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Class Notes

This document contains information about a group project for a Supply Chain Management module at Chinhoyi University of Technology. It lists the names and registration numbers of 9 students in the group. It also includes responses to 4 questions about accounting. The responses define accounting, list the information needs of different users of financial statements, state the objective of financial accounting, and identify significant differences between being a sole proprietor versus operating a limited company business.

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Leslie Tapera
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34 views

Class Notes

This document contains information about a group project for a Supply Chain Management module at Chinhoyi University of Technology. It lists the names and registration numbers of 9 students in the group. It also includes responses to 4 questions about accounting. The responses define accounting, list the information needs of different users of financial statements, state the objective of financial accounting, and identify significant differences between being a sole proprietor versus operating a limited company business.

Uploaded by

Leslie Tapera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHINHOYI UNIVERSITY OF TECHNOLOGY

SCHOOL OF ENTREPRENUERSHIP AND BUSINESS SCIENCES

PROGRAMME: SUPPLY CHAIN MANAGEMENT


MODULE: Financial and Management Accounting for business
LEVEL: 1.2
GROUP

FIRST NAME SURNAME REG NUMBER

1 Tadiwanashe N Mazambara C23154292G

2 Takudzwa Chimedza C22151627L

3 Tererai M Rupende C23153868X

4 Madhodha Pandasvika C23155947C

5 Clara Siwonde C23154003J

6 Samantha R Mushori C23154270L

7 Leslie Tapera C23154855N

8 Tafadzwa Munjanga C23153945B

9 Tinotenda M Machaya C23153670E


Question 1
a) Accounting is the process of identifying, measuring and communicating economic information to
permit informed judgement and decision by users of such information or just simply defining it as
the process of recording financial transactions pertaining to a business which also includes
summarizing, analyzing and reporting these transactions to oversite agencies, regulators and tax
collection entities.

b) The users of Financial statements and their information needs are summarized by the below table

Users Information Needs


Investors These are the owners of the business and they
want to understand the performance of their
investment whether it is bringing profit or loss
Lenders Estimating the ability of the borrower to pay
back all loaned funds and related interest
charges as the financial statements shows if
the business is successful or on its knees
Suppliers To decide whether it is safe to offer the
supplies on credit or only conduct the pay up
front policy with the business
Customers To consider which supplier to select for a
major contract, wants to review their financial
statements first in order to judge the financial
ability of a supplier to remain in business long
enough to provide goods and services as
agreed in the contract
Company Management Need to understand the profitability, liquidity
and cash flows of the organization every
month in order to make operational and
financial decisions about the business
Shareholders In order to know whether the business is
bringing a profit or not and also to calculate
their royalties they receive at year end and to
also share the profits as per their capital
investment ratios
Government For tax collection purposes and to also
calculate the nation`s Gross Domestic Profit
(GDP) at large after combining all financial
records of public limited companies
c) The objective of Financial Accounting to reveal the profits and losses of the business and provide
a true and fair view of the business which is aimed at safe guarding the interest of various
stakeholders both internal and external which are connected to the business, though some
businesses conduct what we call window dressing of the financial accounts which leads to bias
information being used to provide the profit and losses of the business there by revealing no fair
view of the business.

d) Yes, there are significant differences in your relationship to the business entity as a sole
proprietor versus a limited company.

Liability
As a sole proprietor, you are personally liable for the debts and obligations of the business. This
means that if the business cannot pay its debts, creditors can come after your personal assets to
settle the debts. On the other hand, in a limited company, the company is a separate legal entity,
and your personal liability is limited to the amount of money you have invested in the company.

Taxation
As a sole proprietor, you will report the business income and expenses on your personal tax
return. You will pay tax on the business profits at your personal income tax rate. In a limited
company, the company is taxed separately from its owners, and you may be able to take
advantage of tax planning strategies to minimize your overall tax liability.

Control and decision-making


As a sole proprietor, you have complete control and decision-making authority over the business.
In a limited company, decisions are typically made by the board of directors or shareholders, and
you may have to share control with other stakeholders.

Continuity and transferability


A sole proprietorship ends if the owner dies or decides to close the business. In a limited
company, the business can continue operating even if the original owners leave, and shares can be
transferred to others.

Credibility and perception


Limited companies generally have a more professional and credible image compared to sole
proprietorships, which can be beneficial when dealing with customers, suppliers, and lenders.

It's important to carefully consider these differences and consult with a legal and financial advisor
to determine which business structure is best for your specific situation and goals.

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