5038 assignment 1 Pass BTEC

ASSIGNMENT 01 FRONT SHEET Qualification BTEC Level 4 HND Diploma in Business Unit number and title Unit 5 Accounting Principles Submission date Date received (1st Submission) Re submission date Date r.

ASSIGNMENT 01 FRONT SHEET Qualification BTEC Level HND Diploma in Business Unit number and title Unit 5: Accounting Principles Submission date Date received (1st Submission) Re-submission date Date received (2nd Submission) Student Name Student ID Class No GBS1005B Assessor Name Trần Xuân Lĩnh Student declaration I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism I understand that making a false declaration is a form of malpractice Student Signature Grading Grid P1 1 P2 M1 D1  Summative Feedbacks Grade: 2  Resubmission Feedbacks Assessor Signature: Date: Internal Verifier’s Comments: Signature & Date: 3 Table of Contents I) INTRODUCTION: A) The Purpose of Report: This is an article made to clarify research on "The Role of Accountants in Organization", as an internship through PricewaterhouseCoopers (PwC) Vietnamese SME Graduate Intern program This article uses the market resources and accounting services of PwC to find and fulfil the requirements of old and new customers Based on the above, this article is divided into two parts: The first part provides a more in-depth explanation of the accounting function of the organization, including the definition and purpose of the organization, as well as the main users of the accounting information, second section discusses the background and purposes of financial and management accounting, including the role and relevance of accounting, the difference between financial and management accounting, and finally the organizational limitations and threats in accounting II) THE ACCOUNTING FUNCTION IN AN ORGANIZATION: A) The definition of Accounting Function and Purposes of the accounting function: a) Definition: According to the American Accounting Association [AAA]; “Accounting refers to the process of identifying, measuring, and communicating economic information to enable users of the information to make informed judgments and decisions.” b) Purposes: According to Bragg, S (2022),” The goal of accounting is to gather and present financial data regarding a company's operations, finances, and cash flows Following that, decisions about how to manage the company, make investments in it, or extend credit to it are made using this information This data is gathered in accounting records through accounting transactions, which are either recorded through more specialized transactions known as journal entries, or through more standardized business transactions like customer or supplier invoices.” B) The Main Users Of Accounting Information: a) External Users: Lenders: Lenders use financial statements to determine the creditworthiness of their prospective borrowers based on their liquidity and solvency position before sanctioning loans to them Suppliers or Trade Partners: Suppliers are interested to know whether the entity will be able to honor its dues on a timely basis These will help suppliers to determine the credit policies, rates to be charged and discounts to be offered to their trading partners Prospective Investors (Shareholders): Prospective investors use accounting information published by the entity to determine whether to invest in the organization or not Based on the financial position of the entity prospective investors can also determine the amount of money to invest, the appropriate time for investment, and expected returns Customer: may also have either a short-term or long-term interest in the business entity to know the profitability, liquidity, and solvency position of the business Government: Accounting information published by business entities is continuously monitored by government agencies to check whether entities are performing their operations in compliance with prevailing laws and regulations, Statutory payments are made on a timely basis or not This accounting information is also used by tax agencies as a base for performing tax assessments General public also wants to know information about business enterprises for the long-term benefits to them or to society b) Internal Users: Owners & Stockholders: Owners provide capital to the business with the primary objective of earning rewards by way of profits and dividends They need information about the financial position of business such as its current earnings, ability to survive, growth potential, and dividend payouts Owners need the information to assess their investments and take rational decisions about future strategies to buy, hold, or sell their stocks Management: Based on accounting information, Management evaluates the impacts of various managerial decisions take in past on the financial position of the entity and helps in deciding the future action plans Employess: Employees belonging to the accounting and finance department need accounting information for the preparation of