Business Accounting Importance - Assignment
Added on 2020-10-22
9 Pages2174 Words478 Views
Business Accounting
Table of ContentsTable of Contents.............................................................................................................................2INTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1: Use of breakeven analysis...............................................................................................3TASK 2............................................................................................................................................52.1: Evaluate a business decision using costing techniques...................................................5TASK 3............................................................................................................................................63.1: Reasons for the importance of final account to stakeholders..........................................6TASK 4............................................................................................................................................64.1: Evaluate the financial state of business through using application of techniques...........6CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONBusiness accounting is one of the systematic system of recording, interpreting andpresenting financial data of an organisation. Accounting is vital way a business used to keeptrack of their operations on right track. It is the role of accountant to make proper analysis ofbusiness finances so that owner of the company can make better and accurate decision in nearfuture. This project aims at providing use of break-even analysis in order to justified regarding abusiness project. Evaluating a business decision through using tools and techniques ofmanagement costing is being explained properly. Apart from this, importance of final accountsto stakeholders and reliable application to evaluate financial position of a business is alsodiscussed under this report (Anandarajan and Srinivasan, 2012). TASK 11.1: Use of breakeven analysisBreak-even point (BEP): It is said to be level or position that used to represents overallsales amounts in either units or revenue terms. It is needed to include costs that are associatedwith the fixed and variable incurred by the TESCO company. A point in which the companyneither earn profit nor get losses. Break-even analysis is being used to analyse the point at which gain received equals to thecosts related with retaining the profits. It calculates, margin of safety which is the amount thatprofit increase the BEP point. It is all about examine the relationships among price, volume andcosts (Hoyle, J. B., Schaefer, T. and Doupnik, T., 2015). Price is the cost a company incurred in buying and selling of goods, whereas volume is thequantity that they normally sell and costs is related with overall investment made to producesthat particular product. A company can make effective decision in case they can understand howthose changes in relation to one another can varies. There is various other use of Breakevenanalysis. Some of them are mentioned underneath: In case decision made in relation to investment: For example, in case company shouldupgrade their equipment, the cost can directly being secure which will be utilised further inhiring new employees or providing sufficient amount of discount on goods and services. Classification of costs as per their behaviours such as fixed or variables. Calculation ofcurrent breakeven position of TESCO. Use of all information as effective tool to make upcoming3
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