Higher Nationals

Internal verification of assessment decisions – BTEC (RQF)

INTERNAL VERIFICATION – ASSESSMENT DECISIONS

Programme title Pearson HND in Business

Assessor Internal Verifier

Unit 5 – Accounting Principles

Unit(s)

Accounting in Context and Budgetary Control.

Assignment title

S.P.Devindi Lalithya
Student’s name

List which assessment Pass Merit Distinction

criteria the Assessor has
awarded.

INTERNAL VERIFIER CHECKLIST

Do the assessment criteria awarded

match those shown in the assignment
brief?
Y/N

Is the Pass/Merit/Distinction grade

awarded justified by the assessor’s
comments on the student work? Y/N

Has the work been assessed

accurately? Y/N

Is the feedback to the student:

Give details:
 • Constructive? Y/N
Y/N

• Linked to relevant
assessment criteria?

Y/N
• Identifying opportunities
Y/N
for improved
performance?

• Agreeing actions?

Does the assessment decision need

amending? Y/N

Assessor signature Date

Internal Verifier signature Date

Programme Leader signature (if

required) Date
Confirm action completed
Remedial action taken

Give details:

Internal Verifier
signature Date
Programme Leader
signature (if required) Date
Higher Nationals - Summative Assignment Feedback Form
Student Name/ID S.P.Devindi Lalithya /E179170
Unit Title Unit 5 – Accounting Principles
Assignment Number Assignment 1 of 2 Assessor
07.12.2023 Date Received 1st
Submission Date submission
Date Received 2nd
Re-submission Date submission
Assessor Feedback:

LO1 Examine the context and purpose of accounting

Pass, Merit & Distinction P1 P2 M1 D1

Descripts

LO2 Prepare basic financial statements for unincorporated and small business organisations in accordance
with accounting principles, conventions, and standards

Pass, Merit & Distinction P3 M2 D2

Descripts

LO3 Interpret financial statements

Pass, Merit & Distinction P4 P5 M3 D2

Descripts

LO4 Prepare budgets for planning, control and decision-making using spreadsheets.

Pass, Merit & Distinction P6 P7 M4 D3

 Grade: Assessor Signature: Date:

Resubmission Feedback:

Internal Verifier’s Comments:

Signature & Date:

* Please note that grade decisions are provisional. They are only confirmed once internal and external moderation has taken place and grades decisions have
been agreed at the assessment board.

Assignment Feedback
Formative Feedback: Assessor to Student

Action Plan

Summative feedback
Feedback: Student to Assessor

Assessor Date
signature

Devindilalithya11@gmail.com 07.12.2023

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Pearson
Higher Nationals in
 Business
Unit 5: Accounting Principles
Assignment 01

General Guidelines
 1. A Cover page or title page – You should always attach a title page to your assignment. Use previous
page as your cover sheet and make sure all the details are accurately filled.
2. Attach this brief as the first section of your assignment.
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Important Points:

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information. eg: Figures, tables of comparison etc. Adding text boxes in the body except for the
before mentioned compulsory information will result in rejection of your work.
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9. Non-submission of work without valid reasons will lead to an automatic RE FERRAL. You will
then be asked to complete an alternative assignment.
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reference list.
11. If you are proven to be guilty of plagiarism or any academic misconduct, your grade could be
reduced to A REFERRAL or at worst you could be expelled from the course
Student Declaration

I hereby, declare that I know what plagiarism entails, namely to use another’s work and to present it as my own
without attributing the sources in the correct way. I further understand what it means to copy another’s work.

1. I know that plagiarism is a punishable offence because it constitutes theft.

2. I understand the plagiarism and copying policy of the Edexcel UK.

3. I know what the consequences will be if I plagiaries or copy another’s work in any of the assignments for this
program.

4. I declare therefore that all work presented by me for every aspect of my program, will be my own, and where I
have made use of another’s work, I will attribute the source in the correct way.

