Accounting Principles in Carrefour Supermarket

DATE: 11/15/2021 Contents Purposes of accounting function within Carrefour Supermarket 20 Ethical Budgeting and planning 20 Decision making 20 Compliance of the law 20 Reporting and financial statements 21 Avoiding unethical fraud 21 Accounting function within Carrefour in the context of regulatory and ethical constraints 21 Ethical constraints in accounting 21 Manipulation of figures 22 Effects of greed 22 Confidentiality 22 Misappropriation of assets 22 Regulatory constraints in accounting 23 Nature of accounting 23 Generally accepted accounting principles (Gaap) 23 Context and purpose of the accounting function

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ACCOUNTING PRINCIPLE
ASSIGNMENT TITLE: APPLICATION OF FINANCIAL AND
MANAGEMENT ACCOUNTING TECHNIQUES IN THE
PREPARATION AND ANALYSIS OF FINANCIAL
STATEMENTS IN AN ORGANISATION.
DATE: 11/15/2021

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Contents
Purposes of accounting function within Carrefour Supermarket..................................................20
Budgeting and planning.............................................................................................................20
Decision making........................................................................................................................20
Compliance of the law...............................................................................................................20
Reporting and financial statements............................................................................................21
Avoiding fraud...........................................................................................................................21
Accounting function within Carrefour in the context of regulatory and ethical constraints.........21
Ethical constraints in accounting...............................................................................................21
Manipulation of figures.........................................................................................................22
Effects of greed......................................................................................................................22
Confidentiality.......................................................................................................................22
Misappropriation of assets.....................................................................................................22
Regulatory constraints in accounting.............................................................................................23
Nature of accounting..................................................................................................................23
Generally accepted accounting principles (Gaap).....................................................................23
Context and purpose of the accounting function clearly showing the role of accounting in
informing decision.........................................................................................................................24
Financial accounting..................................................................................................................25
Managerial accounting...............................................................................................................25
Cost accounting.....................................................................................................................25
Appendix 1.....................................................................................................................................28
Sole proprietorship.....................................................................................................................28
Appendix 2.....................................................................................................................................30
Partnership.................................................................................................................................30
Appendix 3.....................................................................................................................................32
Ratios.........................................................................................................................................32
Liquidity ratios.......................................................................................................................32
Turnover ratios.......................................................................................................................33
Profitability ratios..................................................................................................................34

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Gearing ratios.........................................................................................................................35
Appendix 4.....................................................................................................................................37
Non-profit organizations............................................................................................................37
Appendix 5.....................................................................................................................................40
Cash budget...............................................................................................................................40
Benefits and limitations of budgets and budgetary planning, and control for an organization. 41
Benefits..................................................................................................................................41
Limitations.............................................................................................................................42
References......................................................................................................................................44

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Purposes of accounting function within Carrefour Supermarket
Accounting is referred to as the practice of analyzing, summarizing and recording financial
transactions and activities. There are various types of accounting such as forensic, management
and government accounting. Accounting is mostly essential to business owners, investors and
stakeholders. Regarding Carrefour, the accounting department should be able to produce critical
information such as profit and loss that is needed to analyze the financial status of an
organization (Freshbooks, 2020).
The different purposes of accounting within Carrefour include;
Budgeting and planning
Accountants are responsible for developing the organization’s budget. Accountants create annual
budgets using historical financial data and future revenue projections. Accountants also create
different budgets for individual departments within the business (Indeed, 2021). For instance,
Carrefour must plan on how they will use resources such as machinery, labor and so on.
Decision making
Accounting aids the business in a variety of decision making procedures and also aids business
owners in creating policies to optimize the efficiency of business operations. Carrefour will have
to make accounting based choices that include, resources required to manufacture products and
services, creating price points for their items as well as financing business opportunities
(Freshbooks, 2020).
Compliance of the law
An organization must follow its governments laws and standards such as those imposed by the
Kenyan Revenue Authority (KRA). Counties also impose monetary regulations on businesses.
Accounting will help to make sure that Carrefour’s financials are complying with their states
laws and regulations (Indeed, 2021).

