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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 determine the opening cash balance for March, we first need to calculate the balance at the end of February and then use that as the starting point for March.
The formula for calculating the cash balance is:
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January Balance: January opening cash balance = $5000
- Cash in January = $6000
- Cash out in January = $3000
Cash balance at end of January:
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February Balance: Opening cash balance for February = $8000
- Cash in February = $5000
- Cash out in February = $3000
Cash balance at end of February:
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March Opening Balance: This will be the balance at the end of February, which is 10000.
Step 2
(ii) In which month did the business start with a negative cash balance?
Answer
To find the month when the business started with a negative cash balance, we need to analyze the cash balances for each month:
- January: Opening Cash = $5000
- February: Balance from January = $8000 after cash flows
- March: Balance from February = $10000 after cash flows
- April: Balance from March = $7000 after cash flows
- May: Balance from April = $4000 after cash flows
- June: Balance from May = $2000 after cash flows
By evaluating these balances, we see that there are no months with a negative opening cash balance. Hence, the business never had a negative cash balance.
Step 3
Explain government influences on the financial management of businesses.
Answer
Government influences on financial management can be observed through various means:
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Tax Regulations: Businesses are required to pay various taxes such as payroll tax, company tax, and GST. These taxes directly affect the company's profit margins and need to be considered in financial planning. Understanding tax obligations helps businesses budget effectively.
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Regulatory Compliance: Governmental bodies, like the Australian Securities and Investments Commission (ASIC), regulate businesses by enforcing laws on fair trading, ensuring transparency, and protecting consumers. Compliance costs can influence financial decisions.
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Financial Assistance Programs: Governments often provide grants, subsidies, or loans to support businesses, especially during economic downturns. Knowledge of such programs can assist businesses in managing cash flow more effectively.
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Economic Policies: Government fiscal and monetary policies can influence interest rates, inflation, and market demand, impacting a business's financial strategies. Businesses must adapt their financial management approaches according to these macroeconomic factors.