5. I acknowledge that the attachment of this document signed or not, constitutes a binding agreement between
myself and Edexcel UK.

6. I understand that my assignment will not be considered as submitted if this document is not attached to the
attached.

Student’s Signature: Date:

(Provide E-mail ID) (Provide Submission Date)

Devindilalithya11@gmail.com 07.12.2023
Higher National Certificate/Diploma in Business

Assignment Brief

Student Name /ID Number S.P.Devindi Lalithya/E179170

Unit Number and Title Unit 5: Accounting Principles

Academic Year

Unit Tutor

Assignment Title Accounting in Context and Budgetary Control and Production

and Interpretation of Financial Statements

Issue Date

Submission Date

IV Name & Date

Submission format

The submission is in the form of a portfolio of evidence compiled from the evidence produced for two
assignments that include the following.

Section A

A blog that should make use of headings, sub-sections, columns and appropriate business-related images and
illustrations. This format offers the opportunity to present academic and theoretical information in a practical,
contextualised and creatively written way. The recommended word limit for the case study is 1,500–2,000 words,
although you will not be penalised for going under or exceeding the total word limit. All work must be supported
with research and referenced correctly using the Harvard referencing system (or alternative referencing system).
You will need to provide a bibliography using the Harvard referencing system (or an alternative referencing
system). Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly.

Section B

You will also submit budget reports (Sales budget, Production budget & Cash budget) with relevant
interpretations. You will insert sections of your spreadsheet into the memorandum. The recommended word
limit for the memorandum is 1,000–1,500 words, although you will not be penalised for going under or exceeding
the total word limit. Referencing for both submissions should use the Harvard system (or an alternative system).
The submission is in the form of a portfolio of evidence compiled from the evidence produced for two
assignments that include the following.

Section C

A constructed set of financial statements (income statement and statement of financial position) for the business
in question. The word count is 2,000–2,500 words, although you will not be penalised for going under or
exceeding the total word limit. A bibliography should be provided using the Harvard referencing system (or an
alternative system). Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly.

Section D

A detailed letter to a named client. The letter must be clear worded, well-structured and should make use of
appropriate business language and terminology. The letter can also include clearly labelled tables and charts.

The word count is 2,000–2,500 words, although you will not be penalised for going under or exceeding the total
word limit. A bibliography should be provided using the Harvard referencing system (or an alternative system).
Inaccurate use of referencing may lead to issues of plagiarism if not applied correctly.

Unit Learning Outcomes:

LO1 Examine the context and purpose of accounting.

LO4 Prepare budgets for planning, control and decision-making using spreadsheets.

LO2 Prepare basic financial statements for unincorporated and small business organisations in accordance with
accounting principles, conventions, and standards.

LO3 Interpret financial statements.

Learning Outcomes and Assessment Criteria

Pass Merit Distinction

LO1 Examine the context and purpose of accounting

P1 Examine the purpose of

the accounting function D1 Critically evaluate the role of
M1 Evaluate the context and
within an organisation. accounting in informing decision making
purpose of the accounting
function in meeting to meet organisational, stakeholder and
P2 Assess the accounting societal needs within complex operating
organisational, stakeholder
function within the environments.
and societal needs and
organisation in the context of
expectations.
regulatory and ethical
constraints.

LO4 Prepare budgets for planning, control and decision-

making using spreadsheets.

P6 Prepare a cash budget

from given data for an D3 Justify budgetary control solutions
M4 Identify corrective actions
organisation using a and their impact on organisational
to problems revealed by
spreadsheet. decision making to ensure efficient and
budgetary planning and
effective deployment of resources.
control for effective
P7 Discuss the benefits and
organisational decision
limitations of budgets and
making.
budgetary planning, and
control for an organisation.

