TABLE OF CONTENTS

I. Introduction:...........................................................................................................................3
II. Overview about accounting:..................................................................................................4
1. The purpose and function of accounting within the business.........................................4
2. The scope of accounting in organizations.........................................................................5
3. The branches of accounting:..............................................................................................6
4. Job skillsets required for accountants...............................................................................7
5. Company Overview............................................................................................................7
III. The organization's accounting functions under the restrictions of regulatory and
morality.........................................................................................................................................10
1. Regulatory Requirements in accounting........................................................................10
2. Ethical Requirements for accountants............................................................................10
IV. The context and purpose of the accounting function in meeting organizational,
stakeholder and societal needs and expectations......................................................................12
1. Users of accounting information.....................................................................................12
2. How Accounting Meets Users' Needs..............................................................................19
V. Evaluation of the role of accounting in informing decision-making to meet
organizational, stakeholder and societal needs within complex operating environments....20
1. Complex Operating Environments and Their Impact on the Accounting Function.. 20
2. Efficiency and Effectiveness of Accounting in Complex Environments......................20
3. Efficiency and Effectiveness in Meeting Stakeholder Needs........................................21
VI. Prepare a cash budget under different scenarios for the given company....................22
1. 12-Month Cash Budget with Variance Analysis.............................................................22
2. The benefits and limitations of budget and budgetary planning and control within
the organization.......................................................................................................................26
2.1. Benefits.......................................................................................................................26
2.2. Limitations.................................................................................................................26
3. Identify corrective actions to problems revealed by budgetary planning and control
for effective organizational decision making (M4)...............................................................27
4. Justifying solutions for budgetary control and making clear their impact on
organizational decision-making that can make sure the efficiency and the effectiveness of
resource development (D3).....................................................................................................28
LO1: Examine the context and purpose of accounting
The link to blog: https://yeuanh2812sinn.wixsite.com/trangwebcuatoi
P1: The purpose and funtion of accounting within the business
I. Introduction:
Accounting, often referred to as the "language of business," is a fundamental component of
financial management that plays a critical role in organizations and economies worldwide.
Accounting is a comprehensive system of recording, summarizing, analyzing, and reporting
financial transactions and information in a structured and standardized manner. It involves the
process of systematically collecting and organizing financial data to provide an accurate and
objective representation of an entity's financial position and performance. Accounting is essential
for internal management, external stakeholders, and regulatory compliance, facilitating informed
decision-making and ensuring transparency in financial reporting. Through accounting,
stakeholders can gain insights into an entity's profitability, liquidity, solvency, and overall
financial performance, which are crucial for both internal management and external reporting
purposes. Accounting principles and standards, established by organizations like the Financial
Accounting Standards Board (FASB) in the United States, ensure the consistency and reliability
of financial information, making it essential for transparency, credibility, and compliance with
legal and regulatory requirements (FASB, 2022) In essence, accounting is the backbone of
financial reporting and decision-making, serving as a cornerstone for financial stability and
growth.
II. Overview about accounting:
1. The purpose and function of accounting within the business
2. The scope of accounting in organizations
3. The branches of accounting:
4. Job skillsets required for accountants

5. Company Overview
P2: Assess the accounting function within the organization in the context of regulatory and
ethical constraints.
III. The organization's accounting functions under the restrictions of regulatory and
morality.
1. Regulatory Requirements in accounting

2. Ethical Requirements for accountants

M1: Evaluate the context and purpose of the accounting function in meeting
organizational, stakeholder and societal needs and expectations.
IV. The context and purpose of the accounting function in meeting organizational,
stakeholder and societal needs and expectations
1. Users of accounting information
 Organizational Management
 Investors and Shareholders
 Creditors and Lenders
 Goverment Authorities
 Employees
 Customers and Suppliers
 Society at large
2. How Accounting Meets Users' Needs
D1: Provide a critical evaluation of the role of accounting in informing decision-making to
meet organizational, stakeholder and societal needs within complex operating
environments.
V. Evaluation of the role of accounting in informing decision-making to meet
organizational, stakeholder and societal needs within complex operating
environments.
1. Complex Operating Environments and Their Impact on the Accounting Function.

