Accounting for Business: Financial Analysis Report, Semester 1

This report provides a comprehensive analysis of accounting principles within a business context. It explores various aspects, including financial statement analysis, different business structures such as sole proprietorship and partnership, and the financial implications of each. The report examines the process of securing funding through loans and investments, along with the importance of accounting information in decision-making, including financial information, liquidity, and risk management. Furthermore, it highlights the crucial accounting knowledge and skills required for effective business operations, such as accounting treatment, communication, and financial management. The report concludes by emphasizing how accounting information aids businesses in managing their data effectively and providing insights into overall performance.

Running head: ACCOUNTING FOR BUSINESS
ACCOUNTING FOR BUSINESS
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction...................................................................................................................3
Answer to Question A...................................................................................................3
Answer to Question B...................................................................................................4
Answer to Question C...................................................................................................4
Answer to Question D...................................................................................................5
Answer to Question E...................................................................................................5
Conclusion....................................................................................................................6
Reference.....................................................................................................................7

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Introduction
Accounting helps the organisation to carry all the accounting treatment in their
financial statement (Bebbington, Unerman and O’DWYER 2014). The report shows
how Tim decides in regards to the purchase of shop. It shows all the various option
that is available for Tim in regards to the form of organisation and shows how Tim
can finance the business operation. It shows the sources from which Tim can finance
its business operation.
Answer to Question A
Tim has many options related to the form of the business. Tim can select the
form of business based on capital requirement and nature of business it wants to
carry in the shop (Brown 2014). The option of business Tim can choose from:
 Sole Proprietorship
 Partnership
Sole Proprietorship
Sole Proprietorship is a type of business which is carried by a single
individual. It does not take into consideration the separate legal entity principle in the
business. An individual has to bear all the losses and profit in the business
operation.
Advantage of Sole Proprietorship
 The setup of the business entity is very similar
 Control of the business is easy compared to another business
Dis-Advantage of Sole Proprietorship
 It carried the unlimited liability which will show that individual is personally
liable for the amount of debt in business
Partnership
A partnership is a business structure which involves many individuals that can
carry the business operation jointly. It divided into two parts as a limited and general
partnership.
Advantage of Partnership
 It carries more amount of capital for business operation
 The business involves many numbers of individual which help them to
increase their expertise in business operations.
Dis-Advantage of Partnership
 Unlimited liability of a partner in regards to business debt
 The principle of an agent is there in the business as the act of one partner is
directly affect the right and act of other partners
Answer to Question B
The case study shows that Tim has to opt for the form of organisation in which
it wants to carry its operation (Duska, Duska and Kury 2018). Sole proprietorship
business is carried by a single individual, so it involves less amount of fund whereas

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many individuals carry partnership business which requires a high amount of fund.
Tim can raise the fund as per the requirement of the chosen business structure.
Answer to Question C
Sole Proprietorship is the form of business which is chosen by Tim. It can
introduce its investment as a form of capital in the business. Tim will able to raise
more amount of fund with the help bank loan and another short-term loan (Kaplan
and Atkinson 2015). Tim to opt for short-term business loan, has to comply with the
requirement of bank. It has to provide collateral security which will serve as a
guarantee to the bank loan. The collateral security includes commercial property,
personal possessions items and vehicles. It has to show its income proof and other
expenses details which will help it to complete the bank requirement related to the
loan.
Answer to Question D
The transaction carried by the business termed as accounting information.
The information provides the details as how the company is carrying its business
activities (Kieso, Weygandt and Warfield 2019). Accounting information which should
be considered by Tim while deciding on the purchase of shop are:
1. Financial information provides a baseline which will help Tim to analysis the
impact of company business in future period (Libby 2017). These also help it
to know the position of the business in the market.
2. These provide the details of liquidity and solvency of business which serves a
base on which Tim can know the financial stability of the shop
3. It will get an idea about the resources required in business and how to utilise
the same to carry different business activities.
It should take the details of the risk management process in the business, the
process which is carried by the company to reduce the risk in the business
operation. It should also know about the details of competitors in company business.
Answer to Question E
The accounting knowledge and skills required by Tim is:
1. Accounting Treatment – It should be posses’ proper knowledge of accounts
that will help Tim to prepare proper financial statement of business
(Schaltegger and Burritt 2017). Tim should know all the norms in regards to
accounting information.
2. Communication Skills – Tim should possess proper communication skills
that will help it to carry the activities easily in the business (Smith 2017). Tim
should have a proper listening quality which will let him know the problem that
is faced by its customer and able to clarify the customer problem quickly.
3. Financial Management – Financial Management should be adequately
carried by Tim, which will help it to carry its business operation effectively. Tim
should form a proper composition of invested capital and borrow capital.
Conclusion
It concludes as the accounting information help the company to carry all their
data in the financial statement. Accounting information let the financial user know
about the company overall performance in the business. The report shows how Tim
can choose the form of organisation in which it wants to carry its business activities.

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Tim has opted for sole proprietorship as it will invest its investment and also take a
loan from a bank. Last part show about the accounting skill which is required by Tim
to carry its business activities.

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Reference
Bebbington, J., Unerman, J. and O’DWYER, B.R.E.N.D.A.N., 2014. Introduction to
sustainability, accounting and accountability. Sustainability accounting and
accountability (pp. 21-32). Routledge.
Brown, R., 2014. A history of accounting and accountants. Routledge.
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. Wiley-Blackwell.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI
Learning.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2019. Intermediate accounting. John
Wiley & Sons.
Libby, R., 2017. Accounting and human information processing. In The Routledge
Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting:
issues, concepts and practice. Routledge.
Smith, M., 2017. Research methods in accounting. Sage.