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Q.
Do all entities have to prepare Financial Statements fully
compliant with Australian Accounting Standards? |
A.
No. Entities that can be classified as "Non-Reporting Entities" need not
prepare fully compliant Financial Statements. The following will often be
Non-Reporting Entities:
- Small proprietary companies;
- Family trusts;
- Partnerships;
- Sole Traders; and
- Wholly owned subsidiaries of Australian reporting entities.
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Q.
Will MYOB software assist me with my GST reporting obligations? |
A.
Even the most basic of MYOB's software range will greatly assist the
business person preparing monthly or quarterly BAS returns. The software
accommodates businesses no matter what their chosen GST accounting method,
i.e. Cash or Accruals.
All reports required to generate a BAS are found in the "GST Reports" area.
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Q.
How will "Key Factor" and "Break-Even" analysis enhance my business? |
A.
These techniques can be utilised as shown below:
Key Factor Monitoring
Financial statements are not just a set of numbers; numbers in relation to other numbers tell the story.
To faciliate proper financial monitoring, the business person should have access to periodic profit and loss statement and balance sheet.
Using numbers from financial statements, financial ratios can be developed which provides tests that measure the short-term solvency, long-term solvency and profitability of a business.
The following business ratios should be regularly checked by the business owner:
- Return on Capital Employed (ROCE)
- Profitability Ration
- Asset Turnover (or Activity ratio)
Break-Even analysis
Break-Even analysis is used to determine how much
sales/fees needs to be derived, in order to cover the fixed and variable costs of generating that income and all domestic financial commitments.
In calculating break-even it is important to differentiate between fixed and variable costs.
Fixed costs don't change with the level of activity or output, whilst variable costs do.
The benefit of break-even analysis is obvious; it provides the proprietor with a benchmark to aim for in terms of deriving a minimum rate of return.
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