Accounting Principles, Standards, Financial Statements and Budgets

This report discusses the importance of accounting principles and standards in maintaining financial stability and balance. It examines the purpose of accounting functions within an organization, evaluates the main branches of accounting, and explores the role of technology in accounting systems. It also addresses issues of ethics, regulations, and compliance. The report concludes with an analysis of a cash budget for a hypothetical organization.

Learner Name ID
Programme Name Pearson BTEC
Higher National
Diploma in Business
Unit Number and Title Unit 5 – Accounting
Principles
Credit Value 15 Unit Level 4
Cohort Jan 22
Title
Part 1 Accounting
Principles.
Standards, Financial
Statements and
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Table of Content
Assessment Part 1
1.0 Introduction 3
2.0 An examination of purpose of an accounting function within
an organization 3-4
3.0 A critical evaluation of the accounting function 5-6
4.0 Explanation of main branches of accounting 6-7
5.0 Accounting systems and the role of technology 7-8
6.0 Issues of ethics, regulations and compliance 8-9
7.0 CASH BUDGET 9-10
8.0 Conclusions 10
References 10-11
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Part 1
1.0 Introduction
Write an Introduction to Management Accounting and the
principles of Management Accounting
In this report of accounting principles it discuss about the
standards which basically include the normal rules and regulation that
needed to be implemented and give instruction to the accountant at the
time of maintaining and transacting the financial documents. The main
goal and objective of accounting principles is to support the stability and
equalization of financial statement. Which assists the creditors, lenders
who give loan facility to the borrower and the investor who invest money
in potential organization(Abdulkareem, 2019). The group of systematic
accounting principles which has been given by the financial accounting
standards board (FASB). The company which is chosen form this report
is Brainlabs it is the information controlled marketing agency, which
mainly assist the firm to organize the marketing test- control through the
help of monitor, customer relationship officer and inquiry of London,
United Kingdom. In this case it basically include the importance of
accounting section and financial report and find how the budget strategy
and anticipation helps to predict future results and measure of
correctives to achieve the long term objectives of the organization.
2.0 An examination of purpose of an accounting function within
an organization
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This accounting method is basically utilized for recording the
transactions of company, it operates and understanding the financial
information(Al Homsi, Sori and Asadov, 2020). The function of accounting is
similar to the big machine in which the organization give information
along with the raw materials and note whole firms transaction,
assessment activity, taxes and many more. It also explain about the
actual picture of financial situation of the business. In includes some few
points which are involved in accounting, the first part is maintaining the
books it is also known as accounting cycle. It is the process which is
measured to accept in data transactions because of same and relevant
financial documents. In bigger and shorter organizations, profit or non-
profit, private and public these kind of firms are induced by numbers.
Sales revenue, generating payrolls and maintaining inventory these all
are tracing and the capable leader know how to handle the commands of
those numbers it is very important but with no real purpose of accounting
it is nearly not possible. Firms choosing a good complete role of
accounting it needed to carry individual aspect of accounting after the
debit and credit.
The main goal for the accounting function is to keep the daily financial
proceedings. It also keep and confirm ll the types of monetary
information which involves projected expenses, capital
expenditures,donations, cash flows, utilities and salaries. It should
require to trace in every month.
There are some functions of accounting and its main objective in context
of firms Brainlabs which are as given below:
 Keeping financial statements: It maintain a better and correct note
of day to day financial transactions of the firm Brainlabs (Altinay,
2020). This is UK based firm purchases, sales, trade receivables
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and trade payable also the borrowings which helps the firm
accounting.
 Near control of financial transaction: This organization function of
accounting is helpful for the accountant to get a complete relation
with payments in order of Brainlabs company and the trade
receivable earned by the company to ensure that its get the sales
revenue and left profits.
 To make the financial documents: It mainly create the individual
types of financial documents in which whole accounting is needed.
The accounting function involve prepare monthly data, annually
and quarterly financial reports which are related to the assets of
Brainlabs company, the profit and losses of internal and external
stakeholders and its borrowings(Amel-Zadeh, Meeks and Meeks, 2020).