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Reporting and financial statements
The provision of financial statements is yet another responsibility of accountants within a
business. The business’s accountants compile financial data primarily to create accurate and
truthful reports and financial statements such as income statements and balance sheets and
internal communications (Luenendonk, 2021).
Accountants are also in charge of preparing financial statements at the end of every year.
Carrefour can use these reports in order to engage with investors and stakeholders and to also
generate leads (Luenendonk, 2021).
Avoiding fraud
An accountant will ensure that capital is neither mishandled or wasted inside a business.
Accountants are aiming to safeguard the business’s assets from internal or an eternal fraud
attack, nowadays this is usually done via cybersecurity. Carrefour should monitor its financial
data to ensure that funds are not being mishandled or misappropriated by the employees for their
own benefit (Indeed, 2021).
Accounting function within Carrefour in the context of
regulatory and ethical constraints
Ethical constraints in accounting
Ethical constraints are implications that one must operate within the socially recognized norms
and standards in order to avoid committing any type of offence (Mattwattsmedia, 2012).
Managing ethical concerns within a business is generally quite difficult for most business
owners. It is Carrefour’s management’s responsibility to bring accountability to employees who
are unethical (Holton, 2020).
The following are some of the ethical issues that the Carrefour accounting department
should look to avoid;

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Manipulation of figures
Operating a business might be very pressuring for some business owners. The business owners
of Carrefour may have the urge to get their accounting department to manipulate financial data.
This is not an ideal situation for accountants, as they have a legal and ethical duty to correctly
present Carrefour’s financial status, and the failure to do exactly just this can lead to criminal or
civil consequences (Decker, 2019).
Effects of greed
Businesses face a lot of cases where their accountants will break ethical boundaries in the sake of
generating more money. An accountant who works in the Carrefour shouldn’t let their financial
desires skew their ethical behavior, he or she must adhere to the business’s ethical financial
reporting guidelines (Content, 2017).
Confidentiality
Professional accountants are expected to protect the privacy and confidentiality of sensitive
information that could be obtained via business and professional relations. This sensitive
information should never be revealed to any third parties without getting permission or it’s a
legal matter and they are forced to disclose the information. Accountants working for Carrefour
should know that it is unethical for them to break this code of conduct (Nordmeyer, 2018).
Misappropriation of assets
Carrefour may also face misappropriation of assets from their accountants. The use of business
assets for purposes that are not in line with company interests is referred to as asset
misappropriation. A top executive, for example could bill a family lunch on to Carrefour as a
business cost (Freedman, 2019).

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Regulatory constraints in accounting
Nature of accounting
The nature of accounting can be broken down to qualitative attributes and quantitative attributes.
Qualitative characteristics simplify and expand on financial data to make sure that outcomes are
easily understood and comparable. These attributes include, reliability, relevance,
understandability, comparability and faithful presentation (Commerceiets, 2019).
Quantitative attributes of accounting are simply preparing financial statements in a measurable
form and assigning them to relevant users. Some of these attributes include recording of financial
transactions only, classifying the transactions and summarizing the transactions (EP, 2020).
In order to preserve the quantitative and qualitative attributes of accounting, the regulatory body
GAAP has created various principles that a business’s accounting function must use whilst
creating financial statements. While widely recognized accounting standards seek to eliminate
erroneous financial reporting and help businesses in generating accurate and valid financial
information, they do have limitations that have constrained Carrefour’s accounting function
(Indeed, 2021).
Generally accepted accounting principles (Gaap)
The following are some of the principles that Carrefour’s accounting function is constrained to
regarding GAAP;
 Reliability principle: This principle requires for Carrefour to only document transactions
which can be verified using objective proof. Forms of objective proof can include, bank
statements, checks, receipts and so on (Bragg, 2021).
 Relevance principle: The relevance principle states that the information obtained from
an accounting system should be able to aid the end-users in making key decisions.
Carrefour’s external and internal stakeholders can be considered end users. Carrefour’s
employees are examples of internal stakeholders while external stakeholders include
lenders, investors and so on. For the information to be deemed relevant it must be clear,

