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Audit tasks refers to those task under which financial statements of the company is verified and checked by the auditors in order to know about whether the final accounts are indicating the true and fair view of the company's financial position or not. Current report is covering the meaning of accounting principles and importance of these concepts in maintaining final records. This report will also discuss about types of different accounting records and their specific purpose and uses for the organisation (Carpenter and Feroz, 2001). Next segment of the report will cover the annual report of TESCO 2014, through which meaning and components of business risk facing by TESCO will have been described. TESCO is a multinational retail company occupied third largest retailer in the world position. There are various control systems in order to reduce business risk will also have been described and evaluation of fraud risk is also discussing in this projects (TESCO Plc, 2015). At last this report will also covered an audit plan for FA Jet limited company.
Accounting records are those sources of information and documents which can be used for verifying and auditing financial statements and also indicator of financial position of the company. There are various accounting records which a firm must have to maintain is Journals, ledger, trial balance, income statement, balance sheet and cash flow statement (Wilkin And Chenhall, 2010). Each financial record is having their own purpose and uses in order to indicate correct position of the enterprise. Purpose and use of each accounting records can be understood as follows:
Journals: It is chronological record of day to day financial transactions of the company. In journals entries are recorded by double entry book keeping system under which two accounts are involved in each financial transaction (Bushman and et. al., 2004). Purpose of maintaining journals is to keep daily record of day to day transaction of the company so that any kind of error can be find out for the first time. Use of preparing journals is that it make easier to prepare ledger and financial statements. Another use of journal is to keep systematic record of all the events which have occur in the business.
General Ledger: General ledger is a principle book which records summary of all the transactions that are recorded in journals and can be measure in quantitative terms. Purpose of maintaining ledger account is to keep systematic and summarised record of each account in order to make use of these account at any time if required (Bell, Landsman and Shackelford, 2001). Use of ledger is to formulate budget and also helpful in providing necessary information in order to conducting research and audit for the company.
Trail balance: Trail balance is accumulations of all ledger balances into debit and credit sides. Purpose of preparing trial balance is check mathematical correctness of accounting data and system. Data of trial balance is used for preparation of financial statements for the firm and available them data in very simple form (Romney, 2006). He data of trail balance also used in order to make audit of financial statements.
Income statement: Income statement is the statement that indicates the profitability of the company over a specific accounting period. The purpose behind preparing income statement is to make aware its investors about the profitability condition of the enterprise over a accounting period (Hall, 2012). It can use by the bankers and auditors in order to ensure its true picture of profitability conditions.
Balance sheet: balance sheet is the statement that shows the financial position of the company. The purpose of preparing balance is to convey its financial position to its stakeholders. On the other hand balance sheet is used by all the stakeholders of the company who is having interest in the functioning of the business. Balance sheet data are also used to verify actual position of the firm by the auditors (Gelinas, Dull and Wheeler, 2011). It can also be used for the purpose of ratio analysis for the organisation.
Cash flow statement: it is the statement which indicates the incoming and outgoing of cash from the business over an accounting period. It shows liquidity position of the company by analysing cash outflows and cash inflows over a particular period of time. Purpose of making cash flow statements is to make aware its stakeholder about the actual liquidity position of the company and its actual earning in cash over a specific period of time (Wilkin And Chenhall, 2010). It can be used in anticipating future cash flows and at the same time also helps in formulating annual budgets for th
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