Unit 5: Accounting Principles Assignment Sample

Part 1

Introduction: Unit 5: Accounting Principles

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The basic accounting principles are assumptions and guidelines of some regulatory rules that involve temporary consistency in finance. Additionally, accounting principles are the set of guidelines and rules for individual companies and must be reporting each and every financial data. The basic principle of GAAP (Generally Accepted Accounting Principle) standardizes the basic guidelines and financial reporting should be followed by the financial statements. Standardized guidelines for accounting and financial reporting are known as GAAP (Generally Accepted Accounting Principles). Whenever a company prepares its financial statements, these principles should be followed. Reporting requirements for publicly traded companies are mandated by the Securities and Exchange Commission (SEC). In order to, some popular transactions can be used at the time of financial performance and that can able to managing all the financial resources at the same time.

The purpose and scope of accounting

In order to, a critical evaluation is always important for individual business organizations and effectively controlling each financial data of a company. Most business organizations try to follow accounting principles to identify and eliminate the major barriers which are necessary to manage the effective outcomes of a business. Apart from that, financial accounting is also considered management accounting which is necessary to manage all the financial resources which are necessary for the business. Most business organizations try to manage the financial outcomes by using these rules and regulations through continuously monitoring each financial activity of the business (Chandrasekaret al. 2021). A business organization must be futuristic and also identify the relationship to make more future scope. Most business organizations are only focusing on financial scope through preparing financial accounting.

Simply, the generic aim and objectives of the organization are always useful and that measure how efficiently organizations are struggling to make a profit. As per the narration of Zyznarska-Dworczak et al. (2020), clearly identify the specific scope of financial accounting and to clearly distinguish between financial accounting and production and business operations, accounting work should be structured based on the features of production and business operations, as well as management's needs. Accounting units collect, process, examine, analyze, and provide economic and financial information to those that need it using financial statements. The purpose of financial accounting is to provide information about occurrences. As a result, financial accounting must be accurate and reliable. A financial statement should be prepared according to the provisions of accounting standards and relevant legal documents based on the documents and evidence collected. 

Critical evaluation of accounting function

Its goal is to minimize the decision maker's uncertainty and, as a result, increase the likelihood that he or she will make better judgments regarding the target objectives as a result of the information. Keeping track of financial transactions is vital to a business's success. As a result of this, companies can identify their business operations, understand their financial health, and make informed decisions by recording and reporting financial data. As cited by Li et al. (2018), investors make decisions based on accounting data in order to understand the potential losses and profits involved in investing in your company. It is important for accountants to know accounting information for decision-making so that they can advise you on your own decisions.

There may be a feeling of time-consuming or confusing information when it comes to financial reports and accounting. But it is essential to have that data in order to make important decisions for your business. Information about the financial position and business activities of different company units can be provided by accountants (Putri et al. 2020). Using the collected information about economic and financial events, the information can be processed, and scientific methods used to make appropriate decisions can help companies make appropriate decisions. In order to, managing the financial resources of the organization is always important in managing each and every financial resources business. Reporting requirements for publicly traded companies are mandated by the Securities and Exchange Commission (SEC). 

The main branches of accounting and job skill set

Financial accounting is important and provides effective financial information to manage all the financial resources in a financial year. Businesses and society benefit from accounting competencies by adding value to the business and furthering prosperity. Financial accounting is a process that is necessary and that creates companies balance sheet that identifies Keeping track of finances and guiding important financial decisions is what accountants do for many businesses. Accounting is a vital part of managing financial resources in a financial year and provides essential financial information (Putri et al. 2020). In addition to adding value to the business and advancing prosperity, accounting competencies benefit society as well.

Management accounting is a collection of processing as well as analyzing the financial resources which is necessary to identify each financial performance of the business. The job skill set is necessary for individual business organizations and that can able to managing each and every financial resources of a business. Most business organizations are efficiently managing financial data and that can be managing each and every financial resource.

