Accounting in Context and Budgetary Control

This article explores the purpose and scope of accounting, how it assists in making informed business decisions, and how it meets societal needs and expectations. It also covers the main branches of accounting and their required job skills and competencies, as well as the role of accounting in modern technologies. Additionally, it discusses the approach of accounting to ethics, regulation, and compliance.

ACCOUNTING IN
CONTEXT
AND
BUDGETARY
CONTROL

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Purpose and scope of accounting in the complex business environment:..............................3
Explain how the accounting function assists in making the informed business decisions:....4
How accounting function helps in meeting the societal needs and expectations:..................6
Main Branches Of accounting along with the job skills and competencies required.............7
Evaluation of the role of Budgets in an organisation along with its benefits and limitation to
an enterprise:..........................................................................................................................9
Prepare a cash budget...........................................................................................................12
Budgetary control solutions, with justifications for decision making..................................12
TASK 2..........................................................................................................................................13
Prepare the year-end financial statements,...........................................................................13
Calculate the financial ratios................................................................................................14
Evaluation of the performance.............................................................................................15
Benefits of contemporary accounting software packages, with examples of products on the
market...................................................................................................................................16
Conclusions and Recommendations.....................................................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Accounting is the system of documenting, analysing, and summarising monetary
transactions with a view to gift monetary effects to an enterprise. It is not possible for an
enterprise to consider all the transactions that arise on an everyday basis; it's miles important for
an enterprise to recognition on keeping reports, and it has accordingly emerged as extraordinarily
vital to every and each organisation. The monetary statements are divided into three categories.
The paper investigates the cause and position of accounting requirements in regard to moral and
legislative compliance. In addition, the record consists of the advent of monetary debts in
addition to a tribulation balance. It additionally consists of the computation of ratio evaluation. It
additionally consists of the computation of ratio evaluation in addition to the translation of the
results. It additionally consists of the established order of a coin’s finances in addition to
theoretical facts at the finance’s constraints and benefits, in addition to budgetary making plans
and control inner an enterprise organisation.
MAIN BODY
TASK 1
Purpose and scope of accounting in the complex business environment:
The purpose and scope of accounting are mentioned below in a deeper sense:
 Recording – This is the simple characteristic of accounting. All commercial enterprise
transactions of a monetary character, as evidenced via way of means of a few files which
includes income bill, profits slip etc. are recorded withinside the books of account.
Recording is carried out in a e book called “Journal.” This e book may also in addition be
divided into numerous subsidiary books in step with the character and length of the
commercial enterprise.
 Classifying – Classification is involved with the systematic evaluation of the recorded
information, on the way to organization transactions or entries of 1 nature at one area so
that you can placed facts in compact and usable shape. The eye-e book containing
labelled facts is called “Ledger”. This eye-e book carries on exceptional pages, person
account heads below which, all monetary transactions of comparable nature are collected.
For example, there can be separate account heads for Salaries, Rent, Printing and
Stationeries, Advertisement etc. All prices below those heads, after being recorded

withinside the Journal, may be labelled below separate heads withinside the Ledger. This
will assist in locating out the overall expenditure incurred below every of the above
heads. •
 Summarising – It is involved with the coaching and presentation of the labelled
information in a way beneficial to the inner in addition to the outside customers of
monetary statements. This procedure ends in the coaching of the monetary statements. •
 Analysing – The term ‘Analysis’ approach methodical category of the information given
withinside the monetary statements. The figures given withinside the monetary
statements will now no longer assist all people until they may be in a simplified shape.
For example, all gadgets regarding constant belongings are placed at one area even as all
gadgets regarding modern belongings are placed at any other area. It is involved with the
status quo of courting among the gadgets of the Profit and Loss Account and Balance
Sheet i.e., it presents the idea for interpretation. •
 Interpreting – This is the very last characteristic of accounting. It is involved with
explaining the that means and importance of the connection as set up via way of means of
the evaluation of accounting information. The recorded monetary information is analysed
and interpreted in a way so as to permit the end-customers to make a significant
judgement approximately the monetary circumstance and profitability of the commercial
enterprise operations. The monetary assertion has to give an explanation for now no
longer simplest what had passed off however additionally why it passed off and what's in
all likelihood to occur below specific conditions.
 Communicating – It is involved with the transmission of summarised, analysed and
interpreted facts to the end-customers to permit them to make rational decisions. This is
carried out via coaching and distribution of accounting reports, which consist of except
the standard earnings and loss account and the stability sheet, extra facts withinside the
shape of accounting ratios, graphs, diagrams, fund waft statements etc.
Explain how the accounting function assists in making the informed business decisions:
Investing Decisions
Fundamental assessment is predicated upon intently on the accounting facts that is recorded on a
commercial enterprise organization’s monetary statement, alongside the stableness sheet, income
statement, and cash go together with the float statement. Each of the monetary statements for

