Accounting Principles: Analysis, Evaluation, Financial Statements, and Ratios

5 – Accounting
principles

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Analysis the accounting function within an enterprises..........................................................3
2. Evaluate the regulatory and ethical constraints within the organisation.................................4
3.From a given trail balance preparation of financial statements...............................................5
a) Income statement of Village- wide catering Company for the year ended 30th June 2022. .5
b) Difference between sole traders, partnership firm and company...........................................6
4. Present and calculate the financial ratios................................................................................7
a) calculate the financial ratios of the company..........................................................................7
b) Limitation of financial ratios..................................................................................................9
5. Evaluate the financial performance by using financial ratios................................................9
6. Cash budget...........................................................................................................................10
a) Cash Budget of the Village – Wide catering company.........................................................10
7.Discuss the benefits and limitations of budgets and budgetary planning and control of an
organisation. .............................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Accounting principles mean those guidelines that are followed by company to prepare
and presentation of financial statements. It is also known as Generally Accepted Accounting
Principles. It is needed because it brings consistency in the financial statements. It should be
simple and easy understandable that the investors can understand the financial statements.
Accounting concepts and accounting conventions are included in accounting principles. There
are many accounting concepts that are needed to follow by the company such as entity business
concept, principle of going concern and money measurement principle (Aggarwal, 2022). This
report includes, the concept and scope of accounting principles of Moore Kingston Smith that is
situated in UK. They provide various activities of their clients such as finance, audit and tax.
Further this report includes preparation and presentation of financial statements for
unincorporated business and advantages and disadvantages of budgetary control. With the help
of Financial ratios company evaluates the financial performance
MAIN BODY
1. Analysis the accounting function within an enterprises
Accounting functions are the set of the financial activities which helps in identifying, assessing
and recording the transactions that are in the financial form. The prime objective of accounting
function is to maintain the records and the book keeping. It helps in the collection and storing of
the information that are related to the activities which are in the financial terms. It helps in
creation and keeping the accounts from the day company was incorporated to the current day.
This is to reconcile the information from the various sources. It also helps in projecting the future
financial requirement and the formation of the budgets. The financial statement provides the
information about the profit and loss incurred during the year. It shows the income statement of
the concerned period. It helps in keeping the track records of the expenses, profit margin and the
debts. It ensures the compliance of the statutory regulations and rules. The accountant assures
that the various taxes, claims, salaries, dividends, interests, depreciation, etc. are calculated
according to the laws. This accounting is used for both internal as well as external purpose. It
clears the company about its productivity, profitability, sustainability and monitoring its growth
in the next year (Azretbergenova, 2021). It analyses the trends followed by the organisations in

the previous years and making recommendations for the improvement in the financial state of the
company .
2. Evaluate the regulatory and ethical constraints within the organisation
The accounting department of the organisation performs various functions. It maintains the
various reports, creates the budgets for the various departments and maintains the data related to
the costing. It also helps in the planning for the increment in the profits, reduction in the cost,
assessing the future requirement and delivering the important information. The functions are
discussed below-
1. Preparation of the financial reports- the accountant prepares the different financial
statements. It includes the detailed information related to the assets, liabilities, debts and
equities. It also give information about the company 's current profitable state (Gotti and
Fasan, 2020).
2. Payment of salaries and wages- Accounting department keeps the records of the salaries,
wages, provident funds, employee welfare funds ,etc. It also manages the bonuses or any
extra payment being paid to the employees.
3. Monitoring the finance related transactions- In this the proper monitoring is done. It is to
check that the transactions are updated and accurate. These transactions includes the
purchases, payments and sales made during the period.
4. Payment of the utility bill- The accounting department ensures the timely payment of the
various due bills.
5. Comply with the statutory and legal obligations- an accountant should comply with the
industrial and government rules. These rules are related to the taxation policies, payment
of the wages,etc. Such rules are made to prevent the company from the payment of the
penalties for not complying (Grimm, 2021).
6. Performance review of various departments- It includes the regular check of the financial
performances and make amendments while evaluation if it founds any need. As this
performance results in the increase of the productivity and smooth running of the
operations. It also compares the current performance of the company with the current
year 's financial statements. .
7. To avail the records to the auditor- An accountant should available all the financial
records before the auditor. So that the auditing of the enterprise will be done smoothly.