownership of a business

d. Debtors. A company or individual that owes money

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 5

e. Creditors. A company or individual that lends money

1.Calendar year: 1 January – 31 December

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 6

1.Billing and invoicing

2.Maintaining accounting records

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 7

2.Cash flow report

3.Labour and wages report

6. Explain the following operational or departmental financial activities/terms that organisations

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 8

a. Average customer spend. Calculated by adding up all customer

b. Quotations realised to sales. Sales quotes are given to customers to tell

c. Sales performance. How effectively a sales person/team

© SKUP | RTO # 40471 | V1.1.2024

Next Review Dec 2024 | www.skilledup.edu.au

SITXFIN008 Interpret Financial Information 9

d. Stock levels. The amount of stock available for sale at

© SKUP | RTO # 40471 | V1.1.2024