2. Efficiency and Effectiveness of Accounting in Complex Environments.

3. Efficiency and Effectiveness in Meeting Stakeholder Needs
LO4: Prepare budgets for planning, control and decision making using spreadsheets
P6: Prepare a cash budget under different scenarios for the given company

VI. Prepare a cash budget under different scenarios for the given company
From: Nguyen Thuy Linh
To: The Managers
Subject: Budgeting and Resource Allocation for Hospitality and Catering Start-up
Date: 29/10/2023
Dear sir,
I am pleased to present a comprehensive briefing report on budgeting and resource allocation for
the hospitality and catering start-up, a new client our firm is supporting. This venture is
particularly in need of guidance regarding budgeting, which can inform efficient resource
allocation and support effective control and decision-making. The founder is investing £135,000
of their own capital and has secured a business loan of £60,000.
1. 12-Month Cash Budget with Variance Analysis
Our analysis begins with a 12-month cash budget that incorporates several key scenarios. These
scenarios enable us to understand the potential impact of strategic changes on the business's
financial health.
Scenario 1: Discounting Prices and Sales Volume Increase
We contemplate a 20% price reduction in January, leading to an anticipated 10% rise in sales
volume each month. This scenario delves into the intricate trade-off between price adjustments
and sales performance.
Scenario 2: Increasing Marketing Budget
Here, we explore the impact of a 10% monthly increase in the marketing budget, anticipating a
20% surge in sales revenue. This assessment is designed to gauge the benefits of higher
marketing expenditure on revenue growth.
Scenario 3: Offering Suppliers One-Month's Trade Credit
We examine the effects of extending one-month trade credit to suppliers, investigating how this
affects cash flow by impacting accounts payable and accounts receivable cycles.
Scenario 4: Reducing Rental/Property Costs
A 15% monthly reduction in rental and property-related costs is analyzed to assess its influence
on overheads. The objective is to determine the implications of cost-saving measures on the
company's financial stability.
Budget 1: Including scenario 1,3 and 4:

The above table has shown information based on Scenario 1,3 and 4. The analysis of the cash
flow statement highlights various financial dynamics within the business. While the company
starts the year with a robust opening cash balance of £135,000, it faces significant cash flow
challenges in the initial months. By February, the company experiences a negative cash flow of
£15,764, signaling that its cash outflows exceed the inflows. This negative trend continues until
June, with cash reserves dwindling. The most critical cash flow obstacle occurs in July, where
the company encounters a substantial negative cash flow of £47,993. This significant downturn is
primarily attributed to the substantial leasehold payment of £45,000. Subsequently, the business
begins to recover, gradually moving toward positive cash flows from August onwards. The
lowest closing balance is observed in July, with a concerning negative balance of £9,333. This
situation raises concerns about the company's ability to meet its financial obligations and
maintain financial stability.
Recommendation:
To address these challenges, the company should closely monitor and regularly update its cash
flow forecasts to identify potential shortfalls. Efficient inventory management is crucial, and
just-in-time practices can help free up cash. Negotiating favorable leasehold terms can alleviate
financial strain. Establishing a financial reserve from initial capital injection and profits is
essential to cover unexpected expenses or negative cash flow periods. Reviewing operating
expenses for cost reduction opportunities without compromising quality is advisable. Negotiating
with suppliers for extended payment deadlines aligning with the company's cash flow cycles can
help manage cash outflows. Exploring revenue diversification, expanding product lines, or
entering new markets can reduce reliance on a single income source. Reevaluating the
commission structure for salespeople and implementing performance-based bonuses may be
cost-effective. Conducting regular financial reviews aligns budgets with actual financial
performance. Investing in strategic marketing efforts can increase sales and improve cash flow.
Securing a revolving credit line or business overdraft facility can serve as a financial safety net
during challenging months. Cost-benefit analyses before significant purchases ensure informed
decision-making.
Budget 2: Scenario 2,3,4
The company's budgeted cash flow statement and sales budget provide a comprehensive view of
its financial outlook for the year. Key observations include steady sales growth, which can lead
to increased revenue and profitability. However, the statement also highlights the need for careful
management of cash collection and payments, which can lead to negative cash flow in the early
months. To manage this, a contingency plan, such as a line of credit or cash reserves, is essential.
The company's cost of goods sold (COS) is expected to increase as sales grow, and proper
inventory management and supplier relationships are crucial. Employee expenses and
commission expenses should be adjusted to maintain profitability. The company's net cash flow
shows negative values in the early months but turns positive from February onwards. The closing
cash balance remains positive, indicating healthy cash reserves by the end of the year.
Recommendation:
The company's financial situation can be improved by securing short-term financing, improving
cash collection efficiency, managing inventory, monitoring costs, and regularly reviewing sales
projections. A contingency plan should be developed for unexpected sales fluctuations, and
investments should be evaluated for growth and profitability. Establishing a cash reserve or
emergency fund can provide financial stability. Regular financial monitoring is essential to
identify potential issues early and take corrective actions. Consulting with a financial advisor or
accountant can provide guidance on financial planning and budget optimization. Developing
different financial scenarios can help the company make informed decisions and adapt to
changing circumstances. By implementing these recommendations, the company can better
manage its cash flow, mitigate financial risks, and position itself for sustainable growth and
stability.
P7: The benefits and limitations of budget and budgetary planning and control within the
organization.
2. The benefits and limitations of budget and budgetary planning and control within
the organization.
Budgets and budgetary planning and control play a significant role in organizational financial
management. They offer various benefits but also come with some limitations. Here is an
overview of the benefits and limitations of budget and budgetary planning and control within an
organization:
2.1. Benefits
Financial Planning: Budgets serve as a financial roadmap, helping organizations set targets for
revenue, expenses, and profits. For instance, a company may use budgets to project its quarterly
sales and ensure that they align with overall growth objectives. (Planful, 2023)
Goal Alignment: Budgets help align financial objectives with an organization's broader goals.
Consider a nonprofit organization setting a budget to fund a new community project. The budget
ensures that financial resources are allocated to achieve the project's objectives, thus supporting
the organization's mission. (Planful, 2023)
Resource Allocation: Efficient allocation of resources is vital. A manufacturing company may
create a production budget to allocate resources optimally, ensuring that raw materials, labor, and
equipment are available when needed. (Planful, 2023)
Performance Evaluation: Budgets are a benchmark for evaluating performance. For example, a
retail chain can compare budgeted and actual sales to assess the effectiveness of its marketing