publicly traded companies are created and said in step with the monetary accounting necessities
set forth thru manner of manner of the Financial Accounting Standard Board (FASB) and
submitted to the Securities and Exchange Commission (SEC).2 Investors and analysts use the
facts from monetary statements to make picks about the valuation and creditworthiness of a
commercial enterprise organization, allowing them to set price dreams and determine if a stock's
price is fairly valued or now not. Without the facts provided thru manner of manner of monetary
accounting, consumers ought to have plenty much less understanding about the historical, gift
day, and capability monetary health of stock and bond issuers. The requirements set forth thru
manner of manner of the FASB create consistency withinside the timing and style of monetary
accounts, which means that consumers are plenty much less in all likelihood to be hassle to
accounting facts that has been filtered based totally mostly on a firm's gift-day condition.
Lending Decisions
Financial accounting is also a key for creditors, from banks to bondholders. Because monetary
statements outline all its assets similarly to the short- and long-term debt, lenders get a better
enjoy of a commercial enterprise organization's creditworthiness. A variety of commonplace
location accounting ratios creditors rely on, inclusive of the debt-to-equity (D/E) ratio and times
interest earned ratio, are derived absolutely from a commercial enterprise organization's
monetary statement. Even for privately-owned agencies that do not constantly observe the
requirements of the FASB, no lending institution assumes the criminal obligation of a large
industrial organization loan without important facts provided thru manner of manner of monetary
accounting techniques. Ultimately, a lender simply wants to understand without a doubt how
masses hazard is concerned at the same time as lending a commercial enterprise organization
money, which can be determined thru manner of manner of reviewing the commercial enterprise
organization's monetary accounting. Once this diploma of hazard is determined, the lender will
also be able to outline exactly how masses to lend and at what interest fees thru the approach of
underwriting the loan.
Corporate Governance
Reliable accounting serves a practical characteristic now not nice for outside consumers and
lenders but moreover for the internal workings of the businesses themselves. The most obvious
advantage for agencies to seek advice from their monetary accounting is to fulfil the prison and
regulatory responsibilities noted for (public) businesses. Companies want to be honest and

apparent about their monetary sports activities and the facts said want to be accurate and
regularly updated. Beyond the regulatory and compliance hurdles monetary accounting moreover
lets in companies optimize their day-by-day operations and find out the varieties of projects that
could provide increase opportunities withinside the future. Financial accounting lets in managers
create budgets, recognize public perception, track efficiency, look at product performance, and
boom short- and long-term strategies, among several distinctive picks aided thru manner of
manner of accounting figures.
The Bottom Line
Financial accounting is a manner for companies to maintain music in their operations, however
additionally to offer a photo in their economic fitness. By presenting statistics via quite a few
statements along with the stability sheet and profits statement, a business enterprise can supply
buyers and creditors greater electricity of their decision-making.
How accounting function helps in meeting the societal needs and expectations:
By The following reasons provide cause for the manner accounting advantages a set of
shareholders similarly to society:
 The financial money owed of an enterprise are used by buyers to end up privy to the
employer's financial situation in terms of everything. The cause for the studies is that
when a person invests coins in a corporation, he expects huge earnings. Investors study
the accounting statistics to determine a employer's earnings producing ability and to
ensure that his coins is steady in that form. He involves a choice to put money into a
challenge after considering all of these variables.
 Accountants: Accountants make advice to corporation owners and managers an amazing
manner to boom a employer's efficiency. This can handiest be completed if he has a
record that modified into created using suitable necessities and principles. If there may be
no record, the account specialists may be now no longer capable of provide
recommendations.
 Creditors and vendors: They study the employer's financial statistics to determine how an
lousy lot coins it owes and the manner prolonged it's going to take to repay it. Creditors
and vendors will enlarge credit score rating to the employer withinside the occasion that
they enjoy steady.

