物流技术概论outcome

Section2- Assessment

The assessment example below can be used by centre, or alternatively centre can develop their own assessment.

Assessment 1

Outcome covered 1

Assessment instructions

Prepare a report/response which answers the following question.

1.Identify two sources of finance available to private and public sector organizations and

explain the advantages and disadvantages associated with each.

Private sector organization:

1)Use share to raise money:

Advantage:

The capital provided by the owner of a business is long-term capital, because in the normal course of events it will not be repaid to owner.

Disadvantage:

Control a certain percentage shares, will be control the organization’s lifeblood. And it leads much assets and profits flow into the shareholders pocket.

2)Loan:

Advantage:

It is the easiest and the most effective way to raise money.

Disadvantage:

1.Business risk, i.e. the risk inherent in the project. If the project is risky, a provider of

finance will be less certain of recovering its investment, and will charge a higher rate

of interest to compensate for that danger.

2.Financial risk, if the borrower is already heavily dependent on outside finance, the

interest and repayments will consume much of its profits.

Public sector organization:

1)Use charity to raise finance:

It is depend on the donors who support the work of the charity, special events to collect donations from a wide range of people. However, it has uncertainty, which easily lead to insufficient funding.

2)Through the government allocate the funding:

Advantage:

This finance way is use the money from the government revenue received from taxpayers.

Disadvantage:

The funds must be used to the projects have benefit for the taxpayers, unless the government did not give the money to the public sector organization.

2.Define two alternative methods of funding a capital purchase, e.g. a forklift truck. Consider

the financial benefits or disadvantage of each method.

Bank overdraft: the bank allows the business to spend more cash than it actually owns, the bank itself making up the shortfall, it usually charge an arrangement fee for setting up the overdraft facility, and it will charge interest on the amount of cash that has been “overspent” by the business

Benefits:

1)Allows a firm to draw check to a greater value than the actual balance in the bank

account of company.

2)Bank overdrafts are a fairly cheap form of finance with the added advantage of flexibility.

In some cases a small overdraft facility may be offered free of charge.

Disadvantage:

1)The bank will take a close interest in the affairs of the business until the overdraft is

repaid.

2)An overdraft is need repayable on demand; therefore, the bank can withdraw the facility

at a moment’s notice and require the business to pay the amount owing.

Credit from suppliers: A supplier provides goods or services to a purchase with an arrangement for payment at a later date. Their suppliers have in effect-probably unwillingly-“loaned” goods to the business.

Advantage:

This can be cheapest form of finance.

Disadvantage:

1)Prices may be adjusted to allow for credit.

2)Delayed payments can lead to poor relations with suppliers

3.Describe the differences between revenue and capital purchasing and why they are

accounted for in separate ways.

Revenue expenditure refers to obtain the benefits of financial services and only those expenditures that occur in the current period. These expenditures as current expenses should be credited to the appropriate expense account. The effectiveness of expenditures associated with the current fiscal year, should be treated as revenue expenditure