Reference no: EM131443944
Element of Competency
Identify individual compliance and other requirements
Recognise and apply GST implications and code transactions
Report on payroll activities
Report on other amounts withheld, pay as you go instalments and taxes
Complete and reconcile the Activity Statement
Lodge Activity Statement
Requirements:
- Access to a computer loaded with MYOB AccountRight v19.7/8 (PC) or MYOB Account Edge - MAC Version 11.5 (MAC) - Floranda V197 2013.MYO
- Backup disk/flash drive - Calculator
- Access to the internet [if available]
Important - to complete this unit MYOB AccountRight Student Edition v19.7/8 must be used.
Assessment Conditions:
Access to "BAS & IAS Statement User Guide" and to additional reading material used alongside your User Guide, MYOB Australia help and participant's notes is allowed.
Errors will be indicated on printouts. Students will be permitted to correct errors in remaining allocated time and resubmit. All printouts must be accurate. It is recommended that on completion of this module, participants should be able to produce work with not more than two re-submissions.
Remember Dates are important in MYOB AccountRight. Remember neatness and correction of error techniques is important.
Part A and B can be completed in different sessions.
Before beginning this exercise, check that your posture, lighting and working space meets occupational health and safety recommendations.
Assessment Details
You work as the contract bookkeeper for Floranda Flowers Pty Ltd, a company which grows and sells flowers to local florists and markets in the city. The company is registered for GST.
The business has several employees. One employee has the use of a company car - Fringe Benefits Tax is paid by the company.
The company also has a rental house on the property.
Set out on Page 3 is an extract from the Policies and Procedures of the company.
As a contract bookkeeper, you should also have in your possession a set of Policies and Procedures for your business which must contain a Payroll Checklist and a Business Activity Statement Checklist.
Floranda Flowers
Extract from POLICIES and PROCEDURES Manual
1 Company Details
Floranda Flowers Pty Ltd, trading as Floranda Flowers a small business that grows and sells flowers to local florists and city markets, and sometimes for export. Ross Brown is the Director of Floranda Flowers owning 100% of the shares.
2 GST and BAS reporting
The business has an ABN and is registered for GST reporting GST quarterly on a CASH BASIS and PAYROLL monthly. Superannuation and Deductions are paid within 24 days after the end of the month. A 2% PAYG Instalment is also paid quarterly. Income Tax returns are prepared on an Accrual Basis. A Fringe Benefits Tax [$1,000] is paid quarterly. The business also claims a Fuel Tax Credit for diesel used in tractors and equipment on the farm. For 2012/13 year, the ATO has classed this business as horticulture and the fuel tax rate will be 38.143 cents. Items are used to track the number of litres purchased. The business has a Voluntary Agreement with Chris Brown to deduct a 20% Tax from payment. Tax Codes used: CAP, CAF, GST, FRE, ANR, ITS, INP, NIG, NIF, N-T, VWH, ABN. A BAS Clearing A/c is not used by Floranda Flowers. At the end of each month the business assesses the amount of Tax Liabilities and records in their Cash Flow Analysis.
3 Accounting System
The business keeps an Accrual set of books, accounting for debtors and creditors. When data is entered, the source document must be check for validity and the account code and initials of who entered the data is required on the source document.
4 General Ledger
A Chart of Accounts has been drawn up in consultation with the accountant. Accounts are not to be added unless there is no other account which can be used. If accounts are added, care must be taken so that the new accounts are on the correct level so that financial reports are accurate.
5 Fixed Assets
Ross Brown will be responsible for the purchase of assets. [Registration and CTP are recorded as expenses.] A file is kept for each asset purchased. This file should include the Tax Invoice, warranties, loan arrangements and any other documentation regarding the purchase. When sold, sale documentation should be added to the file.
The business is not taking advantage of the Small Business Income Tax concessions depreciation rules.
6 Errors and Discrepancies
It is essential that the books of the business are accurate and correct. Any discrepancies should be reviewed by Ross Brown. A file should be kept to document all changes in the data file. Where necessary, entries should not be deleted e.g. dishonoured cheque. The entry in your data file should be reversed and re-entered if necessary. If an incorrect Tax Code has been used in a previous BAS, a journal entry is recorded to correct this error.