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timely and useful to aid end-users such as investors to make key decisions (Banerjee,
2021).
 Understandability principle: Understandability refers to the idea that financial data
must be given in such a way that a user such as an investor can readily comprehend it.
This notion implies the user has a basic understanding in accounting. Adhering to a fair
degree of understandability can preclude Carrefour from purposefully obscuring financial
data to deceive users of the financial statements. In order for accounting information to
be understandable, it must be clear, concise, complete and organized (Bragg, 2021).
 Comparability principle: The comparability principle helps users such as investors to
compare financial performance and situations over time and also with other businesses.
Comparability increases the value of Carrefour’s financial statements as it allows the
users to carry out analysis such as cross-sectional, common-size and trend analysis.
Carrefour may use cross-sectional analysis to make a performance comparison with that
of its competitors (Jan, 2020).
 Faithful presentation: The notion of faithful representation requires for Carrefour to
produce its financial statements correctly reflecting the its current situation. For instance,
if Carrefour recorded on its balance sheet fifty thousand in October then it should be so.
For accounting data to be faithfully represented then it should be unbiased, error free and
complete (Bragg, 2021).
Context and purpose of the accounting function clearly showing
the role of accounting in informing decision
Accounting plays a vital role when it comes to decision making and decision making is done
mainly through two forms of accounting, this being, financial accounting and cost accounting
within managerial accounting. The main distinction between managerial and financial
accounting would be that financial accounting information is more provided to external parties
such as investors whilst managerial accounting information is intended more to assist the
businesses management in making decisions for the business (Kenton, 2020).

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Financial accounting
Through financial accounting Carrefour can collect and report the financial information that
flows in and out of their business, allowing the management as well as external analysts and
investors to evaluate the business’s financial health therefore making educated decisions (Drury,
2021).
The following are the major ways in which financial accounting aids in making decisions;
 Financial accounting gives investors a starting point for analyzing and comparing the
financial health of businesses issuing securities to know whether it is well values or not,
if it is they can decide to invest into Carrefour by buying into shares of the business
(Drury, 2021).
 Financial accounting aids creditors in determining Carrefour’s solvency and credibility.
When the business has generated the appropriate financial statements detailing all its
assets and debt, lenders attain a better understanding of the company’s credibility and
they can make a decision such as lending Carrefour capital to buy more equipment for
manufacturing (Drury, 2021). An example of this financial statement can be a balance
sheet that shows investors all the assets and liabilities that Carrefour owns.
 Financial accounting enables outside stakeholders to assess a company's profitability and
worth. An investor can determine whether Carrefour has regularly outperformed, paid
dividends, and look to have favorable margins. A lender can examine financial data such
as fixed charge coverage ratio to determine liquidity, cash flow, leverage, and overall
solvency to figure out whether the business has substantial cash flow available to be able
to reimburse debt, therefore helping an investor make decisions such as funding a new
product idea from Carrefour (Drury, 2021).
Managerial accounting
Cost accounting
A business’s management uses cost accounting to determine all variables and fixed costs
involved with the manufacturing. Input expenses are compared with output results to help assess
financial success and make decisions in the long term (Tuovila, 2021).