Accounting system and the role of technology

Additionally, modern technology played a different role which is necessary for individual business organizations and enhancing more future scope which is more effective for business. The accounting techniques are faster and that makes better solutions at the time of micro and macro enterprise. Most business organizations try to protect necessary data which is managing each and every financial resource of a business. As per the explanation of Natchkova, (2020), each and every accounting software faciliate accounting functions which is useful to manage all the financial options of a business. On the other hand, digital disruption directly affected accounting functions and there is a high chance of losing important data through external threats.

The impact of modern technology directly affects financial performance and individual companies using advanced software such as cloud computing and financial performance more efficient. Additionally, artificial technology is more useful to make financial solutions and organizations make more profit due to the same reason. As discussed by Handayati and Nastiti (2019), the advanced software as well as technology is more useful and manages all the financial pieces of information and includes further automation AI tools to continuously monitor financial performance. In order to, the accounting process is always important and that makes numerous solutions and that rapidly evolving relationship among the accounting information. In order to, organizing financial data of a business is always important and that makes numerous solutions in modern days.

Issues of ethics and external threats

All the financial data are depending on traders, regulators, stakeholders, and scrutinisers and that supports and encourages individuals to make more profit. Additionally, most of the external threats of business directly affect financial performance and organizational culture can be hampered (Sofiia et al. 2021). In order to, inadequate responsibility, as well as limited financial resources, are considered major difficulties in business and directly affect the current financial position. Identifying the major issues is always mandatory for the business and that develops financial outcomes which are necessary for the business. An individual is trying to promote organizational culture after identifying and eliminating critical components of a business. Lack of communication and poor job skill directly affect current financial performance and that involves some professionalism which is more important for business.

In order to, modern technology is always important for individual business organizations and efficiently managing all the financial information is continuously increasing future scope. Most business organizations try to identify the major benefits which are managing all the necessary information related to the organization (Krüger et al. 2018). Apart from that, enforcement techniques are always crucial for individual business organizations and efficiently managing all the financial resources related to the organization. Keeping track of financial transactions is vital to a business's success. As a result of this, companies can identify their business operations, understand their financial health, and make informed decisions by recording and reporting financial data. Reporting requirements for publicly traded companies are mandated by the Securities and Exchange Commission (SEC).

Cash budget

Cash budget start-up business
Particulars	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Total
Receipts
Forwarded cash balance	£ 1,71,320.00	£ 1,94,378.40	£ 2,27,234.89	£ 2,74,399.05	£ 3,39,625.67	£ 4,28,950.27	£ 5,50,640.33	£ 7,14,999.01	£ 9,36,020.40	£ 12,32,210.72	£ 16,28,035.61	£ 66,97,814.35
Capital	£ 1,00,000.00	£ 1,00,000.00
Sales from hospitality	£ 12,500.00	£ 16,500.00	£ 21,780.00	£ 28,749.60	£ 37,949.47	£ 50,093.30	£ 66,123.16	£ 87,282.57	£ 1,15,212.99	£ 1,52,081.15	£ 2,00,747.12	£ 2,64,986.20	£ 10,54,005.57
Bank loan	£ 50,000.00	£ 50,000.00
Sales from catering	£ 13,620.00	£ 17,978.40	£ 23,731.49	£ 31,325.56	£ 41,349.74	£ 54,581.66	£ 72,047.80	£ 95,103.09	£ 1,25,536.08	£ 1,65,707.62	£ 2,18,734.06	£ 2,88,728.96	£ 11,48,444.47
TOTAL RECEIPTS	£ 1,76,120.00	£ 2,05,798.40	£ 2,39,889.89	£ 2,87,310.05	£ 3,53,698.27	£ 4,44,300.63	£ 5,67,121.23	£ 7,33,025.99	£ 9,55,748.08	£ 12,53,809.17	£ 16,51,691.90	£ 21,81,750.77	£ 90,50,264.40
Payments
Computer	£ 1,980.00	£ 1,980.00
Drawings	£ 700.00	£ 700.00	£ 700.00	£ 2,100.00
Payment to suppliers with one month credit	£ 8,500.00	£ 9,350.00	£ 10,285.00	£ 11,313.50	£ 12,444.85	£ 13,689.34	£ 15,058.27	£ 16,564.10	£ 18,220.50	£ 20,042.56	£ 22,046.81	£ 1,57,514.92
Marketing expenditure	£ 1,000.00	£ 1,100.00	£ 1,210.00	£ 1,331.00	£ 1,464.10	£ 1,610.51	£ 1,771.56	£ 1,948.72	£ 2,143.59	£ 2,357.95	£ 2,593.74	£ 2,853.12	£ 21,384.28
Other expenses	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 250.00	£ 3,000.00
Hire charges	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 620.00	£ 7,440.00
Delivery charges	£ 100.00	£ 100.00	£ 100.00	£ 300.00
Telephone costs	£ 150.00	£ 150.00	£ 425.00	£ 425.00	£ 425.00	£ 425.00	£ 150.00	£ 150.00	£ 150.00	£ 150.00	£ 150.00	£ 150.00	£ 2,900.00
TOTAL PAYMENTS	£ 4,800.00	£ 11,420.00	£ 12,655.00	£ 12,911.00	£ 14,072.60	£ 15,350.36	£ 16,480.90	£ 18,026.99	£ 19,727.68	£ 21,598.45	£ 23,656.30	£ 25,919.93	£ 1,96,619.20
Net Receipts / (Payments)	£ 1,71,320.00	£ 1,94,378.40	£ 2,27,234.89	£ 2,74,399.05	£ 3,39,625.67	£ 4,28,950.27	£ 5,50,640.33	£ 7,14,999.01	£ 9,36,020.40	£ 12,32,210.72	£ 16,28,035.61	£ 21,55,830.84	£ 88,53,645.19
Balance brought forward	£ 1,71,320.00	£ 1,94,378.40	£ 2,27,234.89	£ 2,74,399.05	£ 3,39,625.67	£ 4,28,950.27	£ 5,50,640.33	£ 7,14,999.01	£ 9,36,020.40	£ 12,32,210.72	£ 16,28,035.61	£ 21,55,830.84	£ 88,53,645.19