 Accounting is tremendously vital due to the fact that an corporation functionality with the
resource of the use of making use of societal resources, and an amazing manner to
attraction to clients and support, it want to offer part of its earnings as Corporate Social
Responsibility.
Main Branches Of accounting along with the job skills and competencies required.
 Financial Accounting – It covers the instruction and interpretation of monetary
statements and conversation to the customers of accounts. It is ancient in nature because
it information transactions which had already been occurred. The very last step of
monetary accounting is the instruction of Profit and Loss Account and the Balance Sheet.
It frequently allows in willpower of the internet end result for an accounting length and
the monetary function as at the given date.
 Management Accounting – It is worried with inner reporting to the managers of a
enterprise unit. To discharge the features of stewardship, planning, manipulate and
decision- making, the control desires kind of statistics. The special approaches of
grouping statistics and making ready reviews as favored with the aid of using managers
for discharging their features are known as control accounting. A very critical factor of
the control accounting is price accounting which offers with price ascertainment and
price manipulate. Management Accounting could be treated at better ranges of the
Chartered Accountancy Course.
 Cost Accounting – The terminology of Cost Accounting posted with the aid of using the
Institute of Cost and Management Accountants of England defines price accounting as:
“the system of accounting for price which starts off evolved with the recording of profits
and expenditure or the bases on which they may be calculated and ends with the
instruction of periodical statements and reviews for ascertaining and controlling
expenses.”
 Social Responsibility Accounting – The call for social duty accounting stems from
growing social consciousness approximately the unwanted with the aid of using-
merchandise of monetary activities. As already mentioned earlier, social duty accounting
is worried with accounting for social expenses incurred with the aid of using the
employer and social blessings created.

 Human Resource Accounting – Human useful resource accounting is an try to identify,
quantify and file investments made in human sources of an enterprise that aren't currently
accounted for below traditional accounting practice.
Accounting and its role in the modern technologies
An accounting device is a mechanism for preserving song of the economic operations that take
location in a firm. It permits a agency to maintain song of its purchases, sales, revenue, invoices,
income, assets, and obligations, amongst different things, and it is able to create statistical
information that assists the agency and outside events in making knowledgeable decisions.
Expenses, invoicing, and price range are all controlled via the accounting device. The following
factors give an explanation for how generation performs a important element in latest situation:
 Cloud-primarily based totally structures: The net has come to be a fundamental
requirement in latest world, and corporations ought to discover ways to take complete use
of it. Many accounting corporations are turning to cloud-primarily based totally structures
to assist them manipulate their information. Companies might also additionally get entry
to their information at any time via a easy login procedure, no matter in which it's far
stored. When necessary, the supervisor can set up and retrieve the files. This affords
backup and safety and has proven to be pretty treasured to corporations.
 Client transactions which are well-organized: Going virtual advantages each the
commercial enterprise and the clients. Both the client and the accountant can store time
with the aid of using assembly for consultations on-site. By the use of video conferencing
and meetings, each event might also additionally examine, modify, and get entry to real-
time information on the identical time.
 Mobile Accounting: Nowadays, all people is reliant on their cell phones. Many packages
had been evolved to assist with accounting obligations inclusive of developing and
sending bills, photographing receipts, and so on.
 Accounting software program with specialised gear: Many software program packages
had been launched that encompass green gear that permit customers to do calculations
withinside the fastest and handiest way possible. This sort of software program aids
corporations in doing correct and reliable computations without losing time.
Issues of ethics, regulation and compliance and the extent to which they are constraints or threats
to the organisation