 To make payable of bills: This function of accounting mainly helps
to confirming the accounts and to make ensure that bills are
adequately paid off and setting the payments dates or paying the
bills for the company. In which they have a duties to pay high for
the retailers and providers on a same date.
3.0 A critical evaluation of the accounting function
The purpose of accounting includes analyzing, reporting, recording
and measuring the financial activities of the company. This
objective of accounting mainly assist in creating to forecast the
budget, profit and loss and the balance sheet(Christianson and et.al.,
2021). It helps in reducing the expense, maximizing incomes and
analyze the upcoming expenditures.
Evaluating the accounting function which are as discussed below:
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 Management of financial information: The organizational
function of accounting is basically helps to handle the day to
day financial activities in an appropriate manner. The daily
transaction includes sales, purchases, trade receivables and
payable.
 Trade payable: This accounting function basically helps in
managing the payments date and payments of
vendor(Irsyadillah and Bayou, 2021). It also provide an assistance
for making the management salary and benefits of
employees on time.
 Creating financial information: This accounting function
involve in creating the statements which includes profit/ loss
and balance sheet of the organization. It also helps in
maintaining the organizations past financial data and making
it achievable for operational task and the process of audit.
 Analyzing the performance: This business of accounting
function is help financially in tracking the financial activities
also measure the financial performance of the organization.
It provide suggestions for increasing the productivity an
reducing the wastage of resources.
4.0 Explanation of main branches of accounting
The main branches of Accounting are as Follows-
Cost Accounting- It Includes evaluating and analyzing the cost
which the organization have occurred in offering of goods and
services to their customer called Cost Accounting. The main
objective of cost accounting is to control and manage the cost of
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the business so that the organisation can increase their profit
margin.
Management Accounting- It helps the organization to provide
information to the management so that the manager of
organization can control Administration of the business. It also
helps the manager to take important decisions of the business.
Auditing- It is also a branch accounting where an outsider certified
public accountant have been appoint known as auditor to inspect
the books of account of the organization to see that the Account
are accurate or not and the money which they invest are invested
at right place or not(Sanada and Tokuga, 2019). If any type of fraud have
been detected by the Auditor then it is a responsibility of auditor to
tell about the fraud to the board of directors of the company.
Tax Accounting- It is a next main branch of Accounting this
accounting which is done by the accounts department of the
organization to know their tax liability and also helps in minimizing
the tax of the company. The main function of Tax Accounting are
preparing various tax returns and dealing with their legal
implications.
5.0 Accounting systems and the role of technology
Accounting system consist accounting process with integrated
procedure and controls. It helps the organization to record the business
transactions in a proper manner by the help of which the businesses can
make there decisions easily. To make a better accounting system
technology plays a major role. The role of technology in accounting
system are as follows-
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Accessibility of Accounting Data- By the help of technology the licensed
users can easily access the their accounting data any time any where
without any difficulty which also saves the time of the organization.
Accurate Data- By the help of technology the accuracy of data is also
improved through which the companies can get their financial position in
the market.
Better Decision Making- The next major role of technology is that it helps
in better decision making because the financial document which they
use are accurate and verified so that the companies can get their target
easily.
Automated Data Entry- There are many accounting software like tally
erp.9, SAP, Busy etc. which are used by the companies to get their
financial position and by the help of these software the companies can
get many information and calculations easily like invoicing, payments
and payroll services etc.
6.0 Issues of ethics, regulations and compliance
It can be define as finding out of comparison between the right and
wrong. It means that the company or organization have to do their
work with honesty which means without any bad intention. If any
firm or company doing their operation ethically then, their
operations will run smoothly and efficiently (Tsuji, 2020). The firm
Brainlabs also do their work ethically until they can good profit for
themselves, but when the firm start facing losses they start their
operation unethically. Some unethical works done by the Brainlabs
are as follows-
Influence or change the Figures- The brain lab firm start changing
their figure in the accounts by putting pressure on the accounts
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department so that they can show the profit to the investors attract
them towards there firm.