Pass Merit Distinction

LO2 Prepare basic financial statements for unincorporated and

small business organisations in accordance with accounting D2 Critically evaluate financial
principles, conventions, and standards. statements to assess organisational
performance using a range of measures
P3 Prepare financial M2 Produce financial and benchmarks to make justified
statements from a given trial statements from a given trial conclusions.
balance for sole traders, balance, making appropriate
partnerships and not-for-
profit organisations, to meet
adjustments.
accounting principles,
conventions and standards.

LO3 Interpret financial statements.

P4 Calculate and present

financial ratios from a set of M3 Evaluate the performance
final accounts. of an organisation over time,
using financial ratios with
P5 Compare the performance reference to relevant
of an organisation over time benchmarks.
using financial ratios.
Assignment Brief and Guidance:

Section A

Your supervisor, one of the firm’s Key Account Managers, has asked you to prepare a blog that will be
used to market and promote its accounting services to new and existing clients. The working title you
have been given for the blog is ‘The role of accounting in an organisation’. The blog must be presented
as an online blog in an engaging and practical way, covering relevant academic theory, making use of,
for example, headings, images and illustrations. Your blog should include the following, but is not
limited to:

 the purpose and scope of accounting in complex operating environments

 a critical evaluation of the accounting function in informing decision making and
meeting stakeholder and societal needs and expectations
 the main branches of accounting and job skillsets and competencies
 accounting systems and the role of technology in modern-day accounting
 issues of ethics, regulation and compliance and the extent to which they are constraints
or threats to the organisation.

Section B

Tools Ltd is a new business which has been formed to buy standard machine tool units and adapt them
to the specific needs of customers.

The business will acquire fixed assets costing Rs.100,000 and a stock of 500 standard tool units on the
first day of business. The fixed assets are expected to have a five-year life with no residual value at the
end of that time.

Sales are forecast as follows:

 Year 1 Year 2

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1

Modified tool units 4,050 4,200 4,350 3,900 4,050

The selling price of each unit will be Rs.90.

The cost of production of each unit is specified as follows:

Rs.

Cost of standard unit purchased 24

Direct labour 30

Fixed overhead 10

64

The fixed overhead per unit includes an allocation of depreciation. The annual depreciation is calculated
on a straight-line basis and is allocated on the basis of a cost per unit to be produced during the year.

Suppliers of standard tool units will allow one month’s credit. Customers are expected to take two
months’ credit.

Wages will be paid as they are incurred in production. Fixed overhead costs will be paid as they are
incurred.

The stock of finished goods at the end of each quarter will be sufficient to satisfy 10% of the planned
sales of the following quarter. The stock of standard tool units will be held constant at 500 units.

It may be assumed that the year is divided into quarters of equal length and that sales, production and
purchases are spread evenly throughout any quarter.
Required

1. Produce, for each quarter of the first year of trading:

(a) the sales budget.
(b) the production budget; and
(c) the cash budget.

2. Explain the benefits and limitations of budgets, budgetary planning, and budgetary control for
Tools Ltd.

3. Compare any other organization which operates with the similar business activities and explain
how organizations are adapting budgetary planning and budgetary control to respond to
financial problem. Further, Justify budgetary control solutions and their impact on
organizational decision making to ensure efficient and effective deployment of resources.

Section C

a. Prepare final accounts for sloe traders, partnerships and limited companies in according with
appropriate principles, conventions and standards. (Please refer the excel sheet for required
information).

b. Prepare Cash flow statement of Ruba PLC. Find the cash balance for the year ended by using
relevant accounting formats. (Please refer the excel sheet for required information).

c. Compare the essential features of each financial statement (Complete set of Financial Statements) to
analyse the differences between them in terms of purpose, structure, content Etc.

