Financial Statements and Budgetary Control

FINANCIAL
STATEMENTS AND
BUDGETARY
CONTROL

Table of Contents
INTRODUCTION...........................................................................................................................3
P1. Examine the purpose of the accounting function of an organisation ...................................3
P2. Describe the various functions of accounting established inside the company which is
related to its various ethical rules and regulations. ....................................................................4
P3. Compose the financial statements with the help of the provided trial balance for sole
traders, partnerships and not-for-profit organisations, to join the accounting principles,
conventions and standards..........................................................................................................6
P4. Calculate the different types of financial ratios using final accounts of Village – Wide
Catering Company......................................................................................................................8
P5. Perform a Comparison of the presentation of the company over time while using the
financial ratios...........................................................................................................................10
P6. Prepare a cash budget from given data for an organisation using a spreadsheet................12
P7. The advantages and disadvantages of budgets and budgetary planning and control for an
organisation...............................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The primary purpose of the financial statements is to provide the financial information to
the user of those informations in making financial decision. They do not provide non-financial
information to the user whether they are relevant for making economic decision. Financial
statements are prepared on the basis of going concern assumption. Financial statements contain
Balance sheet, Profit and loss and cash flow statement. All the elements of the financial
statements are related each other because they show various aspects of same transaction.
Budgetary control is managing income and expenditure. It is prepared for future on the basis of
past data. It is a control technique where budgeted results are compared with actual results. In
this report, a detailed analysis has been performed on the accounting function of 'Moore
Kingston Smith' which is a leading UK based firm. Further in this report preparation of financial
statements of Village Wide Catering Company and also calculated of financial ratios and
comparison of the organisation performance using financial ratio. Further in this report
preparation of cash budget and discuss the benefits and limitation of budgets and budgetary
planning (Cannizzaro and et.al, 2018).
MAIN BODY
P1. Examine the purpose of the accounting function of an organisation
Accounting functions means the tracking, recording, storing and summarising of a
company's financial transactions. The company maintains a systematic record of transaction so
that they can make accessible for audits. These financial statements help management in
decision-making. The company can use financial statements to identify the weakness and
strength of the organisation.
The main objective of the accounting is to providing the information to the owners and
management so that they will take better decision of the business entity. The entity can use
reports, budget and cost data for increased profits and reducing cost (Bruno, and Lapsley, 2018).
The basic function of the accounting they are as follow-
1. To keeping records- It is the basic of the accounting. The accounting is helped to
maintain day to day transaction such as sales, purchase, receipts and payments.

2. Preparing budgets- The company prepares the budget to determine the difference
between actual results and budgeted results.
3. Complying rules and regulation- Accounting helps that the company follows proper rules
and regulations which is related to taxation and financial reporting.
4. To deduct fraud and error- The accountant helps to deduct fraud and error and
determined no wastage of money occur in the company.
5. Performance reviewing- Accounting reviews daily financial performance and reducing
wastage and increase overall performance of an organisation (Aobdia, 2019).
'Moore Kingston Smith' which is leading in UK, the accounting team provides a full details
of business, rules and regulation to their customers so that they can take better in the business.
The main function of this organisation to providing valuable services, the customers can change
the world. It is used two forms of accounting:
1. Managerial Accounting- This accounting is used for the purpose of controlling the
internal function of the organisation. To use of managerial accounting, the owner can
save the future and take the better decision.
2. Financial Accounting- To analysis the past data with the objective of determining the
organisation value. Shareholders use this information and determined the value of an
organisation.
P2. Describe the various functions of accounting established inside the company which is related
to its various ethical rules and regulations.
Accounting ethics includes the following particular rules and guidelines fixed by the
governing institutions which must be followed by each and every individual who is associated
with accounting as a subject to prevent and preclude the misuse of the financial data, information
or the administrative or managerial position. There are various ethical rules and regulations
established in accounting to prevent any misuse of the authority and managerial positions or any
unethical constraints that may occur in the normal working of the society (Abdullayev and et.al,
2019).
 Access to Data and Privacy Issues: An accountant has very high access to a lot of
information and subject matters that are heavily confidential to the respective parties,
which is very necessary to be protected at all costs. Failing to protect such necessary
informations and not keeping such data confidential for the purpose of taking benefit of