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The following are the various types of costs in cost accounting;
 Fixed costs: These are the types of costs which do not fluctuate with the volume of
production. Often these costs are things such as leases and mortgage payments on a
structure or an equipment which is depreciated at a month-to-month rate. Those costs
would not change at all whether output levels increased or decreased (Tuovila, 2021).
 Variable costs: These are that costs that are directly affected by the business’s volume of
production. For example, if Carrefour is to increase production specifically for the
Christmas holidays, it’s inventory may suffer greater expenses when it acquires a large
amount of items from suppliers (Tuovila, 2021).
 Operating costs: These are the type of costs that are connected to the business’s daily
activities. Based on circumstances, these expenses can be variable ore fixed. For
example, if Carrefour has a payroll where it’s employees get paid a certain amount of
salary based on their level of work output then the cost is variable, but if they get paid the
same salary no matter the circumstance, then the cost is fixed (Tuovila, 2021).
Carrefour’s managerial accountants help them examine the progressive advantage of increasing
output, which is known as margin analysis. This leads towards breakeven analysis, that entails
computing the contribution margin of sales mix in order to then find the volume of units that
Carrefour’s gross sales match the total expenses. This material is to be used by the managerial
accountants to establish the pricing point range for items (Freshbooks, 2021).
Carrefour’s managerial accountants use financial information to aid Carrefour in determining
where, when and the amount of capital to spend. Utilizing basic budgetary performance
measures like internal rate of return and net present value to assist decision making on whether
or not they should undertake purchases or costly projects. The process entails examining
propositions, determining whether there is or isn’t a demand for certain products, and
determining the best methods to finance for the purchases. This even specifies repayment
periods, allowing management to forecast future benefits and costs (Freshbooks, 2021).
The bottom line is that, accounting allows companies to monitor their activities while also
providing an overview of their financial condition. By Carrefour giving their lenders and
investors and themselves an overview of its financial information through various financial

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statements such as income statements, it gives them more confirmation when it comes to
decision making (Drury, 2021).
The following are the different users that use accounting information to make decisions;
Investors: People who want to invest in Carrefour will want to know about its performance and
financial status. As a result, they obtain this information from the company's accounting records
(Accountingsimplified, 2021).
Lenders: Banks and as well as other lending institutions need to know that their money will be
reimbursed before the deadlines. Furthermore, financial data assists lenders in assessing such a
stance. As a result, banks as well as other lending institutions will use financial statements to
determine the acceptance for an application for Carrefour’s loan (Accountingsimplified, 2021).
Managers: Successful budget preparation and monitoring need accurate accounting data
pertaining to Carrefour’s numerous operations, goods, divisions and departments. Managers also
use accounting to monitor the organizations performance in comparison to historical results and
deciding whether or not to adjust business strategies depending on the results
(Accountingsimplified, 2021).
Owners: Accounting information assists Carrefour’s owners in determining the amount of
stability with in business over time as well as the magnitude to which change in the economic
conditions have influenced the financial performance of the business (Accountingsimplified,
2021).

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Appendix 1
Sole proprietorship
John Barclay Ltd
Profit and loss a/c for the year ended 31/12/2019
Sales revenue 864,321
Less Cost of sales
Opening inventory 63,084
Purchases 600,128
Cost of stock available for sale 663,212
Closing inventory -66,941
Cost of sales 596271
Gross Profit 268,050
Expenses
Discount allowed 1,100
Rent paid 25,000
Interest paid 2,000
Salaries 122,611
Office expenses 33,947
Printing expenses 1,000 -185,658
Net profit 82,392

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John Barclay Ltd
Balance sheet as at 31/12/2019
Cost (Sh)
Accumulated
depreciation (Sh) Net Book Value (Sh)
Non-current assets
Office equipment at cost 23,250 0 23,250
Machinery at cost 40,000 0 40,000
Land and building at cost 207,785 0 207,785
Total Non-current assets 271,035
Current assets
Bank 1,197
Cash 100
Sales ledger control (receivables) 74,328
Closing inventory 66,941
Total current assets 142,566
TOTAL ASSETS 413,601
Non-current liabilities
Loan from bank 140,000
Capital 155,000
Add: Net profit 82,392
Less: Drawings -21,710 215,682
Current liabilities
Purchase ledger control (Payables) 52,919
VAT 5,000 197,919
413,601