7 End of Month Reconciliation
A Bank Account Reconciliation
Bank reconciliations are performed in your data file at least once a month on the last day of the month to reconcile the accounting records against the bank statement. A number of transactions will appear on the Bank Statement which will have to be entered in the data file.
B Accounts Receivable Reconciliation
At the end of the month, a Receivables Reconciliation report is printed and checked for accuracy.
C Accounts Payable Reconciliation
At the end of the month, a Payables Reconciliation report is printed and checked for accuracy.
D GST Reconciliation
The business accounts for GST on a Cash Basis. The following reports should be printed at the time of preparing the Business Activity Statement: Sales Summary with Tax, Purchases Summary with Tax. The GST Collected balance in the Balance Sheet less the GST in the Sales Summary with Tax report should equal the amount of GST Collected to be reported on the BAS. The GST Paid balance in the Balance Sheet less the GST in the Purchases Summary with Tax report should equal the amount of GST Paid to be reported on the BAS. An adjustment will be made if required to report the correct amount owing.
Part A:
TASK 1 - Identify individual compliance and other requirements
(a) List the two (2) components of the tax agent services legislative package, including where you would find information about them.
(b) Describe the purpose of the TPB and list three (3) ways you can ensure you comply with the TPB registration requirements and Code of Professional Conduct.
(c) Explain how you ensure that the components of the legislation outlined in question (a) above are incorporated into your daily work processes.
(d) What methods do you intend to use to stay up to date with changes to the GST Act and other legislative acts and regulatory rulings?
Refer to Appendix C of the User Guide to answer the following 2 questions (e & f).
(e) List three techniques you could use to reduce cross cultural differences in the workplace.
(f) Summarise a situation in a workplace or as a consumer, where cross cultural communication was an issue and explain how you overcame the difficulty(s).
(g) With reference to the Policies and Procedures of Floranda Flowers, complete the following table setting out lodgement schedule and payment requirements for the final quarter of 2013 [i.e. April to June 2013].
(h) There are guidelines which state when a business must register for GST. What are the guidelines in relation to Floranda Flowers?
(i) What amounts are not included in the calculation of the GST Turnover amount?
(j) According to the Policies and Procedures of Floranda Flowers, what method is used to ensure the business has sufficient funds to pay their Tax liabilities?
TASK 2 - Recognise and apply GST implications and code transactions
(a) How would the following transactions be coded in the data file of Floranda Flowers?
(b) When recording purchases in the data file, the business must have a valid tax invoice on file. Is the document below a valid tax invoice? If not, list the reasons below why it is not a valid tax invoice.
TASK 3 - Other General Questions
Briefly explain the following terms:
(a) Reporting GST on a Non-Cash Basis.
(b) What is W.E.T. and how is it reported?
(c) "Grouping" in relation to GST.
(d) Simplified GST Account Method.
(e) Deferred GST.
PART B: PROJECTS
Part B can be completed in a separate session to Part A if required.
TASK 4 - Recognise and apply GST implications and code transactions
(a) Open the data file supplied "Floranda V197 2013.MYO".
Sign on as "Bookkeeper" and use "MYOB" as the password.
View the Chart of Accounts used in the business.
Display the Transaction Journal and note the data entered 1/3/13 to 30/6/13.
View the Tax Codes used in the data file.
View the transactions in the data file, the coding to the correct account and applying the correct tax code so you familiarise yourself with data already entered.
(b) 20 April 2013
Cheque number 730 was written out to pay the amount owing for the March 2013 BAS. Displayed below is the BAS Transaction printed when the BAS was prepared for the quarter. A Fuel Tax Credit was not claimed in this quarter because it was not claimed at this point in time.
(c) 7 June 2013
Cheque numbers will be EFT to pay the amounts owing to Spectrum for superannuation for May and Greenpeace donations deducted from pays in May.
Key in the 2 cheques using "Pay Liabilities".