Conflict of interest- There is a conflict of interest raise between the
investors and the firm after the completion of auditing because the
investors find out that the organization have change their figures to
attract them which bring issues in the firm and it can also lead to
shutdown of their business.
Lack of productivity- Due to wrong accounting information the
productivity of the firm also get affected because the Branlab firm
is not able to find out the right strategies which can help them to
get their position back in the market.
7.0 CASH BUDGET
This financial document of the firm shows all the cash related
transactions. In this report firm keeping all the money based
incomes and expenditures and it also how that how well a
company maintain its cash transactions. It also involve three
significant components of the statement like operating, investing
and financing activity.
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Impact of cash budget- the business is started by using capital of 100000 also a loan of
50000, the scenarios shows that there is continuous increase in sales in 12 months. The
organisation is making continuous efforts towards raising company’s sales through marketing
campaigns and sales. This effort has increased the sales cost but also have significantly
increased the total revenue. The credit worthiness of the organisation seems strong as the
supplier provides one-month credit, this is effective and in favour of business. Company’s
operational expenses such as rental charges area also decreasing by 15% which depicts that
organisation is working effectively. For being in market as company is a start up the cash
budget shows as a strong and favourable position. This budget can be successfully
implemented in the organisation in order to achieve the organisational the actual result than
can be compared. The deviation can then be rectified by using corrective measure. This only
depicts the cash transaction that is going to take place in the next 12 months.
8.0 Conclusions
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As it is concluded from the above report that the standards of
accounting play a very significant role in a firm and it give lead to
maximize the profitable situation and development of the
organization. The departments of accounting maintain the
documents of all financial tasks and transfer them in financial
reports. There are some multiple components which influence the
daily assessment of the firm and the effect can be directly based
upon the components. This report utilize some various corrective
analysis and the activity recommended to the firm Brainlabs which
assist in accomplishing the upcoming future objectives. An
estimated cash of one year is ready with the assistance of historic
information to analyze the futuristic results of the organization.
References
Abdulkareem, M.D., 2019. Impact of Ethical Codes on Professional Accounting Practices in
Nigeria: Professional Accountants Perceptions (Doctoral dissertation, Kwara State
University (Nigeria)).
Al Homsi, M., Sori, Z.M. and Asadov, A., 2020. Accounting for musharakah mutanaqisah
home financing. CONTEMPORARY ISSUES IN FINANCIAL REPORTING OF
ISLAMIC FINANCIAL INSTITUTIONS (Penerbit UMK).
Altinay, A.T., 2020. Institutional Convergence in European Union Member States: The
Evoluation of the International Accounting and Auditing Standarts. In Handbook of
Research on Social and Economic Development in the European Union (pp. 288-
308). IGI Global.
Amel-Zadeh, A., Meeks, G. and Meeks, J.G., 2020. An outline of issues in accounting for
M&A 1. In Accounting for M&A (pp. 13-41). Routledge.
Christianson, M.S., and et.al., 2021. Financial fluency: demystifying accounting and business
planning for the reproductive medicine specialist. Fertility and sterility. 115(1).
pp.7-16.
Irsyadillah, I. and Bayou, M.S.M., 2021. An institutional perspective on the selection and use
of accounting textbooks: the case of universities in Indonesia. Meditari Accountancy
Research.
Sanada, M. and Tokuga, Y., 2019. Accounting Regulation in Japan: Evolution and
Development from 2001 to 2015. Routledge.
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Tsuji, M., 2020. The social psychology of Cryptocurrency: Do accounting standard-setters
understand the users?. International Journal of Systems and Service-Oriented
Engineering (IJSSOE). 10(2). pp.1-12.
Table of Content
Assessment Part 2
Section B:
Detailed letter to client p
Financial Statements p
i] Profit & Loss Account p
ii] Balance Sheet p
Ratio Analysis p
Conclusion p
Recommendations p
References p
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Part 2
Detailed letter to client p
Write your answer here
Financial Statements p
Present your answer as below
i] Profit & Loss Account p
ii] Balance Sheet p
Ratio Analyses p
Present your calculations here
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Conclusion
Write your answer here p
Recommendations
Write your answer here
References
Write your answer here
14