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Appendix 2
Partnership
ABC BUSINESS
Trading profit and loss account for the year ended 31/12/2013
Sales 10,000,000
Return Inwards -400,000
Net Sales 9,600,000
Purchase -6,000,000
Closing Stock -1,000,000
Return outwards -200,000
Cost of sales -4,800,000
Gross Profit 4,800,000
Discount received 300,000 5,100,000
Expenses
Discount allowed 200,000
General Exp 1,400,000
Rent and rates 100,000
Salaries and wages 500,000
Bad debt 200,000
Office expense 1,000,000
Land and building 400,000
Plant and machinery 300,000
Motor Vehicle 450,000 4,550,000
Net profit 550,000

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ABC BUSINESS
Profit & Loss Appropriation A/C for the year ended 31/12/2019
Net Profit 550,000
Interest on Capital
Ahmed 300,000
Babu 200,000
Chatu 150,000
Salaries
Babu 300,000
Chatu 300,000 (700,000)
Profit, Loss, Share
Ahmed -420,000
Babu -140,000
Chatu -140,000
(700,000)
AHMED
Current Account
Loss 420,000 Bal bd 500,000
Bal c/f 380,000 Int Cap 300,000
800,000 800,000
Babu
Current account
Loss 140,000 Bal/bd 400,000
Interest on Capital 200,000
Bal c/f 760,000 Salary 300,000
900,000 900,000

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Chatu
Current Account
Bal/bd 200,000 Interest on Capital 150,000
loss 140,000 Salaries 300,000
Bal C/f 110,000
450,000 450,000
Appendix 3
Ratios
Liquidity ratios
Current ratio (2018) = Current assets/ Current liabilities = 20,000/10,000= 2 :1
2019= 30,000/10,000= 3:1
This means that in 2018 Carrefour’s current liabilities could be paid off two times before the
assets are exhausted and in 2019 they can be paid off thrice. It simply means that Carrefour is in
a good position to settle their short term financial obligations as they fall due.
Quick/acid test ratio (2018) = Current Asset - stock/ current liabilities = 20,000-5,000/10,000=
1.5:1
2019= 30,000-10,000=2:1
This means that in 2018 and 2019 Carrefour would have had the ability to settle its current
liabilities using the more liquid assets of the business. It changed from 1.5:1 in 2018 to 2:1 in
2019 meaning that its ability to do so is increasing and the business is doing better than before.
Cash ratio (2018) = cash at bank + short term marketable securities/ current liabilities = 5/10=
1:2

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2019= 5/10= 1:2
This means that Carrefour would not have had the ability to pay for its current liabilities using its
liquid assets because they would have had more liabilities than they did liquid assets, from 2018
to 2019.
Turnover ratios
Stock/inventory turnover (2018) = cost of sales/ average stock= 20,000/5,000= 4times
2019= 25,000/7,500= 3.3 times
In 2018 Carrefour would have converted all its stock into sales meaning that the business was
doing well. In 2019 the amount of times stock was converted to sales reduced meaning that the
performance has worsened from 2018 to 2019.
Stock holding period (2018) = 365 days/ stock turn over = 365/4= 92 days
2019=365/3.3= 111 days
This means that in 2018 the stock was held for less days because there were more times that
stock was converted into sales than in 2019.
Debtors/ accounts receiver’s turn over (2018) = annual credit sale/ average debtors =
100,000/10,000= 10
2019= 125,000/ 12,500= 10
This means that the Carrefour was not progressing between 2018 and 2019. In both 2018 and
2019 debtors were turned into sales 10 times.
Debtors collection period (2018) = 365/10 = 37 days
2019= 365x10,000/100,000= 36.5=37 days

