Business Organizations Assignment
Added on 2019-12-03
16 Pages3852 Words155 Views
Business organization
Table of ContentsINTRODUCTION......................................................................................................................1TASK 3......................................................................................................................................1Q. 1. Purpose of financial statements................................................................................1Q. 2. Different type of organization and their financial statements..................................2Q.3. Financial statements analysis of Greggs Plc.............................................................3Q.4. Report........................................................................................................................6Q. 5. Competitor analysis..................................................................................................7Q. 6. Conclusion...............................................................................................................8Q. 7. Presentation..............................................................................................................9References................................................................................................................................10
INTRODUCTIONEvery business prepares its financial accounts in order to identify their financial aswell as operational performance. Different organization prepares distinct type of financialaccounts. In this report we identify the type of financial accounts prepared by theorganizations with their purpose. Moreover, comparative financial statements are alsoanalysed in context to Greegs Plc. It is the largest bakery chain in the UK established in 1939.Headquarter of the company is established in Jesmond, Newcastle upon Tyne, UnitedKingdom. It produces sandwiches, Pies, pastries and another kind of baked foods for theconsumers. Furthermore, the report discusses the competitor analysis of Greggs Plc withWhitbread Plc. TASK 3Q. 1. Purpose of financial statementsFinancial statements: It is prepared to determine the operational and financial resultsof every business organizations. It helps to identify the business changes over the years.Moreover, comparative analysis helps to take effective business decision through mitigate thenegative business impacts. Accounting terminology: Every transaction has two aspects debit and credit. Debittransaction indicates the increase in assets and expenses or decrease in liability. However,credit transaction indicates either increase in liability and income or decrease in assets.Moreover, balance sheet includes two terminologies that are assets and liability (Taylor,2010). Assets are such things that are used for future economic benefits to the organization.However, liabilities are the company's obligation for which payment is required by thecompany. Prime Entry Books: Initially, every business transaction is recorded in books of primeentry. It is also termed as books of original entry includes sales and purchase book, Returnbooks, Cash receipts and payment book, petty cash book, bank book and journal.Accounts and ledgers: Accounts are prepared with debiting and crediting all theincome and expenditures that have taken place in the accounting period. However, ledger isprepared for all the individual business transaction (Penman and Penman, 2007). Trial balance: It is prepared to determine the mathematical or arithmetical accuracythrough combining all the ledger account balances. Moreover, it helps in preparing thebusiness final accounts. 1 | P a g e
Final accounts: Two statements are prepared as the final accounts of the everyorganization that are income statement and balance sheet.ParticularsPurposeIncome statementsTrading Account - It is prepared todetermine the amount of gross profit or grossloss from its trading operations. It iscalculated by subtracting cost of goods soldfrom net sales.Profit and loss Account – It is prepared todetermine the net results through deductingthe gross profit plus indirect incomes to totalindirect expenses.Balance sheetIt is prepared to determine the financialposition of the organization (Benninga,2008). Business can identify their financialstrengths and weakness through thisstatement. Q. 2. Different type of organization and their financial statementsGreggs Plc: It is a public company hence prepares income statements and balancesheet as final accounts so as to know their profits and financial status. Moreover, retainedearnings statements, cash flow statement and fund flow statements are also prepared by thecompany in order to determine respective changes. It prepares its statements according to theact requirement. Further, consolidated financial statements are also prepared by the companythrough combining all the Subsidiary operations. Sole trader: In this type of business only a single person establishes the businessorganization. Therefore, all the money is invested by themselves and bear all the profits aswell as losses.It prepares its financial statements according to their own requirements. Alltrading, profit and loss account and balance sheet is prepared by the entrepreneur (Schroeder,Clark and Cathey, 2011). The statements help to determine their profits or loss situation. Income statement: It includes trading and profit and loss account. Trading account isprepared to ascertain the gross profit or loss. The amount of net profit or net loss isascertained through profit and loss account. 2 | P a g e
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