(d) 18 June 2013
Print a copy of the payroll summary for May 2013
(e) Refer to BAS and IAS guidelines in Floranda Flowers' Policies and Procedures and set up the BASLink.
Prepare the Instalment Activity Statement for May 2013 reporting the necessary payroll amounts and reconcile with the Payroll Summary report. Print a copy.
Instalment Activity Statement
(f) Enter cheque number 733 written out to pay the amount owing. [The business does not use "Pay Liabilities" to pay PAYG Withholding.]
(g) 20 June 2013
The following Recipient Created Tax Invoice was received together with a cheque for the payment for the sale of flowers.
Enter the sale and payment which was banked on 20 June. You may have to create new Tax Codes to enter this transaction accurately.
(h) 22 June 2013
The business purchased a new Toyota Landcruiser using a Chattel Mortgage over a period of 4 years [48 months]. A Toyota Hilux was traded-in (see notes below). The tax invoice from the dealer is printed below. Use the luxury car tax threshold relevant to the 2012/2013 year of $59,133.00.
You are required to enter the following:
- Trade-in of Toyota Hilux via Receive Money into Undeposited Funds account. Use Receive Money to record the receipt of the Trade-in of $13,000 using GST as the tax code.
- Purchase transaction dated 22/6/13.
- Make your first monthly payment from cheque account to the Finance Company dated 29/6/13.
Note there are several ways of entering the above transactions. Because this entry could be considered outside your scope, you may need to seek advice from your Supervisor/Trainer/Assessor/Accountant/Tax Agent.
Signature and comment of Supervisor/Trainer/Coach/Accountant/Tax Agent
(i) If the Toyota Landcruiser was purchased under a Hire Purchase Agreement, explain how you would calculate the amount of GST to be claimed for June 2013 [no need to calculate the amount].
(j) 30 June 2013
10% of the telephone and internet account for the quarter is considered as private use by the director. You are required to enter the appropriate journal entry to account for this private use. You will need to calculate 10% of inclusive total and 10% of the inclusive amount of GST, which equals $151.80.
(k) 30 June 2013
Cheque Number 734 was written out to pay Chris Brown - contract labourer - $600 less $120 Voluntary Withholding = $480.00. Record the payment.
(l) 30 June 2013
Display the appropriate report [refer to Floranda Flowers Policies and Procedures] to determine the number of litres of fuel purchased for the quarter and calculate the Fuel Tax Credit @ 38.143 cents per litre (using the 2012/13 year rate). Enter the journal entry to account for the claimable Fuel Tax Credit using figures on an accrual basis.
TASK 5 - Report on Payroll Activities
(a) Using your Payroll Checklist reconcile wages, deductions and superannuation for the year.
PRINTOUT 3 - Print the appropriate reports and write the reconciliations on the reports or on your Checklist. Identify and number your printed reports [starting with PO 3a, 3b, etc]
(b) You also need to reconcile the superannuation and donations for June. If you identify any discrepancies, note them here and describe how to fix them.
If required, refer the above discrepancies to your Supervisor/Trainer/Coach and receive authorisation to fix in the data file.
TASK 6 - Reconcile GST and identify and fix discrepancies.
(a) Use the BAS Checklist located over leaf to identify, check and validate the accuracy of the data in the file for the Year and the Quarter. [Bank Statement follows the Checklist.]
You are expected to check data entered, allocation of accounts and Tax Codes used, reconcile and print the reports as per checklist.
(b) If you identify any discrepancies, note here how you will fix the discrepancy.
(c) Refer your discrepancies to your Supervisor/Trainer/Coach and receive authorisation to fix in the data file. You will need to reprint reports and reconcile GST.
Tasks
1. Check with other staff that all data for the period has been entered
2. PRINT the GST report for the previous period.
Check the figures against the payment in April to make sure the data for the previous quarter has not changed.
If so find the offending entries - perhaps the file was unlocked at some point and changes have occurred.
Are there any discrepancies? ...............................
