Accounting Functions and Budgeting: Purpose, Ethics, Financial Ratios, Cash Budget, and Advantages and Disadvantages - Desklib

Unit 5

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
PART 1............................................................................................................................................3
Determine the Purpose of Accounting Function.........................................................................3
Examine the functions of accounting that are required in an organisation with respect to the
regulatory and ethical constraints................................................................................................4
Show the contrast of the financial performance for satisfying the conditions of the financial
ratios............................................................................................................................................5
Prepare a cash budget from given data for an organisation using a spreadsheet.........................6
Explanation of the advantages and disadvantages associated with the budgets and budgetary
planning, and control for an organisation....................................................................................7
Maintain budgetary control solutions and their effect on firms decision making to insure
efficient and effective preparation of resources..........................................................................9
PART 2..........................................................................................................................................11
Present the financial statements in order to meet the accounting standards and principles......11
P4. Evaluation and analysation of fiscal ratios:.........................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The term accounting may be referred as the process of recording and summarising the
business and financial transactions along with undertaking certain activities such as
analysing, verifying the reporting results. As the business world is expanding day by
day and it becomes complex to remember the transactions so it becomes important to
record written records of financial transactions thus, leads to development of accounting
(AGĂNENCEI and et.al., 2021). So, to ascertain the current performance of the
organisation it is needed to prepare financial statements. This project report will cover
the purpose of accounting function along with assessing with the context of regulatory
and ethical constraint. It will also cover the formulation of financial statements from
trial balance. In addition to that it will calculate the financial ratios and cash budget. At
last, it will include the benefits and limitations of the budget and budgetary planning in
order to control organisation.
TASK
PART 1
Determine the Purpose of Accounting Function
It is very important to take effective decisions in the business organisation in order to
boost growth and development. It is the process by which an individual can handle, record and
summarise the financial transactions. It plays a crucial role in sustaining the business. It is
important to know and understand the functions in order to carry out functions smoothly.
Following are the purpose of financial accounting (Hsieh and et.al., 2019.).
 To make the available records for auditing – It is needed to have proper financial records
at the time of examining the audit and company can identify the accounting discrepancies
in order to provide corrective solutions.
 To keep financial records up to date – The accounting functions can be used for assessing
the weakness and the strength of the company and by providing effective strategies and
solutions in order to concur the weakness and enhance strength.

 For a review of performance – Accounting helps in performing regular reviews in order
to ascertain the correctness of functions. Each department's performance is measures so
that it helps in assessing the profitability of the company.(Cowling, 2021) By measuring
its performance, it helps in increasing the productivity by comparing previous data from
current data.
 To comply with legal and statutory requirements – The accounting department ensures
that all the activities are complying with legal and statutory compliance which are applied
to entity. It also checks all the rules and regulations that are applicable to business
enterprise such as tax policies, regulations related to taxation, wage related compliances
in order to save business from penalty for non- compliance of such activities.
 To ascertain profit and loss – Every business wants to earn profit and it can be said that
profits are the backbone of business. The financial statements are keen to know the
whether the company is in a sound financial position or not to meet its upcoming
requirements of a business entity.
Examine the functions of accounting that are required in an organisation with respect to the
regulatory and ethical constraints.
Accounting plays a very crucial role in the different field of commerce, the market and
the cultures. Because there are many users of such information who are dependent on
them for making reliable and accurate decisions. So, for this purpose, various
accounting principles have taken place or originated. The accounting principles are
universally applicable and they are framed according to the different locations or
countries in the world. There are many countries that abide by the rules and principles
of such mechanism. The accounting standards are formed to order to get the clear
understanding on the reliability and consistence of book- keeping in a particular
business organization and they have the equivalence in the corporate or not. However, it
can be assessed that there have been many frauds and cheatings in the accounting
practices which has spoiled the image of many enterprises. Even, there are many
auditing teams and firm that does not follow the correct accounting procedures and do
not withstand with them. In this case, effective rules and regulations shall be imposed to
make fit to the marketplace or economy which is in a developing process. While
executing any accounting tasks, it shall be performed through the moral and ethical