How Businesses Operate - Importance of Accounting, HR Functions, Employment Legislation, Profit and Loss Statement, Team Development, Motivational Theories

This article discusses the importance of accounting, HR functions, employment legislation, profit and loss statement, team development, and motivational theories in business operations. It provides insights on how to effectively manage teams and motivate employees. It also covers the stages of team development and Hertzberg's two factor theory.

HOW BUSINESS
OPERATE

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
TASK 2............................................................................................................................................3
Importance of accounting for the success of business.................................................................3
Functions of the HR department in a business.............................................................................3
Key features of the employment legislation................................................................................4
TASK 3............................................................................................................................................5
Profit and loss statement for ABC Ltd. For the year ended 31st December, 2021......................5
TASK 4............................................................................................................................................8
REFERENCES..............................................................................................................................12

MAIN BODY
TASK 2
Importance of accounting for the success of business
An accounting department majorly focuses on the process of recording as well as
evaluating the business transactions in a systematic as well as in an organized way (Haje. and
et.al., 2019). This department is also responsible for overviewing the budgeting procedure of a
business. The basic meaning of budgeting is to allocate the financial resources to the
differentiated tasks within a business. Therefore, this department is responsible for all financial
decisions and transactions that are adopted by the business. The importance of the accounting
department is stated further:
Promotion of effective decision- making within a business
The process of feasible decision- making within an organization is relevant and very
crucial for the promotion of sustainable growth as well as expansion of the organization (Wen.
and Moehrle., 2016). Accounting also provides the financial information or data that is
comprehensive which helps in assisting the organization to basically adopt investment and
financial decisions that are better for the success of the organization. It also has influence over
the operational decisions that the company takes.
Supporting the process of better financial planning in an organization
The approach of business planning particularly focuses on ensuring that a business is
adopting the right decisions and the right strategies that will particularly supplement in achieving
the desired goals as well as the objectives of the business in particular (Barth., 2022). The
accounting department ensures proper planning of finance through the budget function that is
present in the company. It also develops strategies that the business in particular uses for the
purpose of accruing better incomes for supporting the future operations of the business in
particular.
Functions of the HR department in a business
The human resource department or function of a company particularly focuses on
creating as well as maintaining a workforce that is effective and fulfils operational requirements
of the business (Spina. and Spina., 2022). The major functions of the human resource department
are as follows:
Recruitment of the employees

The HR department of the company has a specific responsibility which focuses on
ensuring that the individuals that are skilled and efficient should be employed and also sustained
within the organization at the most- suitable job roles for them in particular (Postnikova. and
Gorozhankina., 2020). Hence, the department is specifically involved in creating the recruitment
as well as the selection which allow the business to deploy right individuals and right talents
within the organization.
Performance management of the employees
The HR department of the company reviews the performance and the working of each
and every employee. Firstly, the department helps in evaluation of the efficiency and the quality
of the work that is done by the employees (Azeem. and Yasmin., 2016). And then they provide
feedback to the employees so that they can work on the areas that employees are weak in. also,
this department is involved in creating and sustaining the effective processes of training as well
as development within the organization in particular. The HR department evaluates the
requirements and the needs of training and the development practices for each of the employee
which will help in enhancement of the performance of the employees.
Overviewing the employer and employee relationships
This is considered to be one of the fundamental functions of the HR department. The
department specifically focuses on the activities that help in betterment of the relationship
between the employer and the employee of the organization.
Key features of the employment legislation
Employment legislation is a function that is centralized in management of the relations
among the employers and the employees of the organization in particular. The legislation
particularly seeks protection of the interests and the rights of the employees and further shield
those rights from the exploitation that could be done done by the employers. The major features
of the employment law are:
Anti- discrimination law
The anti-discrimination laws in particular are the laws that allow prevention of
discrimination among the employees and protect all classes and segments of the individuals. This
law states that it is particularly illegal to discriminate among employees based on sex, race,
religion and ethnicity.
Wage laws

As per the wage laws the employees are entitled and it is their right to earn wages that are
above the level of national minimum wage decided by the government. Also, this law
specifically outlines the guidelines regarding the over time pay that should be provided to the
employees. It basically states that the employees are eligible for getting extra pay if they are
working for more time than that of their designated hours in particular.
Workplace safety laws
The work safety laws particularly compel the employers for providing their employees
with safe conditions for working. The laws also establish the diverse guidelines for safety that
should be observed by the employers at the time when the employees of the organization are
working in differentiated environments in particular. Also, the employees should be well-
educated regarding the guidelines that are followed by the company or organization and it is their
right to be aware regarding it.
TASK 3
Profit and loss statement for ABC Ltd. For the year ended 31st December, 2021
Particulars Amount in £ Amount in £
Sales 100, 000
Less (-) cost of sales (40, 000)
Gross profit 60, 000
Bad debt 600
Rent 4, 000
Light and gas 3, 000
Stationery 2, 500
Telephone 600
Travel expenses 300
Salaries 15, 000
Advertisement expenses 5, 500
Insurance expenses 1, 500

