In this report Hanna Paper Company has been selected analyzing the accounted principles being applied in the books of accounts of the company. Data has been taken from the internal resources, which has been critically reviewed and analyzedin the light of knowledge gained by studying the subject. Accounting data, costing, managerial accounting and budgeting has been done in the software i.e. MS Excel, whose file has been attached here with. The purpose remained to get familiarity with the practical implications of accounting principles.
The US based company that has been selected for this task is known as Hanna Paper. This is multinational company hacking many chapter is different not only in different states of America, but also in Canada and other countries if Europe. This is paper cycling company and is found to be the market leader of paper recycling industry of America. This is a tailoring organization which works order to work business psychology in which it operates its work processes only on the direction of its customers. However the target market of this company is the industrial sector to which it provides the stationary as required by them.
Accounting is one of the most important cross functional area of an organization. Under this function, all the financial activates of a business are recorded in a systematic way. These financial activities are called transaction. Accounting not only involves maintaining the record of all the transactions but it also includes the keeping the data in a processed form so that it can be retrieved and utilized in future for planning, budgeting, forecasting and analyzing the weak areas of a business. Furthermore, knowing the true financial position of a business and its profitably would also be impossible if the organizations would have not remained proper record of the transaction in a systematic way. Thus, the accounting is consider to be the life blood for an organization.
There are two types of accounts in an accounting system of any business organization: Real Accounts and Nominal Accounts. However, the blocks over which the building of accounting stands includes following points:
- Owner's Equity
There are following two aspects of an accounting transaction as two sides of a coin. These are given as under:
The accounting equations accounts for the position of an organization. It is divided into two parts; i.e. assets and liabilities plus owner equity. This not only show the aggregate assets and liabilities of a business entity but also the show the value of individual assets and liabilities of the business concern. This is the equation which narrates the equality of assets with the owner equity and liability. So as long as the total value of left hand side of accounting equation is equal to its right hand side, this means that business is solvent. However, if in case the asset side get weaker than that of liability side, this would lead to the insolvency of business. In short, we may say that accounting is the mother board of all the accounting system of the organization.
The systematic process by which a company not only records its transaction that occur on daily basis, but it also includes sorting and summarize the accounting records. Thus accounting system produces the final reports in form of financial statements which show the financial position of the organization. These reports not only show the ne profitability and the actual worth of the business but also remains helpful in varies analysis about the accounting records.
There are wide range the pros of budgeting which starts from the finical planning and leads to make contingency plans in case of some unexpected scenarios come up. The budgeting also sets some performance measures for the organizations which becomes responsibility of the management to make these measure to be implemented in the organization. Another important aspect of budgeting is the fund management and cash allocation. Budgeting lets the managers to know the sum of minty that would be required by the business in future times. Thus, by analyzing cash requirements, business tries to arrange for the cash requirements. And in the end, budgeting helps the accountants and finance mangers to do the profitability reviewer of the company.
The budgeting involves forecasting of the financial statements of a business organization for the upcoming period. This includes making the Cash flow statement, Income Statement and Balance Sheet for some future period. This is done on the basis of previous data of the company. However, the horizontal analysis and the vertical analyses of the accounting records are also considered in creating the budget for future time span.
Managerial accounting is directly related to the decision making aspects. This type of accounting is practiced only for the internal users of the organization and is not published. Output analysis, Cost accounting, including labor material and factory overhead and performance analysis are the important dimensions of managerial accounting. It fosters the loopholes and discrepancies in the work processes of an organization. Thus, the ultimate objective of this accounting is to increase the efficiency of the business and likewise to increase the effectiveness of the resources being utilized in the business. Although, the work sheets of managerial accounting are not to be published but still they are examined by the internal and external auditors during their audit. Thus there are some prescribed forms and performs under Generally Accepted Accounting Principles and International Accounting Standers on which the accounting managers make their entries.