financial statements, audits, and communication of financial results to stakeholders Employees belonging to other departments are interested to know the growth, stability, and continuity of the organization as the growth of C) employee are directly related to the organization's growth Analyze and evaluate the interrelationships between accounting functions: Purchasing: This department is in charge of the company's financial health They contribute to the smooth functioning of the organization's operations and the protection of its integrity and market position by monitoring supply chains and activities such as vendor negotiations, among other things Accounting is dependent on buying to submit purchase orders and confirm the validity of supplier bills, which alert accountants of items received or returned In exchange, the accounting department provides Purchasing with all payment and invoice information (Malone 2018) Marketing: The link between accounting and marketing is very important in generating profits for the organization Accountants are responsible for monitoring and evaluating how money is spent, as well as the return on investment because marketing attracts customers and generates profits for the organization Because, while accountants are good at evaluating certain types of data, marketers are good at determining which campaigns or actions will yield the best results Working together, Marketing and Accounting can track sales trends, and track marketing expenditures based on predetermined budgets, efficiently manage resources, evaluate sales patterns, and estimate the success of marketing or promotional campaigns (Bragg, 2019) III) THE CONTEXT AND PURPOSE OF FINANCIAL AND MANAGEMENT ACCOUNTING: A) The Roles and Importance of Accounting as an Information System: For years, drastic changes have taken place in the business environment due to the widespread use of information technology, new communication means, and market globalization With these developments, a lot of organizations have searched for the most efficient use of resources to dominate their respective markets An accounting Information System is software that a business uses in collecting, storing, and processing financial data that are used for decisionmaking It is a computer-based method to track down accounting activity in conjunction with information technology resources To simplify, Accounting Information System gives accurate data to the managers before making any significant decisions that will either make or break their business The basic functions of Accounting Information System: Collect and Process Data Providing Important Reports to the Management Accuracy and Security B) Distinguish between financial accounting and management accounting: Picture: Management Accounting – Difference between Financial Accounting C) and Management Accounting (Siddiqui, 2015) The Organizational constraints and threats: a) Accounting constraints in organization: The materiality principle states that all reasonably relevant information that could have an impact on the decision of financial statement users should be disclosed in the financial statements For instance, it may not be justified to record and account for a small calculator as an asset in the balance sheet due to the cost of recording being greater than the benefits associated with the asset's usefulness Materiality is influenced by the quantity of items, the size of the company, the level and type of information, and the department or individual who makes the materiality determination (Way, 2021) Principle of Conservatism: When in doubt, accountants should employ the strategy that has the least potential to overstate assets and income or understate liabilities and losses When recording transactions involving estimates, accountants may use their discretion In other words, the conservative constraint forces accountants to select the less optimistic option when faced with two equally plausible options There are times when accounting conservatism is used to record and report revenue (CFI, 2022) b) Overview of GAAP from FASB; IFRS from IASB; and VAS from VmoF: Generally Accepted Accounting Principles (GAAP): GAAP is a combination of authoritative standards (set by policy boards) and commonly accepted ways of recording and reporting accounting information GAAP aims to improve the clarity, consistency, and comparability of the communication of financial information GAAP specifications include definitions of concepts and principles, as well as industry-specific rules The purpose of GAAP is to ensure that financial reporting is transparent and consistent from one public organization to another, and from one accounting period to another (Stephen, 2022) International Financial Reporting Standards (IFRS): understood as standard international financial reporting standards including standard accounting standards issued by the International Accounting Standards Board (International Accounting Standards Board - IASB) with the objective