Section D

These local businesses do not make use of contemporary software to support its book-keeping and
accounting function. This is something which concerns you as you feel that it represents an opportunity
for the business to save time and resource. Your supervisor, one of the firm’s Key Account Managers,
has asked you to compile the year-end financial statements ready for submission and provide, for your
client. You should prepare some detailed analysis of the figures produced, which will be presented in
the form of a letter.
a. Calculate and interpret following ratios from the given information in the excel sheet.
 Investor ratios
 Liquidity ratios
 Leverage ratios
 Profitability ratios

b. critically evaluate the performance to the business year on year (making reference to data you have
calculated, and data provided from the previous year), with reference to relevant benchmarks as
well as any limitations of using financial ratios as performance measures with a justified
conclusions and recommendations for your client.
Grading Rubric
 Feedback
Grading Criteria Achieved

P1 Examine the purpose of the accounting

function within an organisation.

P2 Assess the accounting function within

the organisation in the context of regulatory
and ethical constraints.

P6 Prepare a cash budget from given data

for an organisation using a spreadsheet.

P7 Discuss the benefits and limitations of

budgets and budgetary planning, and control
for an organisation.

M1 Evaluate the context and purpose of the

accounting function in meeting
organisational, stakeholder and societal
needs and expectations.

M4 Identify corrective actions to problems

revealed by budgetary planning and control
for effective organisational decision making.
D1 Critically evaluate the role of accounting
in informing decision making to meet
organisational, stakeholder and societal
needs within complex operating
environments.

D3 Justify budgetary control solutions and

their impact on organisational decision
making to ensure efficient and effective
deployment of resources.

P3 Prepare financial statements from a

given trial balance for sole traders,
partnerships and not-for-profit
organisations, to meet accounting
principles, conventions and standards.

P4 Calculate and present financial

ratios from a set of final accounts.

P5 Compare the performance of an

organisation over time using financial
ratios.

M2 Produce financial statements from

a given trial balance, making
appropriate adjustments.
M3 Evaluate the performance of an
organisation over time, using financial
ratios with reference to relevant
benchmarks.

D2 Critically evaluate financial

statements to assess organisational
performance using a range of measures
and benchmarks to make justified
conclusions.

Contents
1. The role of Accounting in an Organization............................................................................2
Executive Summary...............................................................................................................2
1.1. The purpose of accounting in complex operating environments within an organization:2
1. 2. The Scope of accounting in complex operating environments within an organization: 3
 1.2.1. The accounting function within the organisation in the context of regulatory and ethical
constraints..........................................................................................................................3
1. Financial Record Keeping:.............................................................................................3
2. Financial Reporting:.......................................................................................................4
3. Internal Controls:...........................................................................................................4
4. Auditing..........................................................................................................................4
5. Tax Compliance.............................................................................................................4
1.3. The context and purpose of the accounting function in meeting organisational, stakeholder, and
societal needs and expectations:.............................................................................................5
1.3.1. The main branches of accounting and job skillsets and competencies:...................5
1.3.2. Accounting systems and the role of technology in modern-day accounting:..........6
2. Budgets for planning, control, and decision-making using spread sheets:............................6
2.1. A cash budget from given data for an organization using a spread sheet:......................6
2.1.1. Budgetary Reports:...................................................................................................6
2.1.2. Workings:.................................................................................................................7
2.2. Benefits and limitations of budgets and budgetary planning, and control for an organisation 7
2.2.1. Budgets:....................................................................................................................7
2.2.2. Budgetary Planning:.................................................................................................7
2.2.3. Budgetary Control:...................................................................................................7
2.3. Corrective actions to problems revealed by budgetary planning and control for effective
organisational decision making..............................................................................................7
2.3.1. Common Problems in Budgetary Planning and Control:.........................................8
2.3.2. How Organizations are Adapting to Budgetary Planning and Control in Responding to Financial
Problems:............................................................................................................................8
2.3.3. Corrective Actions to Problems Revealed by Budgetary Planning and Control for Effective
Organizational Decision-Making:......................................................................................8
3. Basic financial statements for unincorporated and small business organisations following accounting
principles, conventions, and standards.......................................................................................8
4. Interpret financial statements.................................................................................................9
4.1 Explanation:...................................................................................................................10
4.2Financial Ratio................................................................................................................11
4.2.1 . Conclusions and Recommendations.....................................................................12

