The Business as a Single Entity Concept

Running head: ACCOUNTING FINANCIAL ANALYSIS REPORT ACCOUNTING FINANCIAL ANALYSIS REPORT Name of the Student: Name of the University: Author Note: 1 ACCOUNTING FINANCIAL ANALYSIS REPORT Part 2 Accounting policies Name Datails –Discussion Points Source Accounting standard: GAAP https://www.investopedia.com/terms/a/ accounting-standard.asp Accounting principles Datails – Discussion Points – Implications Source 1The Business as a Single Entity Concept The business entity concept states that the transactions that arise in the business must be recorded seperatley from the owners and the other bsuinesses. The single entity can be separte legal entity, subsidiary department etc. https://www.invensis.net/blog/ten- generally-accepted-accounting- principles-gaap/ 2The Specific Currency Principle The specific currency principle states that the transactions of the business should only be recorded when they are expressed in terms of currency. According to this concept the business transactions are converted into currency and after that they are recorded in the financial statements of the business. https://www.invensis.net/blog/ten- generally-accepted-accounting- principles-gaap/ 3The Specific Time Period Principle The specific time period principle is related to the analysis of the balance sheet ” Assets –What are my long-time assets worth? Add. Current assets as cash, accounts receivables and prepaid expenses  assets should be high for liquidity Liabilities – Current liabilities: Depts, accounts payable, repayments, taxes, etc. Long-time liabilities: minority dept, capital leases, loans, repayments  number should be low and must be lower that the assets Equities –Capital which is invested by the owners. Sum of shares. Share holder have rights, number tells the amount of dividend, Ratios – Return on assets, inventory turnover ratio, quick ratio, total liabilities to net worth, etc. These ratios tell the management if the assets are being used profitably, if the company has excess resources that could be put to better use, if current assets are more than current liabilities or vice versa, ifthe inventory is producing the output that itshould and so on and so forth.  Examine your balance sheet, income statement and cash flow statement for https://www.invensis.net/blog/analyze- balance-sheet/ Critical warning signs in financial statements https://www.invensis.net/blog/critical- warning-signs-financial- statements/?utm_source=invensis- blog&utm_campaign=blog- post&utm_medium=content- link&utm_term=analyze-balance-sheet THE HOW TO SPOT AREA IS ALWAYS A GUIDE TO CALCULATE PERFORMANCE INDICATORS!! 2 ACCOUNTING FINANCIAL ANALYSIS REPORT performing this analysis. These should span the last two or three years so that you can identify year on year numbers. - Inventory growth is permissible only if your business is on the expansion mode. insufficient inventory isalso awarning sign. - High Number of Accounts Receivable Days – 39 is ww average –lower isgood - Increasing Non-Operating Income: selling fixed assets every now and then could mean that your business istrying to raise cash to meet short term expenses or pay off debt - Cash Flow Problems: Ifprofits are good but cash flows are not, itcould be that you are not collecting receivables quickly enough or you are struggling with repayment of your loans, or even worse, you are exaggerating your revenues. A financially well-run business should have an improving cash position at the end of every month rather than every year. 4The Historical Cost Principle The historical cost principle isconsidered as the most basic accounting principle under the US GAAP. This principle states that the assets are recorded in the balance sheet at the historical cost irrespective of increase or decrease in the value over time. The historical cost principle depicts the reliable picture of the assets of he business. With the help of this principle the cost of one assets with the another asset is easily conpared and this concept play an important role in making decision about the assets of the business. How the Historical Cost Principle Affects Business Accounting (2021). Available at: https://www.thebalancesmb.com/ho w-the-historical-cost-principle- affects-business-accounting- 4158384 (Accessed: 30 April 2021). 5The Full Disclosure Principle Potential for risk as it is subjective and provides space for interpretation. The full disclosure principle states that all the important information about the business should be reported in the financial statements. The main objective of this principle is to share the important and relevant information to the outside world. Full Disclosure Principle -Definition, Explanation and Requirements (2021). Available at: https://corporatefinanceinstitute.co m/resources/knowledge/accounting/ full-disclosure- principle/#:~:text=The%20Full%20D isclosure%20Principle%20states,fina ncial%20analysis%20and%20financi al%20modeling. (Accessed: 30 April 2021). 3 ACCOUNTING FINANCIAL ANALYSIS REPORT 6The Recognition Principle This principle states that the revneue should be recorded in the income statement in the period when they are recognised not necessarily when the cash isreceived. This principle isconsidered to be important as it shows the profit and loss in the rela terms. Itisalso important for maintaining the financial creditability. Girsch-Bock, M. (2020) The Revenue Recognition Principle: Definition & Examples ,The Blueprint .Available at: https://www.fool.com/the- blueprint/revenue-recognition- principle/ (Accessed: 30 April 2021). 