Table 1: Cash budget for 12 months

A cash budget considered as written financial plan to measuring spending money by selection of beginning cash balances. In order to, measures cash inflow and outflow of business a company using written financial plan that allowing business to make projections.

Evaluation and role of budget

A periodic evaluation considered by realistic budget plan that ensure the company meet their target or not. Budgeting process considered as strong instrument and that involves financial solution to achieve profitable outcomes. As per the narration and explanation of Krüger et al. (2018), budget is become more important in every business organisation to reduce cost of production and manufacturing industry always using a cash budget to identify the spending amount in a financial period.

An outline of a range of budgetary control system

The process of budgetary control includes various financial aspects and makes numerous scopes by reducing excessive cost of business. Budgetary Control system always monitoring individual financial activities of the organization and relate how business can reduce their excessive caused by using budget template. As cited by Bui et al. (2020), achieving realistic goal and objectives of every business organisation a budgeting template played a crucial role and improves the cost structure to identify business objectives. 

Accounting principles are a set of basic rules and regulations and that can be to manage all the financial information which is more important. In order to, managing the financial resources of the organization always important that maximizes the important facility in business. The purpose of financial accounting is to provide information about occurrences (Jasim and Raewf, 2020). As a result, financial accounting must be accurate and reliable. Most business organizations try to manage the financial outcomes by using these rules and regulations through continuously monitoring each financial activity of the business.

