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 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
1

P2

M1

D1


 Summative Feedbacks

Grade:

2
2

 Resubmission Feedbacks

Assessor Signature:

Date:

Internal Verifier’s Comments:

Signature & Date:

3
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.”
4


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.
5


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

6


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)

7

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

8


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
9


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:
/>(Accessed: December 17, 2022).
Bragg media (no date) Marketing & Accounting are a match made in Heaven •
Bragg Media, Bragg Media Marketing. Available at:
/>(Accessed: December 17, 2022).
Bragg, S. (2022) The purpose of accounting, AccountingTools. AccountingTools.
Available at: (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:
(Accessed: December 17, 2022).
Fernando, J. (2022) GAAP: Understanding it and the 10 key principles,
Investopedia. Investopedia. Available at:
(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:
(Accessed: December 17, 2022).
Sharma, H. (2020) Top 9 users of accounting information, RealCashier. Available
at: (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: (Accessed: December 17, 2022).
Danh, B. (2022) Hệ Thống chuẩn mực Kế Toán Việt Nam (VAS) Hiện Hành, JobsGO Blog.
Available at: />%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