3. Display the Receivables Reconciliation [Summary] at the end of the June quarter.
- Confirm the list is accurate i.e. are these invoices outstanding or has the payment been entered incorrectly perhaps in "Receive Money'.
- Is the "Out of Balance" amount "0"? If out of balance, look for journal entries allocated to "Trade Debtor" or payments dated before invoice date.
4. Display the Payables Reconciliation [Detail] at the end of the June quarter.
- Confirm the list is accurate i.e. are these invoices outstanding or has the payment been entered incorrectly perhaps in "Spend Money".
- Is the "Out of Balance" amount "0"? If out of balance, look for journal entries allocated to "Trade Creditors" or payments dated before the invoice date.
5. Review purchase and sale of any assets.
Review Leases & Loan payments.
Have these transactions been entered correctly?
6. Run the Company Data Auditor and correct errors
- Check file has been verified and backed up
- Cheque Account is reconciled and unpresented cheques are valid
- Check the outstanding cheques - are they correct or are they cancelled cheques or entries entered twice?
- Are the outstanding cheques stale?
- Check the outstanding deposits - are they correct or entries entered twice?
- Debtors reconcile
- Creditors reconcile
- No future dated transactions
- Check any deposits on orders which should be an invoice
- Check Tax Codes
- Check Tax Variances
7. Review the list of common errors located in your workbook.
Do you have any of these errors in your data file?
If so, make the necessary corrections.
8. Print Transaction Tax Codes report and check the accuracy of Tax Codes. [In this file also check the Tax Codes of entries dated July to March for accuracy]
You can also check the correct allocation of transactions.
Make the necessary adjustments.
9. Print the following reports and check accuracy.
- GST [Details - Cash]
- GST [Summary - Cash]
- Profit and Loss for the period - accrual
- Balance Sheet at the end of the period
10. Print the following reports and check accuracy.
- Sales [Summary with Tax]
- Purchases [Summary with Tax]
11. Reconcile GST [see over]
(d) What is the time limit allowed by the ATO to correct the errors in previously submitted BAS?
TASK 7 - Reconciling the Cheque Account
Floranda Flowers Bank Statement
TASK 8 - Reconciling the GST - Reporting on a Cash Basis
(a) Complete the following reconciliations.
GST Collected Reconciliation
GST Collected [end quarter] in Balance Sheet: $........................
Less GST in Sales Summary with Tax report $........................
Amount of GST to pay $........................
Equals GST Collected in GST Report $........................
GST Paid Reconciliation
GST Paid [end quarter] in Balance Sheet: $.........................
Less GST in Purchases Summary with Tax report $.........................
Equals GST [Input Tax Credits] to claim $.........................
Plus/Minus GST correction from previous BAS $.........................
Equals GST Paid in GST report $.........................
TASK 9 - Business Activity Statement
(a) Complete the Business Activity Statement for the June Quarter, reporting PAYG Withholding for June, Fuel Tax Credit for quarter and PAYG Instalment and Fringe Benefits Tax for the quarter.
If would prefer to complete it manually versus using the MYOB BASLink, communicate with your Supervisor/Trainer/Coach for a template.
PRINTOUT 5 - Business Activity Statement if using MYOB BASLink
PRINTOUT 6 - BAS Transaction
PRINTOUT 7 - Audit Report [Summary]
(b) Check the accuracy of the above reports again with your Balance Sheet, Profit and Loss and reports from printouts 4.
(c) Reconcile the PAYG Instalment with the Profit and Loss [Accrual].
[Write your reconciliation on your Profit and Loss report]
(d) Does the business have enough money in the Cheque A/c to pay the amount owing?
TASK 10 - Lodge Activity Statement
(a) Who will lodge this Activity Statement?
(b) Complete the payment cheque on 26th July 2013.
PRINTOUT 8 - General Ledger [Detail] report for 1 April to 30 June as evidence of your data entry. Do not include the Job No. and Net Activity Fields.
You will need to obtain a signature from your Supervisor/Trainer/Coach/Accountant/Tax Agent to assess this assessment to be correct / competent.
Complete tasks in given attachment
Attachment:- BUSINESS ACTIVITY.rar