Unit 5 Accounting Principles - Part 1: Standards, Financial Statements and Budgets

This assignment covers the principles of management accounting, purpose of accounting function, critical evaluation of accounting function, main branches of accounting, accounting systems and technology, ethics, regulations and compliance, and cash budget.

Learner Name ID
Programme Name Pearson BTEC Higher National Diploma in Business Management
Unit Number and Title Unit 5 – Accounting Principles
Unit Level 4
Cohort Sep 2021
Assignment Title
Part 1 Accounting Principles. Standards, Financial Statements and
Budgets
Part 2 Financial Ratio Analysis
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Table of Content
Assessment Part 1
1.0 Introduction p
2.0 An examination of purpose of an accounting function within
an organization p
3.0 A critical evaluation of the accounting function p
4.0 Explanation of main branches of accounting p
5.0 Accounting systems and the role of technology
6.0 Issues of ethics, regulations and compliance p
7.0 CASH BUDGET p
8.0 Conclusions p
References p
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Part 1
1.0 Introduction
Write an Introduction to Management Accounting and the
principles of Management Accounting
Management accounting is the process which helps in creating the
entity the entity’s goals with the help of identification,
measurement, analyzing, interpreting and communication of
information to manager. The main focus of management
accounting is to taught management about business metrics with
respect to operations. Management accounting is also called
managerial accounting and may be described as a procedure of
supplying monetary records and assets to the managers in choice
making. Management accounting is most effectively utilized by the
inner group of the organization, and that is the most effective
aspect which makes it distinctive from monetary accounting. In this
procedure, monetary records and reviews along with invoice,
monetary stability announcement is shared through finance
management with the control group of the company. Objective of
control accounting is to apply these statistical facts and take a
higher and correct choice, controlling the enterprise, enterprise
sports, and development. Financial accounting is the recording
and presentation of records for the advantage of the numerous
stakeholders of an organization. Management accounting, on the
opposite hand, is the presentation of monetary facts and enterprise
sports for the inner control of the organization. In this article, we
are able to analyse what's control accounting and its functions.
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Principles of Management accounting are being mentioned below:
 Designing and Compiling: Accounting records, records,
reports, statements and different proof of past, gift or destiny
consequences must be designed and compiled to satisfy the
desires of the specific commercial enterprise and/or
particular hassle. It way that control accounting device is
designed in this type of manner providing the applicable
data. If so, a specific hassle is to be solved. Moreover,
accounting records may be changed and followed to satisfy
the necessities of control.
 Management through Exception: The precept of control
through exception is observed whilst providing records to
control. It way that budgetary manage device and well-known
costing strategies are observed withinside the control
accounting device. In this manner, the real overall
performance is as compared with pre-decided one for
locating the deviations. The adverse deviations by myself are
knowledgeable exactly to control as what goes wrong. If so,
the control has spent much less time to study and look at the
records and extra time to take action.
 Control at Source Accounting: Costs are excellent managed
on the factors at which they're incurred – manage at supply
accounting. The overall performance of character workers,
info of substances problems and usage and utilization of
offerings including machine, power, upkeep and
maintenance, automobiles etc. are organized withinside the
shape of quantitative and qualitative records. In this manner,
manage may be exercised over employees, substances and
provider supplying devices.
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 Accounting for Inflation: A earnings can't be stated to be
earned except capital is maintained intact in actual phrases.
It way that cash fee isn't stable. Hence, it's miles vital to
evaluate the fee of capital contributed through the proprietors
of the commercial enterprise problem in phrases of actual
fee of cash thru revaluation accounting. In this manner,
charge of inflation is taken into consideration to choose the
actual achievement of the commercial enterprise problem.
 Use of Return-on-Investment: Return on funding is in any
other case known as Return on Capital Employed. The
charge of go back indicates the performance of the
enterprise concern. For this purpose, the capital hired is
calculated in phrases of actual cash value.
 Utility: Management accounting structures and associated
paperwork need to be used most effective so long as they
serve a beneficial purpose.
 Integration: It way that each one the desired data of the
control is incorporated in order that they may be used
efficaciously on the most and on the equal time, the
accounting provider is supplied at minimal cost.
 Absorption of Overhead Costs: Overhead prices are
absorbed on all people of the predetermined basis. The
overhead prices are the mixture of oblique materials, oblique
labour and oblique expenses. Hence, the chosen technique
or techniques for the absorption of overheads need to result
in the preferred effects withinside the maximum equitable
manner.
2.0 An examination of purpose of an accounting function within
an organization
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Accounting refers back to the systematic and designated recording
of economic transactions of an enterprise. There are many types,
from accounting for small businesses, authorities, forensic, and
control accounting, to accounting for corporations.
Accounting performs a crucial position in walking an enterprise as
it enables song earnings and expenditures, make sure statutory
compliance, and offer investors, control, and authorities with
quantitative economic facts which may be utilized in making
enterprise decisions.
There are 3 key economic statements generated with the aid of
using the statistics:
 The profit and loss statement offers business with facts
approximately the income and loss.
 The balance sheet offers a clean photograph at the
economic function of the enterprise on a selected date.
 The CFS drift declaration is a bridge among the earnings
declaration and balance sheet and reviews the coins
generated and spent in the course of a particular duration of
time. It is essential for the business preserve the economic
statistics smooth and updated in case the entity need to
preserve enterprise afloat. Here are only some of the
motives why it's miles crucial in the enterprise, large or small!
The purpose of accounting function within the entity are being
explained below:
 It Helps in Evaluating the Performance of Business:
The economic statistics mirror the consequences of
operations in addition to the economic function of small
enterprise or corporation. In different words, they assist in
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recognizing what’s happening together along with the
enterprise financially.
 It Ensures Statutory Compliance:
Laws and rules range from nation to nation, however right
accounting structures and methods will assist the
management to make sure statutory compliance in terms of
enterprise. The accounting feature will make sure that
liabilities which includes income tax, VAT, earnings tax, and
pension funds, to call a few, are accurately addressed.
 It Helps to Create Budget and Future Projections:
Budgeting and destiny projections could make or destroy an
enterprise, and economic statistics will play a vital position in
terms of it. Business tendencies and projections are primarily
based totally on ancient economic facts to preserve the
operations profitable. This economic fact is maximum
suitable whilst furnished with the aid of using well-dependent
accounting methods.
 It Helps in Filing Financial Statements:
Businesses are required to document their economic
statements with the Registrar of Companies. Listed entities
are required to document them with inventory exchanges, in
addition to for direct and oblique tax submitting purposes.
3.0 A critical evaluation of the accounting function p
Write your answer here
4.0 Explanation of main branches of accounting p
Write your answer here
5.0 Accounting systems and the role of technology
Write your answer here
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6.0 Issues of ethics, regulations and compliance p
Write your answer here
7.0 CASH BUDGET p
PRESENT A CASH BUDGET as provided in the Annexure
8.0 Conclusions p
References p
Table of Content
Assessment Part 2
Section B:
Detailed letter to client p
Financial Statements p
i] Profit & Loss Account p
ii] Balance Sheet p
Ratio Analysis p
Conclusion p
Recommendations p
References p
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Part 2
Detailed letter to client p
Write your answer here
Financial Statements p
Present your answer as below
i] Profit & Loss Account p
ii] Balance Sheet p
Ratio Analyses p
Present your calculations here
Conclusion
Write your answer here p
Recommendations
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Write your answer here
References
Write your answer here
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