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Financial Statements Assignment (Doc)

   

Added on  2021-01-02

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FINANCIAL STATEMENTS

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3Role of Accounting & Finance with in an organisation..............................................................3TASK 2............................................................................................................................................8a. calculation of five different ratios of Alpha Ltd. For each of the two years...........................8CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12

INTRODUCTIONFinancial Statement consists of various written reports such as balance sheet, Incomestatement and Cash Flow Statements. This reports are prepared by every organisation formaintaining their financial performance and evaluating effectiveness of their business operations.Financial Statements are essential as it helps in checking accuracy of tax and making investmentdecisions. The below report explains role of Accounting Function and Finance Function inoperating business of an organisation. Further, this report calculate different types Ratios toanalyse, evaluate and compare financial performance of Alpha Limited of two financial years.TASK 1Role of Accounting & Finance with in an organisationAccounting is a process of recording & analysing overall financial transactions of acompany. Every organisation maintain & prepare their books of accounts with and objective ofdisclosing their financial information to investors, customers, managers and creditors. So, thatthey can make investment decisions. Tesco is a UK based multinational retail brand which offergroceries and other general merchandise in many country across the globe. Company also keeprecord of all of its financials to manage its profits, enhance its customer base and market share.Accountant of company collect all necessary financial information and present this informationthrough different types of financial statements. Further, this information is transferred to publicthrough Annual Report and it is also published on official website of firm. Thus, Accountingplays an important role in managing and analysing business performance of Tesco. Finance Function is also used by Tesco for maintaining companies existing funds and itis also beneficial in preparing future budget related to expenses(O'Hare, 2016).Two types of accounting is used by companies Management Accounting and FinancialAccounting. Management Accounting is an activity of presenting business information tomanagers so that they can make business decisions such as Production Decisions and PricingDecisions. Whereas, Financial Accounting helps in running functions of business.

Role of AccountingAccording to (Minnis and Sutherland, 2017), Accounting also helps accountant isevaluating various business situations of Tesco and helps in resolving problems so that profits ofcompany gets maximised. Various roles of accounting function in Tesco are discussed below-Decision Making- Function of Accounting plays a role in making important decisionsand formulating rules and regulations of company. Decisions related to expansion andmodification of business operation of Tesco can be done only when all the necessary informationof company such as assets, Liabilities, Cash Inflows & Outflows and profits is available. ForExample- Tesco is offering its products & services in many countries and for making decisionsrelated to shipment of products in each country is based on demand of products & services ineach country which can be evaluated if company keep an accurate record of its accounting data.Thus, Accounting plays a role in making decisions related demand of products & services. Further, if company wants to make decision as to investment is done in improvement ofits existing facilities or in establishment of new store. Each of these two alternatives will givedifferent returns thus, accounting also plays a role in evaluating different alternatives and helpsin making profitable decisions.Accounting for Governmental Regulations- Tesco is a multinational company and earnhuge profits thus, it is necessary for company to pay taxes on time. Further, it is also essential forcompany to operate its business in accordance with rules and regulations formulated bygovernment. For determining accurate amount of all types of taxes such as Income Tax, ServicesTax and Social Taxes company is require to maintain Accounts. According to (Vanauken,Ascigil and Carraher, 2016), Accounting Function play a role in filling return and accurateassessment of Income.For Example- If due date of filling Income Tax return of company is 30 June andmanagers of company is not able to calculate actual amount of income so, they file a return withan inaccurate amount than company is liable to pay penalties. Accounting in Making Budget- Accounting manager of Tesco use TraditionalBudgeting Method in its business according to which company prepare its current years budgeton the basis of past years budget and that becomes possible only if company has a record of its

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