List of figures
Figure 1 Types of Accounting 5

List of Tables

Table 1 Cash budget 9

1. The role of Accounting in an Organization
Executive Summary

The success of a business hinges significantly on its Accounting function, which,

through strategic practices, enhances operational efficiency and fosters a competitive
edge, promoting sustainable growth. A blog explores the multifaceted role of
accounting in intricate operational settings, delving into branches, job skills,
technology's impact, and ethical considerations. It addresses regulatory and
compliance issues and evaluates their implications as constraints or threats. A critical
analysis follows, assessing how the accounting function informs decisions and aligns
with stakeholder expectations. The content extends to budgetary reports, comparing
manufacturing entities' approaches to budgetary planning and control amid financial
challenges. Final accounts, cash flow statements, and a comparative study of financial
statements' features are included, ensuring adherence to principles and standards. The
comprehensive coverage concludes with a detailed letter incorporating financial
ratios, a year-on-year performance evaluation, and insightful recommendations for the
client. (Indeed Team, 2023)

1.1. The purpose of accounting in complex operating environments

within an organization:
In a complex operating environment, the purpose of accounting becomes paramount
as it serves as the backbone for informed decision-making and effective resource
allocation. Accounting functions play a crucial role in systematically recording,
summarizing, and analyzing financial transactions, providing stakeholders with a
comprehensive understanding of the organization's financial health. In such intricate
environments, where numerous variables and factors influence business operations,
accounting acts as a reliable tool to track revenues, expenses, assets, and liabilities.
This information is essential for management to assess the financial performance,
identify areas for improvement, and make strategic decisions to ensure the
organization's sustainability and growth. Additionally, in complex operating
environments, adherence to regulatory requirements and compliance with accounting

2
standards becomes more intricate, making the accounting function vital for legal and
ethical financial reporting. (scribd, n.d.)

1. 2. The Scope of accounting in complex operating environments

within an organization:
The scope of accounting in complex operating environments extends beyond mere
record-keeping and financial reporting. In such settings, accounting encompasses a
broad range of activities that contribute to the overall efficiency and effectiveness of
the organization. This includes financial planning, budgeting, and forecasting to
anticipate and navigate the challenges presented by the dynamic business landscape.
Moreover, management accounting plays a pivotal role by providing detailed insights
into cost structures, profitability analysis, and performance metrics. (Eisenhardt,
2007)In complex environments, accounting systems are often integrated with other
organizational functions, such as supply chain management and human resources, to
facilitate seamless information flow and ensure holistic decision-making. The scope
also involves risk assessment and management, where accountants evaluate financial
risks associated with diverse business operations and implement strategies to mitigate
them, safeguarding the organization's financial stability. (wallstreetmojo, n.d.)

1.2.1. The accounting function within the organisation in the context of

regulatory and ethical constraints.
The accounting function within an organization plays a crucial role in managing
financial information, reporting, and ensuring compliance with regulatory and ethical
standards. This function encompasses a range of activities related to the recording,
summarizing, and analyzing of financial transactions. Here's a breakdown of the key
aspects of the accounting function within the context of regulatory and ethical
constraints:

1. Financial Record Keeping:

The accounting function is responsible for maintaining accurate and complete
financial records in accordance with regulatory requirements. This involves adhering
to accounting standards and principles set by regulatory bodies such as the Financial
Accounting Standards Board (FASB) in the United States or the International
Financial Reporting Standards (IFRS) globally. (MARK, 2022)

3
Ethical constraints require accountants to maintain the integrity of financial records,
ensuring that information is truthful, transparent, and free from manipulation. This
involves avoiding conflicts of interest and upholding honesty in financial reporting.