strategies and make adjustments accordingly. (FASB, 2022)
Cost Control: Controlling costs is a fundamental aspect of budgetary planning. In healthcare, a
hospital's budget helps manage expenses like staff salaries, medical supplies, and facility
maintenance while maintaining quality patient care. (Planful, 2023)
Cash Flow Management: Cash flow is crucial for business operations. By creating a cash
budget, a small business can anticipate when it will receive payments from clients and plan its
own expenses accordingly. (Planful, 2023)
Decision Support: Budgets offer data-driven insights for decision-making. A tech company, for
instance, might use budget data to decide whether to invest in new research and development
projects based on expected returns. (Planful, 2023)
2.2. Limitations
Inflexibility: Budgets can be inflexible, making it challenging to adapt to changing market
conditions. For example, an advertising agency might struggle to modify its annual marketing
budget to address unexpected shifts in client needs or market trends. (McIntyre, 2023)
Time-Consuming: Preparing, monitoring, and adjusting budgets demand a significant amount of
time and resources. This can distract management from other critical activities. For instance, a
startup may find the time spent on budgeting diverts energy from innovation and business
development. (McIntyre, 2023)
Overemphasis on Short-Term Goals: Budgets often emphasize short-term financial goals,
potentially at the expense of long-term strategy. An educational institution's budget, for instance,
may focus on yearly enrollment targets, potentially sidelining broader educational quality
improvements. (McIntyre, 2023)
Accuracy Challenges: Budgets are based on assumptions and predictions, making them prone to
inaccuracies. Variability in actual results can lead to inaccurate forecasts, causing decision-
making errors. An e-commerce company might miscalculate its inventory needs, resulting in
overstock or stockouts. (McIntyre, 2023)
Incentives for Padding: Some employees or departments may have an incentive to pad their
budgets with unnecessary expenses to ensure they receive adequate funding. This can lead to
inefficient resource allocation. In government agencies, this is known as "use it or lose it"
spending. (McIntyre, 2023)
Lack of Alignment with Strategy: Budgets may not always align with the organization's long-
term strategy. This misalignment can limit innovation and hinder progress toward strategic
objectives. An electric car manufacturer's budget may not adequately support its commitment to
sustainable technology development. (McIntyre, 2023)
Resistance to Change: Budgets can create resistance to change within an organization. For
example, if a manufacturing company's budget is based on traditional production methods,
transitioning to more efficient, but budget-disruptive, processes might face internal resistance.
3. Identify corrective actions to problems revealed by budgetary planning and control
for effective organizational decision making (M4)
In order to effectively address problems revealed by budgetary planning and control, it is
essential to identify issues and provide corrective actions. In this context, we will consider two
scenarios based on the budgets prepared in P6 and discuss corrective actions to solve the
problems associated with negative cash flows.
Scenario 1: Negative Cash Flows in the First Quarter
The budgets reveal negative cash flows during the first quarter, which can be problematic as it
may lead to financial instability. In this scenario, it's critical to take immediate corrective actions
to ensure the organization's financial health.
Corrective Actions:
Short-term Bank Loan: To cover the cash flow deficit in the first quarter, the organization can
consider obtaining a short-term bank loan. The amount should be calculated to bridge the gap
between cash inflows and outflows during this period. The duration of the loan should align with
the expected timing of increased cash inflows, ensuring it can be repaid without causing a strain
on future budgets.
Better Management of Credit Terms: Negotiating extended credit terms with suppliers can help
alleviate immediate cash flow issues. This would allow the organization to delay payments to
suppliers while still maintaining positive supplier relationships.
Budget 2: Negative Cash Flows in the Second Half of the Year
The budgets also indicate negative cash flows in the second half of the year, which is another
concern as it affects long-term financial stability. Addressing this issue is crucial for the
organization's sustainability.
Corrective Actions:
Restructure Payment of Expenditures: To manage negative cash flows in the latter part of the
year, the organization can restructure the payment schedule for certain expenditures. This could
involve negotiating with landlords to adjust rent payments or renegotiating contracts with service
providers to spread costs more evenly throughout the year.
Long-term Bank Loan: For addressing cash flow issues over an extended period, the organization
may explore securing a long-term bank loan. This provides a more extended repayment period,
reducing the immediate financial burden. The amount should be calculated to cover the expected
cash flow deficits in the second half of the year.
Improved Credit Control: The organization can implement stricter credit control policies to
ensure that customers pay their invoices promptly. This will enhance the predictability of cash
inflows and reduce the risk of late or defaulted payments.
Reduce Non-Critical Expenditures: Identify and prioritize expenditures, reducing or postponing
non-critical expenses that can be delayed without affecting operations or customer satisfaction.
