Brisbane State College

Business Organisation and Management

Students Name: Mr Taylor

Class: 2009

Year 11 Unit: Financial Management (FN)

Time: 60min Task No.: 5.1

Task: Short Answer

Conditions: 60min
No teacher assistance
Exam conditions

Criteria Assessed:
Knowledge and Understanding
Reflection Processes
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Question 1 (2 Marks)
List and explain the four (4) objectives of financial management.
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Question 2 (2 Marks)
Explain two (2) of the reasons financial management is important.
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Question 3 (3 Marks)
Provide the term for each of the following definitions:
a) Those assets which can be consumed or converted to another
form (usually cash) within a current year.
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b) The Net Sales minus the Cost of Sales
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c) An event or happening that changes financial position and/or
earnings.
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Question 4 (3 Marks)
Explain the concept of ‘under-capitalisation’ and state one effect that it
may have on the business.
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Question 5 (3 Marks)
Define risk management while explaining the two components of risk
management. Give examples for each.
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Question 6 (3 Marks)
Define financial management and explain why it is important for a
business to make informed decisions and have quality control.
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Question 7 (3 Marks)
Explain why and how the time taken to complete the cash flow cycle
would differ between a convenience store and an antique shop.
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Question 8 (4 Marks)
Determine whether a short or long term source of finance should be
used for the following:
a) A small business buying a building ___________________________
b) Extra funds needed for wages _______________________________
c) Inventories being bought on credit____________________________
d) A large company buying a new CEO a car______________________

Question 9 (6 Marks)
The owner of Scribble, an organisation that makes stationary, is
concerned about the profitability of her business. She has asked you to
give her some explanations and make some calculations for her.
She has provided you with the following information:
Based on the selling price of $4 per
unit
Costs:
Rent
$180
Advertising $
50
Insurance $
25
Cost of Materials
Ink
25c
Plastic tube
5c
Metal spring an tip
35c
Electricity
$55
Wages
$80
a) Calculate the fixed costs and explain what is meant by the term.
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b) Calculate the variable costs and explain what is meant by the term.
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c) Calculate the break even point and explain what is meant by the
term.
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Question 10 (11 Marks)
Use the information below to prepare a Cash Budget for Thomas
Smith for November and December 2009.
The bank balance on the 1st of November is $5 000 (over draft)
November December
Cash Purchases 120 000 90 000
Cash Sales 160 000 130 000
Interest Received 2 000 2 000
Wages 25 000 30 000
Purchase of Equipment 40 000
Operating Expenses 10 000 12 000

November December