Recording Business Transactions-Portfolio (1)

Recording Business
Transactions-Portfolio (1)

TABLE OF CONTENTS
ASSESSMENT 1.......................................................................................................................3
PART 1.......................................................................................................................................3
PART 2.......................................................................................................................................3
PART 3.......................................................................................................................................4
PART 4.......................................................................................................................................7
REFERENCES.........................................................................................................................10

ASSESSMENT 1
PART 1
a.
In the given definition, the decision makers are the users of the accounting
information of the company. In terms of large organization like Unilever, the key decision
makers are the internal members of the organization like CFO, accounting team and
employees while on the external side are the investors, clients, suppliers, banks and other
financial institutions and lenders. The internal user of the company makes use of the
accounting information in order to gain an insight about the performance and position of the
company based on which future related decisions are undertaken. These are useful in carrying
out the other accounting activities which helps in getting further enhanced and better
information (Al-Dalabih, 2018). In respect to the external users like investors, banks and the
lenders make use of this information in terms of determining the profitability of the company
by comparing it with the past performance, liquidity and solvency position as well. With the
help of these information, decisions are undertaken in regard to whether to make an
investment in the company or provide funds to the company or not. For the big organizations,
proper disclosure of accounting information is important otherwise, it might result into
government intervention affecting the reputation of the company.
b.
Accounting is very useful for the profit business structures in respect to timely
recording of all the financial transactions of the company. For example, recording of credit
sales amount of which will be received next financial year such situation comes across the
accountant much of the time. By the way of making use of accounting proper entry for the
same can be done which will help in effectively meeting with the requirements. This will
result into getting a clear picture about the company’s financial performance in that financial
year. On the other hand, there are certain disadvantage of accounting as well (Bojarenko,
2017). There are chances that complete information might not be presented to the accountant
because of which there are chances that it might result into discrepancy in the accounting
information provided like vouchers, bills where the account without any choice has to record
whatever is being asked to. This results into inaccurate biased results. Therefore, for profit
business structure accounting is important even though it has certain drawbacks but its
benefits overcome those limitations.