Part 2

Financial statement

Income statement

Particulars	2019	2020	2021	Total
Sales	£ 12,00,000.00	£ 13,80,000.00	£ 17,25,000.00	£ 43,05,000.00
Less cost of goods sold	£ 7,56,000.00	£ 7,93,800.00	£ 7,71,120.00	£ 23,20,920.00
Gross profit/net sales	£ 4,44,000.00	£ 5,86,200.00	£ 9,53,880.00	£ 19,84,080.00
Expenses
Accountant fees	£ 102.00	£ 110.00	£ 152.00	£ 364.00
Advertising and marketing	£ 120.00	£ 126.00	£ 235.00	£ 481.00
Bank fees and charges	£ 145.00	£ 126.00	£ 155.00	£ 426.00
Bank interest	£ 25.00	£ 36.00	£ 51.00	£ 112.00
Credit card fees	£ 45.00	£ 11.00	£ 32.00	£ 88.00
Utilities (electricity, gas, water)	£ 110.00	£ 115.00	£ 169.00	£ 394.00
Telephone	£ 25.00	£ 36.00	£ 145.00	£ 206.00
Lease/loan payments	£ 14,500.00	£ 24,100.00	£ 2,500.00	£ 41,100.00
Rent and rates	£ 1,500.00	£ 26,000.00	£ 2,560.00	£ 30,060.00
Motor vehicle expenses	£ 150.00	£ 125.00	£ 256.00	£ 531.00
Repairs and maintenance	£ 523.00	£ 125.00	£ 412.00	£ 1,060.00
Stationery and printing	£ 41.00	£ 265.00	£ 123.00	£ 429.00
Insurance	£ 12.00	£ 25.00	£ 23.00	£ 60.00
Superannuation	£ 415.00	£ 415.00	£ 415.00	£ 1,245.00
Income tax	£ 625.00	£ 425.00	£ 525.00	£ 1,575.00
Wages (including PAYG)	£ 12,500.00	£ 16,500.00	£ 25,000.00	£ 54,000.00
Total expenses	£ 30,838.00	£ 68,540.00	£ 32,753.00	£ 1,32,131.00
NET PROFIT (net income)	£ 4,13,162.00	£ 5,17,660.00	£ 9,21,127.00	£ 18,51,949.00

Table 2: Income statement

An income statement is used to evaluate company’s financial performance during the specific period. The total revenue as well as expenses is considered by and income statement and balance brought forward can be evaluated by the income statement. The total expenses almost £30838 in the financial year of 2019 while gross profit is £444000 respectively at the same financial year. As per the study of Rapini and Putro (2021), an income statement considered as effective financial tools and that basically used to identify company’s financial performance over the accounting period. Additionally, identify individual business organizations are identify current financial position after identify the revenue as well as expenses over the financial year. An income statement always describes current financial health and evaluates cash inflow and outflow of business. An income statement always focusing on total revenue as well as expenses and describe organization can achieve targeted profit or not. 

Balance sheet

2020	2021	2022
Particulars	Amount (£)	Amount (£)	Amount (£)
Noncurrent Assets	£ 3,15,505.00	£ 7,29,236.00	£ 12,19,027.00
Current assets
Finance Income	£ 4,000.00	£ 3,000.00	£ 2,000.00
Bank	£ 2,000.00	£ 3,000.00	£ 5,000.00
Inventory	£ 90,000.00	£ 70,000.00	£ 8,000.00
Long Term investment	£ 5,000.00	£ 3,000.00	£ 2,000.00
Purchase	£ 5,60,000.00	£ 1,43,539.00	£ 2,34,185.00
Advance payment to debtors	£ 1,35,217.00	£ 3,12,530.00	£ 3,65,708.00
Insurance	£ 17,520.00	£ 20,177.00	£ 20,195.00
Revaluation Reserve	£ 1,00,000.00	£ 50,000.00	£ 1,00,000.00
Trade Receivables (debtors)	£ 4,00,000.00	£ 2,50,000.00	£ 3,50,000.00
Total current assets	£ 13,13,737.00	£ 8,55,246.00	£ 10,87,088.00
Total assets	£ 16,29,242.00	£ 15,84,482.00	£ 23,06,115.00
Non-current liabilities
Share capital	£ 3,47,900.00	£ 4,18,595.00	£ 5,50,000.00
Long Term Loans	£ 2,00,000.00	£ 1,18,557.00	£ 2,70,194.00
Reading earrings	£ 4,13,162.00	£ 5,17,660.00	£ 9,21,127.00
Current liabilities
Share Premium	£ 1,00,000.00	£ 1,50,000.00	£ 1,70,000.00
Outstanding Salaries and Wages	£ 1,50,000.00	£ 50,000.00	£ 70,000.00
Bad debts	£ 3,000.00	£ 2,000.00	£ 5,000.00
Taxation	£ 12,900.00	£ 15,500.00	£ 20,000.00
Trade Payables (creditors)	£ 3,50,000.00	£ 2,60,000.00	£ 1,60,000.00
Rent and Rates	£ 24,780.00	£ 25,035.00	£ 21,135.00
Bad Debt	£ 4,000.00	£ 2,000.00	£ 20,000.00
Cash	£ 23,500.00	£ 25,135.00	£ 98,659.00
Total current liabilities	£ 16,29,242.00	£ 15,84,482.00	£ 23,06,115.00
Total liabilities	£ 16,29,242.00	£ 15,84,482.00	£ 23,06,115.00