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The debt collection period for both 2018 and 2019 was 37 days which is a short period of time
for debtors to pay their dues. This would be good for Carrefour because the business will always
have liquid cash but on the downside they might have more debtor’s turnover.
Fixed asset turnover (2018) = annual sales/ fixed assets= 100,000/ 45,000= 2.2
2019= 125,000/ 75,000= 1.7
This means that in 2018 1 shillings of fixed assets was utilized to generate 2.2 shillings of sales
and in 2019 1 shillings of fixed assets was utilized to generate 1.7 shillings of sales meaning that
the efficiency was reducing.
Total asset turnover (2018) = annual sales/ total assets= 100,000/65,000= 1.5
2019= 125,000/105,000= 1.3
In 2018 1 shillings of total assets was used to generate 1.5 shillings of sales while in 2019 1
shilling of total assets was used to generate 1.3 shillings of sales meaning that the efficiency
reduced over time.
Profitability ratios
Gross profit margin (2018) = gross profit/sales x 100 = 80,000/100,000 x 100= 80%
2019= 100,000/ 125,000 x 100= 80%
In both 2018 and 2019 the gross profit margin was 80% meaning that the business is doing well
because only 20% of sales revenue was taken up by cost of sales while 80% was the gross profit.
Operating profit margin (2018) = operating profit or earnings before interest and tax/sales x 100
= 45,000/ 100,000 x 100= 45%
2019= 60,000/125,000 x 100= 48%

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This means that in 2018, 55% was taken up by both the operating and the cost of sales espenses
while 45% of sales remains as operating profit margin. In 2019, 52% was taken up by both the
operating profit and cost of sales expenses while 48% of sales remains as operating profit
margin. This means that the operating profit that would have been generated by Carrefour
improved from 2018 to 2019.
Net profit margin (2018)= net profit x 100(earning after tax)+ interest
sales = 30,000+5,000
100,000 × 100 =
35%
2019= 40,000+5,000
125,000 × 100 = 36%
This means that in 2018, 65% of sales was taken up by cost of sales, operating expenses and
financing expenses while only 35% remained as net profit. In 2019, 64% of the sales were taken
up by cost of sales, operating expenses and financing expenses while only 36% remained as net
profit. Carrefour would have slightly improved by 1% in net profit.
Gearing ratios
Debt/ equity ratio (2018) = ¿ charge capital
Equity(net worh) = 30
25 = 1.2
2019= 30/65= 0.5
This means that in 2018 for every 1 shilling of equity there was 1.2 of fixed charge capital and in
2019 for every 1 shilling of equity there was 0.5 of fixed charge capital which means that
Carrefour would have been doing well because it started relying more on its own equity to
finance the business rather than relying on borrowed money.
Fixed charge to total capital ratio (2018)= ¿ charge capital
Total capital employed ×100 = 15
25 × 100= 60%

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2019= 15
65 × 100= 23.1%
This means that in the year of 2018, 60% of the capital employed is fixed charge capital and in
2019 it reduced to 23%. Creditors can use fixed charge ratio to measure how much cash flow
Carrefour has accessible for debt reimbursement. 2018’s low fixed charge ratio frequently
indicates a lack of capability to make fixed-charge payments, lenders aim to avert this as it raises
the chance that they may not be repaid (Hayes, 2021).
Debt ratio (2018) = Total debts
Total assets = 30+10
65 = 0.6
2019= 30+10
105 = 0.4
This means that in 2018, 60% of total assets would have been financed with debt while the
remaining 40% was financed with the owner’s equity while in 2019 only 40% of total assets
would have been financed with debt while the remaining 60% was financed with the owner’s
equity. The debt ratio improved over time because the company lessened its debt therefore also
reducing the risk associated with it.
Time interest earned ratio (2018) = Operating profit (earnings before interest and tax)/ interest
charges = 45/ 5 = 9
2019 = 60/ 5= 12
This means that in 2018 interest charges could be paid from operating profits 9 times and in 2019
8 times. This indicated that Carrefour’s operating profits would have increased over time.

