PART A

PURPOSES OF ACCOUNTING WITHIN CARREFOUR

Accounting is referred to as the practice of analyzing, summarizing and recording financial
transactions and activities. There are various types of accounting such as forensic, management
and government accounting. Accounting is mostly essential to business owners, investors and
stakeholders. Accounting produces critical information such as profit and loss that is needed to
analyze the financial status of an organization (Freshbooks, 2020).

The different purposes of accounting within Carrefour include;

BUDGETING AND PLANNING

Accountants are responsible for developing the organization’s budget. Accountants create annual
budgets using historical financial data and future revenue projections. Accountants also create
different budgets for individual departments within the business (Indeed, 2021). For instance,
Carrefour must plan on how they will use resources such as machinery, labor and so on
(Freshbooks, 2020).

DECISION MAKING
Accounting aids the business in a variety of decision making procedures and also aids business
owners in creating policies to optimize the efficiency of business operations. Carrefour will have
to make accounting based choices that include, resources required to manufacture products and
services, creating price points for their items as well as financing business opportunities
(Freshbooks, 2020).

COMPLIANCE OF THE LAW

An organization must follow its governments laws and standards such as those imposed by the
Kenyan Revenue Authority (KRA). Counties also impose monetary regulations on businesses.
Accounting will help to make sure that Carrefour’s financials are complying with their states
laws and regulations (Indeed, 2021).

REPORTING AND FINANCIAL STATEMENTS

The provision of financial statements is yet another responsibility of accountants within a
business. The business’s accountants compile financial data primarily to create accurate and
truthful reports and financial statements such as income statements and balance sheets and
internal communications (Luenendonk, 2021).

Accountants are also in charge of preparing financial statements at the end of every year.
Carrefour can use these reports in order to engage with investors and stakeholders and to also
generate leads (Luenendonk, 2021).

AVOIDING FRAUD
An accountant will ensure that capital is neither mishandled or wasted inside a business.
Accountants are aiming to safeguard the business’s assets from internal or an eternal fraud
attack, nowadays this is usually done via cybersecurity. Carrefour should monitor its financial
data to ensure that funds are not being mishandled or misappropriated by the employees for their
own benefit (Indeed, 2021).

REGULATORY AND ETHICAL CONSTRAINTS IN

ACCOUNTING
Ethical constraints are implications that one must operate within the socially recognized norms
and standards in order to avoid committing any type of offence (Mattwattsmedia, 2012).
Managing ethical concerns within a business is generally quite difficult for most business
owners. It is Carrefour’s management’s responsibility to bring accountability to employees who
are unethical (Holton, 2020).
The following are some of the ethical issues that the Carrefour accounting department
should look to avoid;

MANIPULATION OF FIGURES
Operating a business might be very pressuring for some business owners. Some business owners
tend to have the urge to get their accounting department to manipulate financial data. This is not
an ideal situation for accountants, as they have a legal and ethical duty to correctly present the
business’s financial status, and the failure to do exactly just this can lead to criminal or civil
consequences (Decker, 2019).

EFFECTS OF GREED
Businesses face a lot of cases where their accountants will break ethical boundaries in the sake of
generating more money. An accountant who works in the Carrefour shouldn’t let their financial
desires skew their ethical behavior, he or she must adhere to the business’s ethical financial
reporting guidelines (Content, 2017).

CONFIDENTIALITY
Professional accountants are expected to protect the privacy and confidentiality of sensitive
information that could be obtained via business and professional relations. This sensitive
information should never be revealed to any third parties without getting permission or it’s a
legal matter and they are forced to disclose the information. Accountants working for Carrefour
should know that it is unethical for them to break this code of conduct (Nordmeyer, 2018).
THE ROLE OF ACCOUNTING REGARDING
CARREFOURS DECISION MAKING
Accounting plays a vital role when it comes to decision making and decision making is done
mainly through two forms of accounting, this being, financial accounting and cost accounting
within managerial accounting. The main distinction between managerial and financial
accounting would be that financial accounting information is more provided to external parties
such as investors whilst managerial accounting information is intended more to assist the
businesses management in making decisions for the business (Kenton, 2020).

FINACIAL ACCOUNTING
Through financial accounting Carrefour can collect and report the financial information that
flows in and out of their business, allowing the management as well as external analysts and
investors to evaluate the business’s financial health therefore making educated decisions.

The following are the major ways in which financial accounting aids in making decisions;

 Financial accounting gives investors a starting point for analyzing and comparing the
financial health of businesses issuing securities (Drury, 2021).
 Financial accounting aids creditors in determining a business’s solvency and credibility.
When the business has generated the appropriate financial statements detailing all its
assets and debt, lenders attain a better understanding of the company’s credibility (Drury,
2021).
MANAGERIAL ACCOUNTING
COST ACCOUNTING
A business’s management uses cost accounting to determine all variables and fixed costs
involved with the manufacturing. Input expenses are compared with output results to help assess
financial success and make decisions in the long term (Tuovila, 2021).

The following are the various types of costs in cost accounting;

 Fixed costs: These are the types of costs which do not fluctuate with the volume of
production. Often these costs are things such as leases and mortgage payments on a
structure or an equipment which is depreciated at a month-to-month rate. Those costs
would not change at all whether output levels increased or decreased.
 Variable costs: These are that costs that are directly affected by the business’s volume of
production. For example, if Carrefour is to increase production specifically for the
Christmas holidays, it’s inventory may suffer greater expenses when it acquires a large
amount of items from suppliers.
 Operating costs: These are the type of costs that are connected to the business’s daily
activities. Based on circumstances, these expenses can be variable ore fixed. For
example, if Carrefour has a payroll where it’s employees get paid a certain amount of
salary based on their level of work output then the cost is variable, but if they get paid the
same salary no matter the circumstance, then the cost is fixed.

The bottom line is that, accounting allows companies to monitor their activities while also
providing an overview of their financial condition. By Carrefour giving their lenders and
investors and themselves an overview of its financial information through various financial
statements such as income statements, it gives them more confirmation when it comes to
decision making (Drury, 2021).
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