Table 3: Balance sheet

In financial accounting balance sheet balance sheet also describe current financial position by identifying assets and liability whether it is a sole proprietorship. A balance sheet evaluating the capital structure of business and sub components of assets and liability are evaluated by the common financial tools. Total noncurrent assets almost £315505 in the financial year of 2019 while current liabilities almost £1629242. In financial accounting most of the business organizations are using balance sheet which is required to identify assets and liability position of business. Additionally most of the business organizations are using assets and liability to describe the financial position which is necessary for business. The assets section of balance sheet always important and company find out own value which is more useful for the business expansion (Marco et al. 2019). Preparing ledger accounts and ascertaining the closing balances of each ledger account. 

Calculations of ratios

Profitability

Year	Gross Profit Ratio	Formula	Amount	Ratio	Growth
2022	Gross Profit	(Gross Profit/Sales)*100	£ 9,53,880.00	55.30%	12.82%
Sales	£ 17,25,000.00
2021	Gross Profit	£ 5,86,200.00	42.48%
Sales	£ 13,80,000.00
2020	Gross Profit	£ 4,44,000.00	37.00%	5.48%
Sales	£ 12,00,000.00
Year	Net Profit Ratio	Formula	Amount	Ratio	Growth
2022	Net Profit	(Net Profit/Sales)*100	£ 4,13,162.00	23.95%	-13.56%
Sales	£ 17,25,000.00
2021	Net Profit	£ 5,17,660.00	37.51%	-39.25%
Sales	£ 13,80,000.00
2020	Net Profit	£ 9,21,127.00	76.76%
Sales	£ 12,00,000.00

Table 4: Profitability ratio

Profitability ratios are considered as important financial tools and Measures Company’s ability to generate income in a financial year. The “Gross profit ratio” and “Net profit ratio” has been computed to identify the current financial position and compare financial functions and describe how business organizations are achieving profitable outcomes. The gross profit ratio is 55.03% and 42.48% while growth rate is 12.82% respectively. On the other hand, “Net profit ratio” also computed after identify net profit and sales of business which is 23.95% and 37.51% in FY 2021 and 2022 while growth rate is 13.65% respectively. In order to, identify the current financial position of business always important and that measures the liquidity position to measures equity during the specific period (Basar et al. 2020). A profitability ratio also considered as efficient financial matrices and compare operating cost as well as equity in a financial year.

Liquidity

Liquidity ratio
Year	Quick Ratio	Formula	Amount	Ratio	Growth
2022	Current Assets- Inventories	(Current Assets- Inventories /Current Liabilities)	£ 12,23,737.00	0.75	0.26
Current Liabilities	£ 16,29,242.00
2021	Current Assets- Inventories	£ 7,85,246.00	0.50	0.03
Current Liabilities	£ 15,84,482.00
2020	Current Assets- Inventories	£ 10,79,088.00	0.47
Current Liabilities	£ 23,06,115.00
Year	Current Ratio	Formula	Amount	Ratio	Growth
2022	Current Assets	(Current Assets /Current Liabilities)	£ 13,13,737.00	0.81	0.27
Current Liabilities	£ 16,29,242.00
2021	Current Assets	£ 8,55,246.00	0.54	0.07
Current Liabilities	£ 15,84,482.00
2020	Current Assets	£ 10,87,088.00	0.47
Current Liabilities	£ 23,06,115.00

Table 5: Liquidity ratio

Liquidity ratio is measures company’s ability to pay off long term or short term debt obligations and determined how quickly company generating revenue by using its assets. Quick ratio and current ratio has been computed to identify company’s ability for the financial year from 2020 to 2022. The quick ratio is 0.75 and 0.50 times respectively for the financial year of 2021 and 2020 and measures current liquidity position of business. (Current assets -Inventories)/Current liability formula is using to calculate liquidity ratio (Baker and Rennie, 2018). In order to, liquid cover ratio is necessary for the individual business organizations and also describes how company are generating sufficient cash flow by using its assets. Additionally, high liquid assets are needed to maintain the short term needs which are more efficient to achieve profitable outcomes in business. On the other hand, current ratio is 0.81 and 0.54 in the both financial year. 