The following are examples of moral problems that could stand up in an agency:
 When a worker is prejudiced towards and now no longer dealt with equally, that is called
discrimination. This can arise in any kind of company setting. Employees may be dealt
with on an identical footing. Discrimination isn't handiest unethical, however it's also
towards the law. Employees are discriminated towards primarily based totally on their
age, gender, religion, and different factors. This would possibly bring about intellectual
harassment for any worker, in addition to intense consequences.
 Unethical Accounting Practices: Many businesses forget about or fail to stick to right
accounting standards, rules, laws, and principles. To misinform the fascinated parties,
they fabricate reviews that painting an extra worthwhile situation than it truly is. The
agency company also can sway accounting professionals for the purpose of falsifying
monetary reviews with the aid of using paying big expenses only for their personal
private gain. The photograph of a agency will certainly be harmed because of this. In a
few cases, the business enterprise leaks monetary statistics to a 3rd party, however it'll
now no longer accomplish that except it's far virtually required and better government
have asked it.
 Abuse of Leadership Authority: There are sure bosses withinside the company who abuse
their energy and authority in unethical ways. As a result, disputes and misunderstandings
could stand up some of the subordinates.
 Corporate espionage: Employees of a company may misuse the agency's statistics. They
may also scouse borrow highbrow assets or maybe by skip the statistics directly to
competitors. All of this effects in a lack of client hobby and agree with withinside the
agency.
Evaluation of the role of Budgets in an organisation along with its benefits and limitation to an
enterprise:
A price range is a tool of control used as a resource withinside the planning, programming and
manipulate of enterprise activity. The Chartered Institute of Management Accountants (CIMA)
UK defines price range as “A monetary and/or quantitative statement, organized and authorized
previous to a described time period of the coverage to be pursued throughout that duration for the
motive of achieving a given objective. It may also consist of income, expenditure and

employment of capital” The price range is a blue- print of the projected course of action
expressed in quantitative phrases for a unique time period.
The main characteristics of budget are as follows:
 A finance is worried for a precise destiny period.
 A finance is a written document.
 A finance is an in-depth plan of all of the financial sports of a commercial enterprise.
 All the departments of a commercial enterprise unit have to co-function for the practise of
a commercial enterprise finances.
 Budget is an average to acquire commercial enterprise targets and it isn't a lead to itself.
 Budget desires to be updated, corrected and managed on every occasion change.
Therefore, it's miles a non-stop process.
 Budget enables in planning, coordination and control.
 Different forms of budgets are organized with the aid of using industries in line with
commercial enterprise requirements.
 A finance acts as a commercial enterprise barometer.
Objective of Budgeting in an organisation:
Planning:
Planning is the start of any activity. Planning establishes the goals of the company and comes to
a decision the direction of movement to reap it. It is involved with formulating short-time period
and long-time period plans to reap a specific end. Planning is a assertion of what have to be
carried out, the way it have to be carried out and whilst it have to be carried out. The method of
making ready finances starts off evolved with the established order of particular objectives of
overall performance and is observed through devising plans to reap such favoured dreams. These
objectives consist of each the general commercial enterprise objectives in addition to the
particular objectives for the person devices withinside the commercial enterprise. Establishing
particular objectives for destiny operations is a part of the making plans characteristic of
management, even as executing movements to fulfil the dreams is the directing characteristic of
management. It can be defined as
 Budget is ready in synchronisation with the general goals of the enterprise, maintaining
challenge and company approach into consideration. Individual plans at unit stage have
to be in consonance with organisational plan.

