Introduction to Financial

Management

Tutorial 1 Alice SUN

Tutorial Schedule and Content

• House Keeping: Course overview, Assessment structure, Resources …

• Lecture review and discussion

• Discussion Questions: 1.2, 1.6, 1.11

• Problem Questions: 1.4, 1.7, 1.11, 1.13,

 About me
• Alice (Shuting) SUN
• PhD in Education (UIPA Scholar)
• 2020 UNSW Education (Secondary) (Hons) (Class 1)
• 2016-2019 UNSW Commerce (Accounting)
/Education (Secondary)
• Tutoring: COMM1140, DPBS1170, ACCT1501
• Email: [email protected]
• Lecturer-in-charge: Dr Conor Clune
[email protected]
Getting to know you

• Name and/or preferred name?

• Which degree?
• Something unique about yourself or some interesting facts?
Assessment Structure

https://www.business.unsw.edu.au/degrees-courses/course-outlines/archives/COMM1140-2023-T1#assessment
 Assessment Timeline
Week1
Lecture Week5 Week7 Final Exam
Starts Group Period
Online
Tutorial Quiz Assessment COMM1140
Starts Week3 (20%) Starts (20%) Week9 Final Exam

Week2 Week4 Week6 Week8 Week10

Flexibility Group
Week Assessment
No lecture Due (20%)
or tutorial Last lecture
& Tutorial

*Ongoing assessment: Tutorial Participation (Homework + Individual participation)

Tutorial Participation (15%)

Please submit via Moodle before each tutorial ☺

I will also try to make my tutorial slides available for
students after every Friday.
Financial Statement Preparation Assessment (20%)

Group Assessment (15%)

Examination (50%)
 Resources
• The course forum: where students should
post questions about content for staff.
• The lecture recording: We provide pre-
recorded lectures during the Summer term
as we recognise that students learn in their
own time and like to have flexible access to
lecture content. .
• The deeper understanding video series:
The aim of this series is to provide a more
detailed discussion of some of the more
challenging concepts discussed in
COMM1140. The content in the lecture is
the examinable content. Students do not
have to listen to the deeper understanding
video series each week – they can
selectively listen to videos useful to them.
The deeper understanding series discusses
the lecture concepts in more detail, some
videos may draw on terms that are not
covered in the lectures.
COMM1140 – Be Aware of Road-Blocks
Part One: Foundations of Financial Management
Topic 1 – Introduction to financial management
Topic 2 – Measuring & Evaluating Financial Position/Performance
Topic 3 – Recording Business Transactions – journal entries
Topic 4 – Recording business transactions – accruals
Topic 5 – Audit and internal control
Topic 7 – Financial statement analysis: income statement and balance sheet

Part Two: Integrating financial management in Organisations

Topic 8 – Valuation and Cash Flow Management
Topic 9 – Free Cash Flow
Topic 10 – Responsible Financial Management

Low Difficulty
Medium
High Difficulty
Learning Objectives
• Define Financial Management

• Understand the type of accounting information and its users

• Introduction to the key financial statements (Balance sheet, Income

statement and Cash-flow statement)

• Understand the concept of the accounting equation and accrual accounting.

 Financial management & Accounting
• Financial management is the process of planning,
Source
organizing, controlling and monitoring financial documents
resources with a view to achieve organizational goals
and objectives. The primary objective of financial Report Journal
Accounting
management is to maximise shareholder value through Cycle
appropriate resource utilization and decision making.
• Accounting is the process of identifying, measuring,
Trial Balance Ledger
recording and communicating economic information
to assist users to make decisions.
 DQ 1.6

Accounting Tax Office (ATO):

• Accountants are responsible for Calculate profit
based on tax law
Shareholders:
Prospect of
the preparation and presentation future dividends

of financial information to a range External Users

of users Suppliers:
Determine ability Banks:
Determine
• Financial accounting to pay on time
credit rating

✓ for external users

• Management accounting Internal Users
e.g. Managers and Directors:
(COMM1170 & COMM1180) Profitability of different divisions

✓ for internal users

Key financial statements
• Balance sheet = Statement of Financial Position
➢ Enterprise’s set of financial resources and obligations at a point in time

• Income statement = Statement of Financial Performance

= Profit and Loss Statement (P&L Statement)
➢ Generating new resources from operations over a period of time

• Cash flow statement

➢ Cash inflows and outflows over a period of time
Key financial statements

Balance Sheet Income Statement

Financial Position Financial Performance

at a particular point in time over a period of time

Revenue (R): inflows of economic benefits
Assets (A): Resources such as cash, equipment…
that increase owner’s equity, e.g., sales…
Liabilities (L): What the company owes, e.g., bank
Expense (E): use or loss of economic
loan, e.g., accounts payable, loan payable…
benefits that decrease owner’s equity, e.g.,
Owner’s Equity (OE): What belongs to the owners, bills…
the residual, e.g., share capital… R>E: net profit
A= L + OE R<E: net loss
Key financial statements