Efficiency

Efficiency ratio
Year	Inventory Turnover Ratio	Formula	Amount	Ratio	Growth
2022	Cost of Sales	(Cost of Sales /Average Inventory)	£ 7,56,000.00	9.45	-10.90
Average Inventory	£ 80,000.00
2021	Cost of Sales	£ 7,93,800.00	20.35
Average Inventory	£ 39,000.00
2020	Cost of Sales	£ 7,71,120.00	96.39
Average Inventory	£ 8,000.00
Year	Asset Turnover Ratio	Formula	Amount	Ratio	Growth
2022	Sales	(Sales /Total Assets)	£ 17,25,000.00	1.06	0.19
Total Assets	£ 16,29,242.00
2021	Sales	£ 13,80,000.00	0.87
Total Assets	£ 15,84,482.00
2020	Sales	£ 12,00,000.00	0.52	0.35
Total Assets	£ 23,06,115.00

Table 6: Efficiency ratio

Efficiency ratios are the important financial matrices to compare assets and capital of each business organizations and continuously improving net revenue of business. In order to, efficiency ratio almost 9.45% and 20.35% in the financial year of 2020 and 2021 while growth rate is -10.45. In order to, improves capital structures of business always important and highly efficient organization can be involved by the same reason. Most of the business organizations are trying to using budget template which is more effective to increase future scope (Kilyar, 2018). At the time of limited investment companies try to improve efficiency level but limited financial resources can be includes some difficulties in business. In order to, not operating cost also described by the efficiency ratio and try to generating more income in a financial year. In order to, managing each and every financial resources of the business always important and that efficiently identify how to maximize the major benefits.

Investment 

Investment ratio
Year	Debt To Total Assets Ratio	Formula	Amount	Ratio	Growth
2022	Debt	(Debt /Total Assets)	£ 2,00,000.00	0.12	0.05
Total Assets	£ 16,29,242.00
2021	Debt	£ 1,18,557.00	0.07
Total Assets	£ 15,84,482.00
2020	Debt	£ 2,70,194.00	0.12
Total Assets	£ 23,06,115.00
Year	Debt To Equity Ratio	Formula	Amount	Ratio	Growth
2022	Debt	(Debt /Equity)	£ 2,00,000.00	0.57	0.29
Equity	£ 3,47,900.00
2021	Debt	£ 1,18,557.00	0.28
Equity	£ 4,18,595.00
2020	Debt	£ 2,70,194.00	0.49	-0.21
Equity	£ 5,50,000.00

Table 7: Investment ratios

An investor ratio is crucial and that usually comparing company’s ability to meet short terms as well as long term debt obligations. In order to, identify the ability of a company always important and net earnings as well as dividend yield also considered by debt to total asset ratio. Almost 0.12 and 0.07 “debt to total asset” ratio has been calculated for the financial year of 2020 and 2021 while its growth rate is almost 0.05%. In order to, evaluate companies ability always important and that identify companies shareholders ability and that basically used by the individual investors (Benedito, 2019). Additionally investors ratio is important and that provides a better insight how effectively individual company can use assets to generate revenue. In order to, potential investors are trying to identify the purpose and scope of investors and using specific ratio which is more sustainable for business. 

Critical evaluation of business performance and limitations of financial ratios

There is a extend number of factors that necessary to influence on overall performance of business. Individual business organizations are more conscious at the time of financial review and considering each cash flow of business to identify the growth. Additionally, identify the financial leverage of the organization always important and that makes numerous solutions to improve business performance and increasing profit (Mukhanova, 2018). In order to, measuring the financial performance of organization is more crucial and that makes new solutions to achieve targeted profit of business. In order to, identify the actual performance of business performance of the organization also necessary to managing the financial resources of business.