Utilities expenses 4, 000
Administration expenses 7, 000
Depreciation expenses 9, 000 (53, 000)
Earnings before tax 7, 000
Tax @ 20 % (1, 400)
Net income 5, 600
Interpretation of the information that is present in profit and the loss account of the
company ABC Ltd.
The profit and the loss statement or account of company is majorly used for the purpose
of assisting the business to depict the profitability of the operations of the business in particular.
Firstly, the income statement particularly presents the sales that is done by the company in
particular. This is the information or data regarding both cash sales as well as credit sales too.
The cost of sales is also presented or show cased in the report in particular. Which further
includes the cost of the purchases and also the inventory that is procured in a particular financial
period. Similarly, it also compiles the costs that are involved in production of the particular
goods as well as services. Furthermore, the income statement also lists all the expenses that are
accrued within the company or organization in particular. This is done for the purpose of
ascertaining the income which is retained in the organization after the catering of the operational
costs within the organization. Moreover, the statement also provides an outline of the net profit
and the net loss after the deduction of the taxation and the expenses of interest are also catered.
In accordance to the income statement of ABC Ltd. The company has earned a net profit of £5,
600 for the financial year of 2021 in particular and as per the date of 31st December 2021.
For effective evaluation of the profitability of ABC Ltd. In particular, the profit sharing
ratios are calculated further.
1. Gross profit ratio
Gross profit ratio = Gross profit / sales
Gross profit ratio = 60, 000 / 100, 000
Gross profit ratio = 0.6
2. Sales ratio

Sales ratio = cost of sales / sales
Sales ratio = 40, 000 / 100, 000
Sales ratio = 0.4
3. Net profit ratio
Net profit ratio = net profit / sales
Net profit ratio = 5, 600 / 100, 000
Net profit ratio = 0.05
4. Return on capital employed
Return on capital employed = earnings before tax / capital employed
Capital employed = total assets — total current liabilities
Capital employed = 1, 360,500 – 93,000
Return on capital employed = 1, 267, 500
Return on capital employed = 7, 000 / 1, 267, 500
Return on capital employed= 0.005
According to the presentation of the above ratios, the gross profit ratio of the company is higher
than that of the sales ration of the company. This specifically gives an indication towards the
direction that the company ABC Ltd. In its operations particularly incurs a high cost of sales
relatively. The sale ratio of the company is comparatively higher than that of the net profit ratio.
This situation particularly indicates that ABC Ltd. Has high expense levels in the operations it
conducts in particular. Furthermore, the ratio of Return on capital employed is very low which
specifically indicates that the company is accruing a low amount of earnings as compared to the
capital that has been invested in the business in particular.
Balance sheet for ABC Ltd. As at 31st December 2021.
Particulars Amount in £ Amount in £
Non- current assets
Delivery van 60, 000
Current assets
Inventories 520, 000
Trade receivables 71, 000

Provision for bad debts 1, 500
Bank 188, 000
Cash 520, 000
Total assets 1, 360, 500
Current liabilities
Accounts payables (93, 000)
Total assets and liabilities 1, 267, 500
Capital 180, 000
The balance sheet of the company ABC Ltd. Highlights the equity, the liabilities and the assets
of the company overall. Further, are ratios that are used for the specific purpose of calculating
and evaluating the performance of the company ABC Ltd.
Current ratio = current assets/ current liabilities
Current ratio = 1, 300, 500/ 93, 000= 13.98
Quick ratio = current assets – inventory/ current liabilities
Quick ratio = 1, 300, 500 – 520, 000/ 93, 000
Quick ratio = 780, 500/ 93, 000
Quick ratio = 8.39
The current ration and the quick ratio in particular are specifically used for the purpose of
estimating the levels of liquidity in an organization or company. High quick ratio and current
ratio represents the ability of ABC Ltd. To satisfy the operational obligations. For example, as
per the calculations presented above, ABC Ltd. Maintains high current and quick ratios. The
ratios calculated also show the enhanced capability of expanding the operations of the company
in particular. High rates of liquidity ratios particularly indicate a good management of cash flow
by the company in particular. Which enables the company to be able to undertake the investment
projects in particular.
TASK 4
A team is particularly referred to a group of individuals or people who work collectively
for achieving the goals as well as the objectives of the organization (Guchait. Lei. and Tews.,

2016). The teams are instrumental in enhancing the performance and the efficiency within an
organization in particular.
Personal roles as well as responsibilities of the team leader and the team members as well
A team leader specifically has a bunch of roles as well as responsibilities in particular
which they require undertaking for the purpose of promoting the attainment of the goals of the
team that they are leading in particular (Poth. Kottke. and Riel., 2020). Personally, as a team
leader in a company I particularly have to ensure that all the team members are performing
effectively as well as efficiently all the roles and the responsibilities. Also, when I became a team
leader I specifically served as a mediator in all the team discussions.
The stages of the team development
Teams are particularly made of employees or individuals with diverse backgrounds,
personalities and interests. For that specific reason the team has to undergo through diverse types
of the stages in a particular order for the purpose of efficiently achieving the goals or the
objectives (Kiweewa. And et.al., 2018). The major theory of Tuckman group model provides
these particular stages or steps. These are:
Forming
This is the primary stage and in this stage in particular all the team members of a specific
team meet and potentially try to acquaint for the first time with one another. This is basically the
stage where interaction is done and roles are discussed.
Storming
In this particular stage it mainly is where major conflicts and issues among the team
members occur. This is because the work styles and the individual personalities of the members
of the team clash with one other which specifically leads to immense scenes of conflicts.
Norming
This stage basically refers to when the individuals or the team members get accustomed
to one another.
Performing
This stage in particular is the stage in which the members of team start working together
in a collaborative and collective way for achievement of the desired objectives of the team.
Adjourning