of sets out common rules so that financial reporting can be uniform, transparent, and comparable around the world IFRS defines how companies maintain and report their accounts, identifying other types of transactions and events that have financial impacts International Financial Reporting Standards (IFRS) have been established to create a common accounting language so that businesses and their financial statements can agree and plan for growth (SAPP Academy, 2020) Vietnam Accounting Standards (VAS): are regulations on how to issue the preparation and interpretation of information in financial statements, researched and developed by the Ministry of Finance of Vietnam, and is applicable to the entire financial system of the country, including revenues, expenses, assets, liabilities, and equity Using standard accounting makes business management easier In addition, businesses will have the basis to make quick and accurate investment decisions, avoiding fraud in financial statements Vietnam is currently one of the countries that has developed a VAS system based on the standards of the IFRS system quite successfully with the goal of 20 standards by 2020 and the completion of the development of the above system by 2050 And at present, we have applied more than 29 standards IV) Conclusion: In conclusion, the blog provides a detailed description of the definition and goals of the accounting function as well as the primary users of accounting information Additionally, the interrelationships between the accounting department and other departments within an organization are explained to show how they are linked to meet the needs and expectations of the organization, stakeholders, and society A thorough comparison of financial and managerial accounting is presented in the blog's final section to highlight the roles and significance of accounting and the differences between the two in terms of their goals and purview Finally, this blog also provides the organizational constraints by evaluating the accounting principles, presumptions, and ethics V) Reference: Siddiqui, F (2015) Management accounting – difference between financial accounting and Management Accounting, Professional Articles on Business & Management, Management Consulting, Software Engineering and Self Improvement Available at: https://fareedsiddiqui.wordpress.com/2015/05/08/management-accountingdifference-between-financial-accounting-and-management-accounting/ (Accessed: December 17, 2022) Bragg media (no date) Marketing & Accounting are a match made in Heaven • Bragg Media, Bragg Media Marketing Available at: https://braggmedia.com/why-marketing-and-accounting-should-work-together/ (Accessed: December 17, 2022) Bragg, S (2022) The purpose of accounting, AccountingTools AccountingTools Available at: https://www.accountingtools.com/articles/what-is-the-purpose-ofaccounting.html (Accessed: December 17, 2022) Atrill, P and McLaney, E., 2018 Accounting and Finance for Non-Specialists 11th Edition Harlow, United Kingdom: Pearson Education IFRS standards (2022) Corporate Finance Institute Available at: https://corporatefinanceinstitute.com/resources/knowledge/accounting/what-areifrs-standards/ (Accessed: December 17, 2022) Fernando, J (2022) GAAP: Understanding it and the 10 key principles, Investopedia Investopedia Available at: https://www.investopedia.com/terms/g/gaap.asp (Accessed: December 17, 2022) Bigelow, S.J (2022) What is GAAP (generally accepted accounting principles)? 10 definition from whatis.com, WhatIs.com TechTarget Available at: https://www.techtarget.com/whatis/definition/GAAP-generally-acceptedaccounting-principles (Accessed: December 17, 2022) Sharma, H (2020) Top users of accounting information, RealCashier Available at: https://realcashier.com/users-of-accounting-information/ (Accessed: December 17, 2022) Academy, S.A.P.P (no date) IFRS LÀ GÌ? Tầm Quan Trọng Của Ifrs Hiện Nay, Blog SAPP Academy Available at: https://blog.sapp.edu.vn/certifr/ifrs-nghia-la-gi-tam-quan-trongcua-ifrs (Accessed: December 17, 2022) Danh, B (2022) Hệ Thống chuẩn mực Kế Toán Việt Nam (VAS) Hiện Hành, JobsGO Blog Available at: https://jobsgo.vn/blog/chuan-muc-ke-toan-viet-nam/#:~:text=Chu%E1%BA %A9n%20m%E1%BB%B1c%20k%E1%BA%BF%20to%C3%A1n%20Vi%E1%BB%87t %20Nam%20hay%20VAS%20(Vietn (Accessed: December 17, 2022) 11 ... https://jobsgo.vn/blog/chuan-muc-ke-toan-viet-nam/#:~:text=Chu%E1%BA %A9n%20m%E1%BB%B1c%20k%E1%BA%BF%20to%C3%A1n%20Vi%E1%BB%87t %20Nam%20hay%20VAS%20(Vietn (Accessed: December 17 , 2022) 11 ... December 17 , 2022) Danh, B (2022) Hệ Thống chuẩn mực Kế Toán Việt Nam (VAS) Hiện Hành, JobsGO Blog Available at: https://jobsgo.vn/blog/chuan-muc-ke-toan-viet-nam/#:~:text=Chu%E1%BA %A9n%20m%E1%BB%B1c%20k%E1%BA%BF%20to%C3%A1n%20Vi%E1%BB%87t... https://www.accountingtools.com/articles/what-is-the-purpose-ofaccounting.html (Accessed: December 17 , 2022) Atrill, P and McLaney, E., 2 018 Accounting and Finance for Non-Specialists 11 th Edition Harlow, United Kingdom: Pearson Education