Forecasted Cash budget for next three years
Particulars	2023	2024	2025	Total
Receipts
Forwarded cash balance	£ 98,659.00	£ 1,82,870.00	£ 2,22,608.40	£ 5,04,137.40
Capital	£ 1,00,000.00	£ 1,00,000.00
Sales from cash operation	£ 25,600.00	£ 33,792.00	£ 44,605.44	£ 1,03,997.44
Sales from credit operation	£ 14,520.00	£ 19,166.40	£ 25,299.65	£ 58,986.05
Bank loan	£ 50,000.00	£ 50,000.00
TOTAL RECEIPTS	£ 1,90,120.00	£ 2,35,828.40	£ 2,92,513.49	£ 7,18,461.89
Payments
Computer	£ 2,500.00	£ 2,500.00
Drawings	£ 1,500.00	£ 2,500.00	£ 4,500.00	£ 8,500.00
Payment to suppliers with one month credit	£ 8,500.00	£ 9,350.00	£ 17,850.00
Marketing expenditure	£ 1,000.00	£ 1,100.00	£ 1,210.00	£ 3,310.00
Delivery charges	£ 900.00	£ 100.00	£ 100.00	£ 1,100.00
Telephone costs	£ 150.00	£ 150.00	£ 425.00	£ 725.00
Other expenses	£ 750.00	£ 250.00	£ 250.00	£ 1,250.00
Hire charges	£ 450.00	£ 620.00	£ 620.00	£ 1,690.00
TOTAL PAYMENTS	£ 7,250.00	£ 13,220.00	£ 16,455.00	£ 36,925.00
Net Receipts / (Payments)	£ 1,82,870.00	£ 2,22,608.40	£ 2,76,058.49	£ 6,81,536.89
Balance brought forward	£ 1,82,870.00	£ 2,22,608.40	£ 2,76,058.49	£ 6,81,536.89

Table 8: Forecasted cash budget

In order to, monitoring financial performance of the organization is necessary and measuring the growth rate of the organization. Prevent financial problems and organisation problems by regularly monitoring your business performance. It helps businesses in lowering process cost. In order to, review of financial statement is necessary and each business activity always maintained to identify current financial position (Mih?l?an, 2019). Measuring how well a company is performing compared to its goals involves comparing actual results with those intended. In order to, conduct regular business organization evaluate current performance after calculate net income which is almost £413162 in FY 2019. Cash as well as bad debts also considered by the balance sheet which is almost £4000 and £23500 which is considering as total current liability.

Limitations

Ratios are based on each accounting figures which is generated by the company however each accounting figures are necessary for the business to identify current financial position. Apart from that, accounting ratios are not totally dependable and that must used in business to manage the effective outcomes and organization is become more efficient and industry solutions always mandatory to enhancing future scope (Toudas, 2018). Inflation might be limit the utility of accounting ratios and cost based financial statement figures are not reflect by the current value of the organization.

Benefits of contemporary accounting software

The accounting software’s are fast and simple data entry always important which is identifying by the detailers financial reports. In order to, managing each financial resources of business always important and manual task are too much time consuming and individual business organizations are using accounting software which is less time consuming (Gupta, 2019). Apart from that accounting software are necessary for the individual business organizations which are more efficient for the business. Additionally improves accuracy always important and advanced accounting software are evaluated more accurate result and less time consuming.

Conclusion and recommendation

Based on the above discussion it can be concluded that, using the collected information about economic and financial events, the information can be processed, and scientific methods used to make appropriate decisions can help companies make appropriate decisions. An investor ratio always crucial and that is usually comparing company’s ability to meet short terms as well as long term debt obligations. In order to determine whether the net revenue of a company is continuously improving, efficiency ratios are important metrics to compare the assets and capital of every company.

Recommendation

In order to, creating a great strategy in business is important and that achieving profitable outcomes in business. Individual business organizations are needed to consider the effective business strategy to improving performance Management system. Additionally, identify individual business organizations are identify current financial position after identify the revenue as well as expenses over the financial year. 

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