After the objectives and the goals of the team in particular are attained the team is mostly
required to be adjourned.
Assessment of the motivational theories
The major objective of the motivational theories is to basically assist the organizations or
companies in understanding the motivational behaviours of the employees of the organization in
particular.
Hertzberg's two factor theory
This theory in particular states that the motivational factors of employees are categorized
into two major categories, namely the motivating factors and the hygiene factors in particular
(Alshmemri. Shahwan-Akl. and Maude., 2017). The motivating factors basically enhance the
commitment of employees towards work. Example is recognition and growth. Whereas, the
hygiene factors are not mainly focused on enhancement of the work motivation but absence of
these factors might lead to high levels of dissatisfaction among the employees in particular.
Examples are working conditions and also remunerations.
Maslow's hierarchy of needs
The Maslow's hierarchy of needs majorly focuses on the requirements of the employees
at different levels (Fallatah. and Syed., 2018). This theory states that there are five major levels
which enhance the motivational levels of employees through employment. The needs basically
include first physiological needs, then safety needs, then social needs, then esteem needs and
lastly the need of self- actualization. This theory states that the needs or the requirements of the
employees should be fulfilled step by step. Which means through the stages provided in the
theory.
McClelland's theory of needs
This theory mainly states that all the employees have majorly three factors that motivate
them. The three factors in particular are, power, affiliation ans well as achievement. The
employees specifically undertake the diverse job roles for the purpose of accomplishing the
professional and personal goals they thrive to achieve. And mainly, the employees desire to be
liked be other professionals. And lastly, the employees within an organization also want to have
a sense of power to control.
Different types of leadership styles
Authoritarian style of leadership

This style of leadership focuses on the concept that the leader in particular imposes the
decisions on the employees (Zhang. and Xie., 201). And the employees are required to exercise
all the decisions without asking any questions.
Participative style of leadership
participative style of leadership on the other hand grants the employees of the company
the freedom to participate in the procedure of decision- making within the company in particular.
Transformational style of leadership
In this leadership style in particular the leader basically serves as role model for the team.
Therefore, the leader inspires and empowers the employees to attain the vision set by the
organization or business. The transformational leaders mainly focus on creation of effective
relationships among employees for the purpose of increasing the collaboration and the unity in a
business.

REFERENCES
Books and Journals
Alshmemri, M., Shahwan-Akl, L. and Maude, P., 2017. Herzberg’s two-factor theory. Life
Science Journal. 14(5). pp.12-16.
Azeem, M.F. and Yasmin, R., 2016. HR 2.0: linking Web 2.0 and HRM functions. Journal of
organizational change management.
Barth, M.E., 2022. Accounting standards: the ‘too difficult’box–the next big accounting issue?.
Accounting and Business Research. 52(5). pp.565-577.
Fallatah, R.H.M. and Syed, J., 2018. A critical review of Maslow’s hierarchy of needs. Employee
Motivation in Saudi Arabia. pp.19-59.
Guchait, P., Lei, P. and Tews, M.J., 2016. Making teamwork work: Team knowledge for team
effectiveness. The Journal of psychology. 150(3). pp.300-317.
Haje, P. and et.al., 2019. The role and importance of accounting information system in the
context of digitalization. Central Asian Journal of Social Sciences and Humanities. 5(1).
pp.64-73.
Kiweewa, J.M. And et.al., 2018. Tracking growth factors in experiential training groups through
Tuckman’s conceptual model. The Journal for Specialists in Group Work. 43(3). pp.274-
296.
Postnikova, E.M. and Gorozhankina, A.G., 2020. PERSONNEL DEVELOPMENT IS ONE OF
THE MOST IMPORTANT STRATEGIC FUNCTIONS OF THE HR DEPARTMENT
IN A MODERN ORGANIZATION. Редакционный совет. p.40.
Poth, A., Kottke, M. and Riel, A., 2020, June. Evaluation of agile team work quality. In
International Conference on Agile Software Development (pp. 101-110). Springer, Cham.
Spina, J.D. and Spina, L.J., 2022. What Are Strategic HR Functions?. In The New HR. Emerald
Publishing Limited.
Wen, H. and Moehrle, S.R., 2016. Accounting for goodwill: An academic literature review and
analysis to inform the debate. Research in Accounting Regulation. 28(1). pp.11-21.
Zhang, Y. and Xie, Y.H., 2017. Authoritarian leadership and extra-role behaviors: a role-
perception perspective. Management and Organization Review. 13(1). pp.147-166.