 Budget displays plans. Therefore, making plans have to precede the instruction of
finances.
 Budgeted plans are quantified and duty is assigned to the humans who're accountable for
execution of plan.
 Communication of commercial enterprise goals via finances has helped many an
organisation to lessen fees at some stage in commercial enterprise recession.
 Planning now no longer most effective motivates personnel to gain dreams however
additionally improves universal choice making. During the making plans section of the
finance’s method, all viewpoints are considered, alternatives identified, and value
discount possibilities assessed. This method might also additionally monitor possibilities
or threats that have been now no longer regarded previous to the finances making plans
method.
Directing and Coordinating:
 Once the finances plans are in place, those may be used to direct and coordinate
operations as a way to reap the said objectives.
 A commercial enterprise, however, is lots greater complicated and calls for greater formal
route and coordination.
 The finances give an vital device to direct and coordinate commercial enterprise sports
and devices to reap said objectives of overall performance.
 The budgetary devices in an enterprise are known as duty centres. Each duty centre is led
through a supervisor who has the authority over and duty for the unit’s overall
performance.
 Objectives of every duty centre and diploma of overall performance anticipated from
them are one at a time communicated.
Controlling
 Control is the method of monitoring, measuring, comparing and correcting real
consequences to make sure that a company’s dreams and plans are completed. Control is
completed via the method of comments.
 As time passes, the real overall performance of an operation may be in comparison in
opposition to the deliberate objectives. These offers activate comments to personnel

approximately their overall performance. If necessary, personnel can use such comments
to fine-music their sports withinside the destiny.
 Feedback acquired withinside the shape of finances file from the duty centre is beneficial
to realize the overall performance of the involved unit.
 Any unexpected adjustments into the situations which have been triumphing on the time
of making ready finances are taken into consideration and budgets are revised to reveal
proper overall performance.
 Comparing real consequences to the plan enables save you unplanned expenditures. The
finances enable personnel to alter their spending priorities.
 The most important goal of Budgeting is to assist in attaining the general goal of the
organization.
Prepare a cash budget.
Particulars January February March April May June July
Receipts
Opening Balance 8000 16080 -30100 -66050 -116700 -144900 -132540
Sales 66000 44000 49500 44000 55000 66000 44000
Issue of Shares 0 0 2000 0 0 2000 0
Issue of Debentures 0 0 0 0 0 0 0
Total (A) 74000 60080 21400 -22050 -61700 -76900 -88540
Less: Payments
Purchases 48000 80000 81000 90000 75000 48000 80000
Selling & Administration Expenses 2800 3400 1800 1000 2000 2400 2500
Marketing Expenses 5500 4620 3300 2750 4400 3080 2640
Property / Rental Expenses 1620 2160 1350 900 1800 2160 2250
Total (B) 57920 90180 87450 94650 83200 55640 87390
Closing Cash 16080 -30100 -66050 -116700 -144900 -132540 -175930
Budgetary control solutions, with justifications for decision making.
 Increasing Income: From the calculated cash budget, it can be determined that receipts
are increased by the sales from 4320 in the month April to 4440 and 4560 in the month of
May and June correlatively. The motive behind this sudden rise in income is because of
rise in the sales of the business in the first quarter from 4320 to 4560.
 Transfer of cash balances: The above analysed cash budget shows that business shift the
cash balances from month of April to May and from May to June. The entity has inflated

