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The table shows an extract from a cash flow statement for a business - HSC - SSCE Business Studies - Question 24 - 2014 - Paper 1
Question 24
The table shows an extract from a cash flow statement for a business. | | Jan | Feb | March | April | May | June | |--------|-----|-----|-------|-------|----... show full transcript
Worked Solution & Example Answer:The table shows an extract from a cash flow statement for a business - HSC - SSCE Business Studies - Question 24 - 2014 - Paper 1
Step 1
(i) Calculate the opening cash balance for March.
Answer
To calculate the opening cash balance for March, we need to consider the opening cash balance for February and incorporate the cash flow for that month. The formula is as follows:
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Determine February's Closing Cash Balance:
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Opening Cash for January: $5000
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Cash In (February): $5000
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Cash Out (February): $3000
February's Closing Cash Balance = Opening Cash + Cash In - Cash Out
5000 - 7000
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Calculate March's Opening Cash Balance:
- Therefore, March's Opening Cash Balance = February's Closing Cash Balance = $7000.
Step 2
(ii) In which month did the business start with a negative cash balance?
Answer
To determine the month the business started with a negative cash balance, we can calculate the cash balance for each month sequentially:
- January: Opening Cash = $5000 (positive)
- February:
- Cash In = 3000
- Closing Cash = 5000 - 7000 (positive)
- March:
- Cash In = 5000
- Closing Cash = 3000 - 5000 (positive)
- April:
- Cash In = 8000
- Closing Cash = 2000 - 1000 (negative)
Thus, the business started with a negative cash balance in April.
Step 3
Explain government influences on the financial management of businesses.
Answer
Government influences on the financial management of businesses can vary widely and can impact crucial operational aspects. Below are key influences:
- Taxation Policies:
- Businesses are subject to various taxes, including corporate tax, payroll tax, and sales tax. Understanding these tax obligations is essential for financial planning.
- Regulatory Compliance:
- Regulations set by government bodies, such as the Australian Securities and Investments Commission (ASIC), can dictate financial practices and reporting standards, ensuring transparency and accountability.
- Financial Aid and Subsidies:
- Governments may offer financial assistance or subsidies to support certain industries, influencing business financial strategies.
- Economic Policies:
- Government monetary and fiscal policies can affect interest rates, inflation, and overall economic conditions, influencing borrowing and investment decisions for businesses.
In summary, businesses must navigate these government influences to ensure they remain compliant, competitive, and financially sound.