2. Financial Reporting:
Organizations are often required to produce financial statements and reports on a
regular basis. These reports must comply with specific regulations and standards
established by relevant authorities, such as the Securities and Exchange Commission
(SEC) in the U.S. for publicly traded companies. (planful, n.d.)

Ethical constraints in financial reporting include presenting information fairly and

objectively. Accountants must avoid biased reporting and provide a true and fair view
of the organization's financial position.

3. Internal Controls:
Establishing and maintaining internal controls is crucial to comply with regulations
such as the Sarbanes-Oxley Act (SOX) in the U.S., which mandates internal control
assessments and certifications to prevent financial fraud.

Internal controls are also important from an ethical standpoint to safeguard against
fraudulent activities and ensure the accuracy of financial information. (audit.ucsf.edu,
n.d.)

4. Auditing
External audits, conducted by independent auditors, are often required to ensure that
financial statements comply with accounting standards and regulations. This is a
regulatory requirement for many organizations.

Ethical constraints in auditing involve independence and objectivity. Auditors must

maintain professional skepticism and avoid conflicts of interest to provide unbiased
assessments of financial statements. (Deskera, n.d.)

5. Tax Compliance
The accounting function is responsible for ensuring that the organization complies
with tax regulations and accurately calculates and reports its tax liabilities.

4
Ethical constraints in tax compliance include avoiding aggressive tax avoidance
strategies that may be legal but are considered unethical. Accountants should uphold
ethical standards in tax planning and reporting.

In summary, the accounting function within an organization operates within a

framework of regulatory requirements and ethical considerations. By adhering to
these constraints, the organization can maintain financial transparency, accountability,
and integrity in its operations.

1.3. The context and purpose of the accounting function in meeting

organisational, stakeholder, and societal needs and expectations:
The accounting function serves as the financial backbone of organizations, addressing
the diverse needs of internal and external stakeholders. By meticulously recording and
interpreting financial transactions, accounting facilitates decision-making, financial
transparency, and regulatory compliance. It plays a pivotal role in meeting the
expectations of investors, creditors, and the broader society by providing accurate,
timely, and reliable information for assessing an entity's financial health and
sustainability.

1.3.1. The main branches of accounting and job skillsets and competencies:

5
Figure 1 Types of Accounting
(relivingmbadays, 2013)
Accounting encompasses distinct branches, each serving specific purposes. Financial
accounting focuses on external reporting, portraying an organization's financial
position. Managerial accounting aids internal decision-making through cost analysis
and budgeting. Auditing ensures the accuracy and reliability of financial information.
Tax accounting deals with tax compliance. Forensic accounting investigates financial
irregularities. A skilled accountant requires competencies in financial analysis, data
interpretation, regulatory compliance, and proficiency in accounting software to
navigate these specialized fields effectively.

1.3.2. Accounting systems and the role of technology in modern-day accounting:

Modern accounting is intricately linked with technology, with accounting systems
revolutionizing traditional practices. These systems automate financial processes,
enhance accuracy, and provide real-time insights. Cloud-based platforms enable
remote collaboration and data accessibility. Technology also plays a crucial role in
cyber security, safeguarding sensitive financial information. Accountants now need
proficiency in data analytics, ERP systems, and cyber security measures to leverage
the full potential of technology, ensuring efficiency, accuracy, and compliance in the
dynamic landscape of contemporary accounting (online.mason, n.d.)

2. Budgets for planning, control, and decision-making using

spread sheets:
Effective financial management relies on robust budgets created and monitored
through spreadsheets. These dynamic tools enable organizations to forecast, control,
and make informed decisions. By inputting data and variables, spread sheets facilitate
the creation of comprehensive budgets that serve as roadmaps for fiscal responsibility.
(factorialhr, 2022)

2.1. A cash budget from given data for an organization using a

spread sheet:
A cash budget, crafted through spread sheet analysis, predicts an organization's short-
term financial health. Utilizing data inputs, this tool calculates anticipated cash
inflows and outflows, aiding in liquidity management.