cash in the first quarter which promotes an overdraft or negative balance of 3720 in the
end of the month of June. As a solution to this the organisation can increase the cash
balance in company by declining the collection of debt period or by up surging the cash
sales.
 Minimize Cost: In the meantime, to boost up the cash balance, the organisation Duck
Cafe can deduct or its cost or expenses. It can decline its drawings so as to generate a
positive or to increase cash balances of the enterprise.
Impact of budgetary control solutions:
By putting the accurate and actual budgetary control solutions, Duck Cafe can bring down the
cost to refining its planning and success of the operational activities which are based on
budgetary arrangement. This relief in declining the costs and achieving the targets which gives
strength to the potency of the organisation (Sahaf, 2018). It promotes growing of thinking;
helping in interpreting and collateral character and duties of the concern and also producing a
formation for operating the set rule and standard for completing; improving the ability of
understanding for position of resolving by making the availability of relative performance
indicators. It aids the owner of the enterprise to pay attention on cash flow, reducing costs,
raising profits and increase the returns on investment. It is the base for all concerns success. It
assists in both planning and controlling the finance of the entity.
TASK 2
Prepare the year-end financial statements,
Income Statement
Income Statement
Particulars Amount
Sales 400000
Less: Opening Inventory 32000
Less: Purchases 158000
Add: Closing Inventory 28000
Gross Profit 238000
Rent & Rates 10000
Energy 6000

Wages & Salaries 34000
Bad debt 8000
Provision for doubtful debts 5000
Net Profit 175000
Balance Sheet
Liabilities Amount Assets Amount
Capital 180000 Premises 160000
Less: Drawings -12000 Equipment 150000
Shareholder's Capital 168000 Trade Receivables 45000
Net Profit 183000 Inventory 28000
Trade Payables 46000 Cash at Bank 14000
397000 397000
Calculate the financial ratios.
Financial ratios are used for assessing the performance of the business entity in relation to
its performance in this sector.
Current ratio: It is a liquidity ratio that estimates the capability of an organisation to pay off its
short term debts or those which fall due within a year. It advises investors and analysts about
how a company can maximize its current assets in order to settle its current liabilities (Silva,
2018).
Current Ratio = Current Assets / Current Liabilities
= 350000 / 150000 = 2.33:1
Quick Ratio: It is a measure of entity's short term liquidity position and also estimates liability
of organisation in order to meet its short term liabilities with its available liquid assets. It
represents the ability of company to immediately use its available cash assets to pay off its
current liabilities.
Quick ratio = (Current Assets – Inventory) / Current Liabilities
= (350000 – 200000) / 150000 = 1: 1

Inventory to working capital: It is a liquidity ratio that estimates the amount of working capital
which is included in inventory. It permits the investor and analyst to understand capability of a
company to increase additional cash from working capital.
Inventory to Working Capital = Inventory / Working Capital
= (200000 / 200000) = 1: 1
Debt to equity ratio: It is an estimation of the contribution made by the creditors and
stakeholders or in the capital of the company. In simple words, ratio of long term debt and
capital in organisation is termed as debt equity ratio (Thomson, de Aguiar and Bebbington,
2021).
Debt to Equity Ratio = Debt / Equity
= 420000 / 200000 = 2.1: 1
Evaluation of the performance.
From the above computations and the results of calculation it can be asserted that
organisation liquidity position is good. From the current ratio, it can be ascertained that the
company's ratio of current assets and current liabilities is 2.33:1 which explains that the
organisation's currents assets are more than its currents liabilities which is good for the financial
position of the business. From evaluation of quick ratio, it can be estimated that it is 1:1 which is
less than the ideal quick ratio which is 2:1 or more than 2:1, this results in consideration that the
ability of company to pay off its short term obligations from available quick assets is weak.
Analyses of inventory to working capital represents that the company is having 1:1 proportion of
working capital included in its inventory which is lower than the ideal ratio i.e., 2:1, which
shows that company has high liquidity of current assets. It also means that there is insufficiency
of inventories in the organisation. By consideration of debt equity ratio, it can be examined that
ratio of debt to equity of organisation is 2.1:1 which is comparatively higher than the ideal debt
equity ratio. In the general sense, it is being examined that ratio of 1.0 is relatively safe while
ratio of 2.0 or more are considered as risky. So with the help of this analyses it can be concluded
that the organisation is riskier in terms of debts and equity.

