Introduction to Accounting: Explanation of Financial Statements and Analysis of Grenco Plc

Introduction to
Accounting
Component

EXECUTIVE SUMMARY-
The upcoming report covers process of accounting and functions of a business.
Accounting helps in analysing and identification of the data which is in monetary terms. With the
help of accounting profit and loss of a firm can be calculated for a specific period of time. This
report contains the detailed explanation with regard to the financial statements in order to get the
net earnings of a business.

Table of Contents
EXECUTIVE SUMMARY- ...........................................................................................................2
INTRODUCTION ..........................................................................................................................5
TASK...............................................................................................................................................5
1. Explain balance sheet, cash flow statement and statement of Profit and Loss. Also explain
the relationship between three.....................................................................................................5
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................12

INTRODUCTION
The first and leading step in accounting is associated with the identification of business
transactions that are financial and monetary in nature (Bhardwaj and Gupta.,2018). After
identifying such kind of transactions, these are then recorded in the books of accounts.
Accounting process also includes analysing, examining and summarising of the financial reports
to get a vision of the business entity. In this report, the Grenco Plc. is taken into consideration to
understand the financials of the business entity. This report also depicts the different financial
statements like Balance Sheet, cash flow statement, and profit and loss accounts. In addition to
this it also comment on the financial health of a company.
TASK
Grenco Plc. is a UK based company that is concerned with retail business of grocery
goods and general products. It is headquartered in Manchester. This company was set up in the
year 1998 and has huge market share. The company has variegated its grocery retail business and
now it merchandises in petrol, electric items, telecom, internet services, books, furniture and
financial services. Grenco Plc. is expanded over the years and this is the reason that an
investment firm - Durwent & Company Financial Services wish to invest in this firm.
1. Explain balance sheet, cash flow statement and statement of Profit and Loss. Also explain the
relationship between three.
Financial statements are the end data of a company that gives the impression of business
activities and financial performance of a firm at a point in time. Financial statements helps the
business in forming the conclusion on the financial health of a firm through financial statement
analysis. These records the assets, liabilities, equity, income and expenses and they are straight
away connected with the financial position of an organisation (Woollacott., 2022). These
statements are prepared to fulfil the requirements of the users of accounting information so that
they can opt for best investment decisions. It is the mix of three major reports that contains the
cash flow statements, the income statements, and the balance sheet.