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Appendix 4
Non-profit organizations
Club 5 GB
Accumulated fund for the year ended 31st/10/2019
Sh 000 Sh 000 Sh 000
Non-current assets Cost
Accumulate
d
Depreciatio
n NBV
Premises 29,000 18,800 10,200
Bus 12,190 10,290 1,900
12,100
Current Assets
Cash in hand 150
Cash at bank 8230
Subscription due 1200
Bar stock 710 10290
Current Liabilities
Owing on printing 90
Owing from bar purchases 590 -680 9610
Net Asset 21,710
Subscription A/C
Sh000 Sh000
Bal b/d 1200 Receipts 1070
Bal c/d 0 Bal c/d 980
Income and
expenditure 10,490 Bal b/d 0
11,690 11,690
Printing and stationary A/C
Sh000 Sh000
Receipts and
payment 470 Bal b/d 90
Bal c/d 30 Inc&Ep 410

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500 500
Bar activities
For the year ended 30/09/2020
sh000 sh000
Sales (Bar takings) 7450
Less: Cost of sales
Opening Stock 710
Add: Bar purchases (W6) 5610
Less: closing stock -870 (5450)
Profit 2000
Owing to suppliers purchases
Receipts and payment 5770 Bal b/d 590
Bal c/d 430 Purchases 25,300
6200 6200
Disposal Account
Cost of the old bus 2390 Receipts and payment 3000
Surplus 11,00 Accumulated depreciation 10,290
13,290 13,290

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CLUB 5 GB
Income & Expenditure for year ended 30/09/2020
Income Sh000
Subscription 10,490
Surplus 2000
Surplus from fetes 10
Net Enter Proceeds 4,270
Bank Interest 230
Profit from the sale of bus 1,100
Total income 18,100
Expenditure
Salaries & wages 4800
Rates and taxes 1260
Printing and stationary 410
Ground Men salary 840
Repairs 320
Depreciation Premises 510
Bus 2310
Transport Expenses 1530 -12,010
Surplus 6090
Accumulated Fund 21,710
Total Accumulated Fund 27,800

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Appendix 5
Cash budget
Jim Enterprise
Cash Budget for Months 1-4
Receipts
Month 1
"000"
Month 2
""000
Month 3
"000"
Month 4
"000"
Initial investment 25 0 0 0
Receipt from sales 0 0 4 6
TOTAL RECEIPTS 25 0 4 6
PAYMENTS
Purchases 6 0 6 4
Expenses 1 1 1 1
Purchases of equipment 15 0 0 0
Drawings 0 0 0 2
TOTAL PAYMENTS 22 1 7 7
3 (1) (3) (1)
Bank bal b/f 0 3 2 (1)
Bank bal c/d 3 2 (1) (2)

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Benefits and limitations of budgets and budgetary planning, and
control for an organization.
Benefits
When Carrefour’s business objectives have been established and codified through the budget, it
is possible to confirm that other plans are equally feasible. Budgeting can also aid Carrefour in
making decisions for different products ensuring that everything is accessible at the appropriate
time (Mbaknol, 2012).
Carrefour determines the budget and aids the all the departments of the company in working
towards a common goal. Budgets aid in maintaining discipline and ensuring all business
departments contribute to the achievement of the objective. When the budget is established, the
budget aids in the resolution of any expected difficulties as well as clarifying other sources of
possible uncertainty (Mbaknol, 2012).
Budgetary planning is essential to Carrefour as it allows its management to have budgetary
control which helps track and assess results. Budgetary planning also aids in adopting various
measures in adjusting the business’s activities with the passage of time, or potentially changing
the budget when it becomes unattainable (Mbaknol, 2012).
A business should make a budget before it is opened as this will aid in pricing the goods and
services. Once one calculates all the costs within a budget, they can then know how much capital
needs to flow within every month before a profit can be made. Carrefour could also modify its
prices to keep their goals in check. It is especially critical if an organization is seasonal in selling
products. If Carrefour predicts that the sales will be lower during winter seasons, they prepare
the amount of capital needed to pay for fixed expenditures before the season approaches (Dise,
2021).
Most organizations strive for expansion. As a business expands, they need to hire additional
people and purchase extra equipment. With these expenses in mind, Carrefour can identify the
best timing to hire new employees. They might begin putting money down for major
expenditures years in ahead. When it comes time for expansion, financing it would not be an
issue (Dise, 2021).