In summary, corrective actions must be tailored to the specific cash flow scenarios outlined in the
budgets. Whether it's a short-term loan, better credit management, restructured payments, or
long-term financing, these actions are essential for maintaining positive cash flows and ensuring
the organization's financial stability and effectiveness in decision-making. It is important to
regularly monitor the effects of these corrective actions and adjust them as necessary to meet the
organization's changing financial needs.
4. Justifying solutions for budgetary control and making clear their impact on
organizational decision-making that can make sure the efficiency and the
effectiveness of resource development (D3)
Implementing solutions for budgetary control is crucial for ensuring the efficiency and
effectiveness of resource development within an organization. These solutions have a significant
impact on organizational decision-making, which, in turn, affects the overall financial health and
success of the organization. Let's explore some justifications for these solutions and their impact
on decision-making:
Regular Performance Monitoring:
- Justification: Implementing regular performance monitoring through budgetary control
solutions allows organizations to track their financial performance against predefined targets.
- Impact on Decision-Making: When financial data is regularly monitored, it provides real-time
insights. For example, a retail company can quickly identify that sales are falling below budget
in a specific region. This information can trigger timely decisions to adjust marketing strategies
or inventory levels to meet budgeted sales targets. (Calzon, 2023)
Variance Analysis:
- Justification: Variance analysis involves comparing actual financial results with budgeted
figures to identify discrepancies.
- Impact on Decision-Making: If a manufacturing company's actual production costs are higher
than budgeted, variance analysis can reveal the specific cost overruns. This information can lead
to decisions about cost-cutting measures, process improvements, or price adjustments. (Walther
& Skousen, 2023)
Resource Allocation Optimization:
- Justification: Budgetary control solutions help in optimizing the allocation of resources,
ensuring that funds, labor, and materials are used efficiently.
- Impact on Decision-Making: For example, a technology startup can use budgetary control to
allocate development resources to the most promising projects. This ensures that limited
resources are invested where they will have the most impact. (Walther & Skousen, 2023)
Cost Control and Reduction:
- Justification: Budgetary control is instrumental in controlling and reducing costs, leading to
increased profitability.
- Impact on Decision-Making: If a healthcare organization's budget shows increasing operating
costs, decision-makers can take actions such as renegotiating supplier contracts or streamlining
administrative processes to bring costs in line with the budget. (Thomas & Chalkidou, 2013)
Investment Prioritization:
- Justification: Budgetary control helps in prioritizing investments and projects based on their
alignment with organizational goals and available funds.
- Impact on Decision-Making: A nonprofit organization can use budgetary control to decide
which community projects to fund. By comparing project budgets to available funds, the
organization can prioritize projects that have the most significant social impact.
Cash Flow Management:
 - Justification: Efficient cash flow management is vital for an organization's liquidity and
financial stability.
- Impact on Decision-Making: An e-commerce company can use budgetary control to project
cash flows and identify potential cash shortfalls during peak sales seasons. This information can
lead to decisions on securing short-term financing or adjusting payment terms with suppliers.
Risk Mitigation:
- Justification: Budgetary control can help in identifying financial risks and uncertainties.
- Impact on Decision-Making: For example, an international corporation can use budgetary
control to assess currency exchange rate risks. Decision-makers can then hedge against currency
fluctuations or diversify investments to mitigate these risks.
Strategic Alignment:
- Justification: Budgetary control solutions ensure that financial resources are aligned with the
organization's strategic objectives.
- Impact on Decision-Making: A renewable energy company, for instance, can use budgetary
control to allocate resources to projects that support its long-term goal of reducing carbon
emissions.
In conclusion, solutions for budgetary control play a pivotal role in organizational decision-
making. They offer justifications for optimizing resource development, cost control, investment
prioritization, and risk mitigation. By integrating these solutions into the decision-making
process, organizations can enhance their efficiency and effectiveness in resource management,
ultimately contributing to their financial success and sustainability.
 References

Calzon, B., 2023. Datapine. [Trực tuyến]

Available at: https://www.datapine.com/blog/author/bernardita/
[Đã truy cập 2023].
FASB, 2022. Financial Accounting Standards Board (FASB). [Trực tuyến]
Available at: https://www.fasb.org/about.shtml
[Đã truy cập 2023].
McIntyre, E., 2023. Harvard Business Review. [Trực tuyến]
Available at: https://hbr.org/2023/06/marketing-when-budgets-are-down
[Đã truy cập 2023].
Planful, 2023. Planful. [Trực tuyến]
Available at: https://planful.com/financial-budgeting/
Thomas, R. & Chalkidou, K., 2013. Health system efficiency: How to make measurement matter
for policy and management. không biết chủ biên:không biết tác giả
Walther, L. & Skousen, C., 2023. Budgeting and Decision Making. không biết chủ biên:không
biết tác giả