2.1.1. Budgetary Reports:

6
Budgetary reports generated from spread sheet analyses provide a detailed breakdown
of an organization's financial performance. These reports offer insights into revenue,
expenses, and variances, aiding decision-makers in evaluating fiscal health.

2.1.2. Workings:
The workings section of a cash budget in a spread sheet showcases the step-by-step
calculations and formulas employed. This transparent breakdown enhances
accountability and facilitates understanding, ensuring that stakeholders can grasp the
financial intricacies underpinning the budget.

2.2. Benefits and limitations of budgets and budgetary planning, and

control for an organisation
2.2.1. Budgets:
Budgets are detailed financial plans that outline an organization's expected revenues
and expenditures over a specific period. They serve as a roadmap for financial
management, aiding in resource allocation, cost control, and goal attainment. Budgets
encompass various categories, such as operating, capital, and cash budgets, providing
a comprehensive framework for fiscal decision-making.

2.2.2. Budgetary Planning:

Budgetary planning involves the systematic process of creating, evaluating, and
implementing budgets. It requires forecasting income and expenses, setting financial
objectives, and aligning resources with organizational goals. Effective budgetary
planning facilitates strategic financial management, enabling businesses to prioritize
spending, allocate resources efficiently, and adapt to changing economic conditions.
This process is essential for maintaining financial health and achieving long-term
success.

2.2.3. Budgetary Control:

Budgetary control is a managerial function that involves monitoring actual financial
performance against planned budgets. It includes comparing real-time results with
budgeted figures, identifying variances, and implementing corrective actions when
necessary. This systematic review ensures that financial resources are utilized
effectively, operational goals are met, and deviations from the budget are addressed

7
promptly. Budgetary control is crucial for maintaining financial discipline, fostering
accountability, and optimizing organizational performance.

2.3. Corrective actions to problems revealed by budgetary planning

and control for effective organisational decision making

2.3.1. Common Problems in Budgetary Planning and Control:

Budgetary planning and control often face challenges such as inaccurate forecasting,
unforeseen expenses, and insufficient communication. These issues can hinder
effective financial management, leading to budgetary shortfalls or overspending.
Identifying and addressing these common problems is crucial for organizations to
enhance the accuracy and reliability of their budgetary processes, fostering better
financial decision-making and strategic planning. (Team, 2022)

2.3.2. How Organizations are Adapting to Budgetary Planning and Control in

Responding to Financial Problems:
Organizations are evolving their budgetary processes in response to financial
challenges by leveraging advanced technologies, embracing flexible budgeting
approaches, and fostering a culture of transparency. Automation tools streamline data
collection and analysis, enabling real-time adjustments. Adaptive budgeting models
allow organizations to respond swiftly to changing circumstances. Additionally,
promoting collaboration and communication across departments ensures a more
cohesive and responsive budgetary planning and control framework.

2.3.3. Corrective Actions to Problems Revealed by Budgetary Planning and

Control for Effective Organizational Decision-Making:
To enhance organizational decision-making, corrective actions must be implemented
in response to issues uncovered during budgetary planning and control. This involves
refining forecasting methodologies, establishing clear communication channels, and
instituting regular reviews to detect and rectify discrepancies promptly. Organizations
should prioritize training and skill development to empower personnel in effective
budget management, fostering a proactive approach to financial challenges and
ensuring informed decision-making at all levels.

8
3. 1 Basic financial statements for unincorporated and small business
organisations following accounting principles, conventions, and
standards.
Creating accurate financial statements from a trial balance involves meticulous
adjustments to align with accounting principles. In the context of sole traders,
partnerships, and companies, these adjustments cater to specific entity characteristics,
ensuring compliance with accounting conventions and standards. The tailored
approach reflects each business structure's nuances, presenting a true financial picture.
Additionally, the inclusion of cash flow statements enhances comprehensive
reporting, shedding light on a business's liquidity and operational efficiency, crucial
for informed decision-making and financial transparency.

a. The essential features of a complete set of Financial Statements involve a

comprehensive presentation of an entity's financial performance and position.
b. The purpose is to provide stakeholders with a clear understanding of the
company's financial health and operational results.
c. Content includes balance sheets, income statements, and cash flow statements.
Adherence to relevant accounting standards, such as GAAP or IFRS, ensures
consistency. The basis is the accrual accounting method, reflecting
transactions when incurred, essential for accurate financial analysis.