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Limitations
Creating budgets can be very time consuming for Carrefour notably if changes such as financial
goals are made to the budget often. If Carrefour’s circumstances are continually changing, the
effort needed may be more substantial, necessitating frequent updates of the budget. Budgeting
requires a lot more time and work especially with a large organization such as Carrefour that has
several divisions. Carrefour needs more labor to ensure that the estimations are as precise as
possible which in turn can be costlier as they have to pay more workers (O’Hoyt, 2014).
Budgeting links to the future forecasts and projections of Carrefour derived from previous and
existing numbers. As a result, there is a high probability of the data being incorrect. A business
that is heavily reliant on budgets may find it difficult to succeed if the incorrect information is
delivered. Significant caution must be given while estimating various facts and numbers.
Budgetary control is utilized to make a comparison between the budget against what actually
occurred. If the budget is unattainable, it then has to be adjusted (Mbaknol, 2012).
Employees in a certain department of a business may achieve more than the planned targets,
causing issues in other departments. For instance, Carrefour’s production department may
produce surplus which the sales department deems hard to sell. To minimize such dysfunction in
management, budgets should be created around reasonable levels, integrated and linked
throughout the business departments with appropriate information (Mbaknol, 2012).
Budgets created by individuals may be created at low attainable rates and because the budget is
too simple to accomplish, it would be of no significant use to Carrefour and could instead result
in reduced output levels and greater expenses such as paying for marketing materials with capital
that was not budgeted for (Mbaknol, 2012).
SOLUTIONS
If Carrefour was using spreadsheets for creating, it’s budgets then it should consider to start
using planning software that aid’s in making the task a lot smoother and less tedious. This cloud
based process provides greater flexibility, as well as improved security plus cost reductions over
manual methods through spreadsheet. Software such as freshbooks accounting software will

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enable Carrefour to develop precise projections and budgets in a timely and error-free manner as
it allows one to track time, easily manage expenses and receipts, etc (Najjar, 2021).
Carrefour must ensure that staff who make entries into the accounting system are familiar with
the businesses accounts and descriptions. Carrefour should take time to thoroughly describe the
different methods. Carrefour can utilize the training options provided from certain applications
such as Zoho books. Carrefour must also establish policies for proper documentation to ensure
that entries are done correctly and precisely (Paychex, 2020).
It’s impossible for Carrefour to anticipate absolutely everything, Carrefour can anticipate
potential roadblocks such creating target levels that are too low to the original projection and
budget. Often creating predictions can help Carrefour be more flexible with new information
rolling in ensuring that choices are made depending on what is currently occurring (Najjar,
2021).
A budget is made up of separate projections that can have a big impact on the whole budget if
not completed. Carrefour’s cash flow can be disrupted if the sales expectations are not met. For
instance, if the spending amount in one sector is more than they anticipated then working capital
may be depleted. To keep failed budgets from passing on unreported, Carrefour can perform a
budget variance analysis every month to make sure they are still on track. If Carrefour then
identifies a major problem, they are able to make improvements right away. When creating
annual budgets, Carrefour should test multiple sales and spending situations to determine how
they will affect the budget and make measures to cope with the events if they are to occur
(Milano, 2021).
If Carrefour has an issue with cash flow, to avoid any future issues arising, Carrefour can make
long term and monthly cash flow statements to ensure they can make payments for the materials,
bills, supplies and so on. Cash flow statements will help identify when Carrefour may need to
save capital, postpone purchases or even apply for extra credit (Milano, 2021).

28 | P a g e
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