Benefits of contemporary accounting software packages, with examples of products on the
market.
Modern accounting: It refers to new technology of bookkeeping and helps to maintain the
transactions of the business. It is used in making financial reports efficiently and effectively. In
other words, it is a digital technique of accounting (Veys, Acha and Macchietto, 2019).
Advantages of modern accounting:
 It is less time consuming process because it records all the information, data, transactions
very fast or quick so that an accountant will maintain company's accounts very easily.
 It assists to create financial reports instantly. Due to record all past data or items, it is
very easy to make any kind of reports regarding business. Whenever, any company's
manager wants to see or go through it is financial position then it helps to an accountant
to give report hand to hand. He does not need to take time to giving the reports or data.
 It records an organisation's financial information. Because it aids to operate the business
in structured way which reach the business enterprise on the top.
 It enhances the data quality of any kind of accounting data.
 It aids to filling the taxes, returns and GST. Cause this software helps to collect all the
items, transaction in manual way which helps to file income tax return and etc.
 It cut down the any type of inventories errors. This uses in maintain the inventories
accounts i.e. how much inventories have gone, purchased and how much inventory need
to be purchased (Wahyuni-TD, Haron and Fernando, 2021).
 Less chances to left any transactions and numerical mistakes. Due to doing transactions
in software there is no area to remain unrecorded items.
 It is an automation process. At the time of filling the returns if there is any error or doubt
regarding any transaction then it automatically corrects the mistakes and numerical.
There are many types of contemporary accounting software which uses in today's scenario. That
are discussed below:
 Tally ERP 9: This software stands for transaction allowed in linear line yards. It is used
by mainly MSME (Zeff, 2020). There are lots of steps to use this software
step 1: firstly, organisation need to download, purchase or taking access of this technology
through the websites.
Step 2: To access this software need to use it's all type of supports once installation is done.

Step 3: then, start to create a company and various accounts of the business.
 BUSY software: This is strong bookkeeping technique. It is not only maintaining the
accounts but also manage the complete business. It is easy to use for MSME
companies.
Conclusions and Recommendations.
From the respective ratios calculated above it is determined that the company does not has
the desired ideal liquidity position. From the current ratio, it can be ascertained that the
company's ratio of current assets and current liabilities has been 2.33 which explains that the
organisation's currents assets are more than its currents liabilities which is good for the financial
position of the business. It is also ascertained from the profitability ratio that the company has
not been able to properly utilise its resources for reduction in expenditure and cost control. This
has resulted in low net profit margins as compared to the year 2020.
It is advisable to the company to first and foremost work on increasing the amount of its
cash and cash equivalents that can help the company to improve its liquidity position and pay off
its liabilities towards creditors. This is also requisite that the company strictly controls its
administrative and selling and distribution costs and focuses on better revenue generation from
its products as due to the high administration and marketing costs the company is failing to
achieve a good net profit margin. This will help the business to achieve better revenue generation
leading to better profits and good returns to the investors which will ultimately lead to business
growth and better positioning of company brand image in the market.

CONCLUSION
From the above report, it can be concluded that it is very important for any business
organization to have a good knowledge of accounts and its various branches. The above
statements give the clarification on how the accounting plays a huge role in any company. The
purpose and scope of accounting, evaluation of accounting functions in decision making process
and fulfilling the needs of society and shareholders from the company. It also concludes the main
branches of accounting and skills required to be a good accountant. Accounting system and role
of technology in this technical era is also involved in the following report. With this it also
clarifies harassment, discrimination, unethical accounting practices are the ethical issues that
might come up in the firm. The second task, consists of preparation of financial statements of
sole proprietor, partnership firm and Not for profit organization and analysing the financial
statements using financial ratios like return on capital employed, net profit margin, current ratio,
average receivables and average payable. Eco base with discussing some accounting soft wares
and most popular software used by companies are concluded. Accounting software packages
with examples have also been discussed. In the last part, cash budget has been prepared and role
of budget in effective planning and control, limitations and benefits of budget and budgetary
planning has been elaborated.

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