4. Interpret financial statements

Creating a cash budget for an organization involves estimating and planning for
the cash inflows and outflows over a specific period. Below is a simple example
of a cash budget for a fictional organization using a spreadsheet. Let's assume we
are planning for the month of January. (accaglobal, n.d.)

Table 1 Cash budget

Item Inflow Rs Outflow Rs Net cash Flow Rs

Beginning Cash 5,000 5,000

Balance

Sales Revenue 20,000 20,000

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 Other Income 1000 1,000

Total Inflow 26,000 26,000

Salaries 10,000 10,000

rent 2,000 2,000

utilities 1,500 1,500

suppliers 500 500

Other expenses 2000 2,000

Loan Repayment 3,000 3,000

Total Outflow 19,000 19,000

Ending Cash 7,000

Balance

4.1 Explanation:

1. Beginning Cash Balance: The amount of cash the organization has at the
beginning of the month.

2. Inflows:

Sales Revenue: Projected income from sales.

Other Income: Additional sources of income, such as interest or investments.

3. Outflows:

Salaries: Employee wages and benefits.

Rent: Monthly rent for the premises.

Utilities: Electricity, water, and other utility expenses.

Supplies: Office supplies or materials needed for operations.

Other Expenses: Miscellaneous operational expenses.

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 Loan Repayment: If the organization has any loans, the repayment amount.

4. Net Cash Flow: Calculated as the sum of inflows minus the sum of outflows.

5. Ending Cash Balance: The sum of the beginning cash balance and the net cash
flow, representing the cash available at the end of the month.

This is a basic example, and in a real-world scenario, you would likely have more
line items and a more detailed breakdown of expenses and revenues. You can use
spreadsheet software like Microsoft Excel or Google Sheets to create and update
this budget as needed.

4.2Financial Ratio
Financial ratio analysis involves examining various financial metrics to evaluate a
company's performance, financial health, and efficiency. Here are some key
financial ratios and what they can indicate: (corporatefinanceinstitute, n.d.)

1. Liquidity Ratios:

This ratio measures a company's ability to cover its short-term liabilities with
its short-term assets. A ratio above 1 indicates good short-term liquidity.

Quick Ratio (Acid-Test Ratio)

Similar to the current ratio but excludes inventory, providing a more

conservative measure of liquidity.

2. Profitability Ratios:

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 Net Profit Marginn

This ratio shows the percentage of revenue that translates into profit. A higher
margin indicates better profitability.

Return on Assets (ROA)

ROA measures how efficiently a company uses its assets to generate profit.

4.2.1 . Conclusions and Recommendations

Following recommendations are administered. Financial management is crucial for

the success and sustainability of any company. Here are some recommendations for
effective financial management:
1. Budgeting:
Develop a comprehensive budget that includes all revenue and expenses.
Regularly review and update the budget to reflect changes in the business
environment.
2. Cash Flow Management:
Monitor and manage cash flow to ensure there's enough liquidity to cover operational
needs.
Implement efficient invoicing and collection processes to minimize delays in
receiving payments.
3. Cost Control:
Conduct a thorough cost analysis to identify areas where costs can be reduced without
compromising the quality of products or services.
Implement cost-cutting measures and regularly assess their impact on the bottom line.
4. Financial Reporting:

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Generate accurate and timely financial reports to provide a clear overview of the
company's financial health.
Use key performance indicators (KPIs) to track and measure financial performance
against goals.

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