Balance Sheet Income Statement

Financial Position Financial Performance

at a particular point in time over a period of time

Revenue (R): inflows of economic benefits
Assets (A): Resources such as cash, equipment…
that increase owner’s equity, e.g., sales…
Liabilities (L): What the company owes, e.g., bank
Expense (E): use or loss of economic
loan, e.g., accounts payable, loan payable…
benefits that decrease owner’s equity, e.g.,
Owner’s Equity (OE): What belongs to the owners, bills…
the residual, e.g., share capital… R>E: net profit
A= L + OE R<E: net loss
 Accrual concept
• In income statement, Revenues & Expenses are recognised when an
economically, meaningful event has occurred.
• Accrual accounting includes the impact of transactions on the financial
statements in the time periods where revenues and expenses occur rather
than when the cash is received or paid. It does not have to involve cash.
• e.g. Cash sales and Credit sales
• Cash accounting only accounts for revenues and expenses when cash is
paid or received.
 Tutorial Question Solutions

*Preparation Questions are for your independent study and will not be discussed in your tutorial.
However, these questions are usually covered in PASS classes should you require further assistance.
 DQ 1.2

Distinguish between financial performance and financial position.

• Financial performance means generating new resources from day-to-

day operations over a period of time.
• Financial position is the organisation’s set of financial resources and
obligations at a point in time.
DQ 1.11

• Accrual accounting includes the impact of transactions on the

financial statements in the time periods where revenues and
expenses occur rather than when the cash is received or paid.

• Cash accounting only accounts for revenues and expenses when

cash is paid or received by the enterprise.
 P 1.4 Calculate accrual accounting profit
OE↑ → does not related to profit (R or E)

Profit = Revenue – Expense

$
Revenue 60,000

Less: Expenses
( ): negative / minus
Interest (40000 x 0.05) (2,000)
Wages (12000 + 2400) (14,400)
Depreciation (8000/4) (2,000)
Other (10,000)

Profit 31,600
P 1.7 Accrual profit

1 Sales revenue for the year ended 30/06/22:

= $100 000 + $200 000
= $300 000
P 1.7 Accrual profit

2 Accrual accounting expenses for the year ended 30/06/22:

= $60 000 + $10 000 – $5 000
= $65 000
P 1.7 Accrual profit

3 Accrual accounting profit for the year ended 30/06/19:

= Revenue – Accrued expenses
= $300 000 – $65 000
= $235 000
P1.11 – Match each item with the financial statement that it would appear in by ticking
the appropriate column.
Item Asset Liability Shareholders’ equity Revenue Expense
Inventory 
Cleaning expenses 
Cash at bank 
Marketing expenses 
Buildings 
Income taxes payable 
Loans from banks 
Accounts payable 
Retained profits 
Accounts receivable 
Income tax expense 
Cost of goods sold 
Sales revenue 
P1.11 – Match each item with the financial statement that it would appear in by ticking
the appropriate column.
Item Asset Liability Shareholders’ equity Revenue Expense
Inventory 
Cleaning expenses 
Cash at bank 
Marketing expenses 
Buildings 
Income taxes payable 
Loans from banks 
Accounts payable 
Retained profits 
Accounts receivable 
Income tax expense 
Cost of goods sold 
Sales revenue 
 P 1.13

1 Cardigan’s shareholders’ equity as at 30/06/21 = Assets – Liabilities

= $150 000 – $ 70 000
= $80 000

2 Cardigan’s assets as at 30/06/22 = $150 000 + $63 000 = $213 000

Cardigan’s liabilities as at 30/06/22 = $ 70 000 + $25 000 = $95 000
Cardigan’s shareholders’ equity as at 30/06/22 = Assets – Liabilities
= $213 000 – $ 95 000 30 June 2021 30 June 2022
= $118 000
Assets: 150,000 Assets: 150,000 + 63,000 = 213,000
Liabilities: 70,000 Liabilities: 70,000 + 25,000 = 95,000
Shareholders’ equity: 80,000 Shareholders’ equity: 118 000
3 Cardigan’s shareholders’ equity as at 30/06/22 = $80 000 – $12 000 = $68 000
Cardigan’s liabilities as at 30/06/22 = $70 000 + $20 000 = $90 000
Cardigan’s assets as at 30/06/22 = Shareholders’ equity + Liabilities
= $68 000 + $90 000 30 June 2021 30 June 2022
= $158 000 Assets: 150,000 Assets: 158,000
Liabilities: 70,000 Liabilities: 70,000 + 20,000 = 90,000
Shareholders’ equity: 80,000 Shareholders’ equity: 80,000 – 12,000 = 68,000

4 Cardigan’s assets as at 30/06/22 = $150 000 x 2 = $300 000

Cardigan’s shareholders’ equity as at 30/06/22 = $80 000
Cardigan’s liabilities as at 30/06/22 = Assets – Shareholders’ equity
= $300 000 – $80 000 30 June 2021 30 June 2022

= $220 000 Assets: 150,000 Assets: 150,000 x 2 = 300,000

Liabilities: 70,000 Liabilities: 220,000
Shareholders’ equity: 80,000 Shareholders’ equity: 80,000
Socrative