7The Non-Death Principle of Business It is also known as going concern principle. This principle states that business will continue to exists and operate with an undefined end date which means that the business will not be liquidated in the forseeable future. What are the Generally Accepted Accounting Principles (GAAP Principles)? (2015). Available at: https://www.invensis.net/blog/ten- generally-accepted-accounting- principles-gaap/ (Accessed: 30 April 2021). 8The Matching Principle This principle is used for doing the real time analysis of the reenues and the expenses. This principle states that how efficiently and efficetively the business has carried its operations. In other words the matching prinicple indicates that the expenses should be matched with the revnues that are generated durimg the accounting period. What Is the Matching Principle and Why Is ItImportant? (2021). Available at: https://www.freshbooks.com/hub/ac counting/matching-principle (Accessed: 30 April 2021). 9The Principle of Materiality The materiality principle indictaes that the accountants need to follow the genrally accepted accoutning practices expect when there is no difference ifthe rules are ignored. In other words the principles of materiality indiactes that the accounting standards can be ignored ifthe net impact has negligible or small impact on the financial statement such that the readers of the finnacial statement would not be misleaded. What isthe materiality principle? (2021). Available at: https://debitoor.com/dictionary/mat eriality- principle#:~:text=The%20materiality %20principle%20outlines%20that,be %20exceedingly%20expensive%20or %20difficult. (Accessed: 30 April 2021). 10 The Principle of Conservative Accounting The principle of conservatism is the genral concept used for recognising and identifying the assets and the liabilities with an uncertainty about the outcome but to recognise the revnues and the assets when they are assured of being received. In other words the principle of conservatism is the principle that concerns about the reliability of the financial statement of the enitity. Conservatism Principle: Definition | Example |Explanation | WIKIACCOUNTING (2016). Available at: https://www.wikiaccounting.com/co nservatism-principle-definition- example/ (Accessed: 30 April 2021). 4 ACCOUNTING FINANCIAL ANALYSIS REPORT Financial Accounting Standard Board (FASB) https://www.investopedia.com/terms/f/fa sb.asp Accounting principles Datails – Discussion Points – Implications Source The financial accounting standard board isthe non profit organization standard setting body whose main aim isto establish and improve the generally accepted accounting principles within the interest of the public. The financial accounting standards board sets the accounting rules for the private as well as the public companies and also the non-profits in the United States. For establishing the compatible standards worldwide, the FASB has been working with the International Accounting Standards Board (IASB). The main aim and purpose of FASB isto improve the financial accounting and reporting standards for providing important and useful information to the investors and also to the other users of the financial reports and to educate the shareholders to implement and effectively understand those standards. FASB Home (2021). Available at: https://www.fasb.org/home (Accessed: 30 April 2021). International Financial Reporting Standards (IFRS) https://www.investopedia.com/terms/i/ifr s.asp 5 ACCOUNTING FINANCIAL ANALYSIS REPORT designed to bring consistency to accounting language, practices and statements, and to help businesses and investors make educated financial analyses and decisions transparency, accountability, and efficiency to financial markets around the world … fostering trust, growth, and long- term financial stability in the global economy. IFRS Foundation Statement of Financial Position: This isalso known as abalance sheet. IFRS influences the ways in which the components of a balance sheet are reported. https://www.investopedia.com/terms/b/b alancesheet.asp Statement of Comprehensive Income: This can take the form of one statement, or itcan be separated into a profit and loss statement and a statement of other income, including property and equipment. https://www.investopedia.com/terms/p/pl statement.asp Statement of Changes in Equity: Also known as a statement of retained earnings, this documents the company's change in earnings or profit for the given financial period. Statement of Cash Flows: This report summarizes the company's financial transactions in the given period, separating cash flow into Operations, Investing, and Financing. IFRS vs. American Standards https://www.investopedia.com/terms/i/ifr s.asp IFRS isnot as strict on defining revenue and allows companies to report https://www.investopedia.com/ask/answe rs/05/iasvsgaap.asp 6 ACCOUNTING FINANCIAL ANALYSIS REPORT revenue sooner, so consequently, a balance sheet under this system might show ahigher stream of revenue than GAAP's. IFRS also has different requirements for expenses; for example, ifa company isspending money on development or an investment for the future, itdoesn't necessarily have to be reported as an expense (it can be capitalized). Development costs: Under GAAP, these costs are considered expenses. Under IFRS, the costs are capitalized and amortized over multiple periods FIFO means that the most recent inventory isleft unsold until older inventory issold; LIFO means that the most recent inventory isthe first to be sold. IFRS prohibits LIFO, while American standards and others allow participants to freely use either. Inventory: The first iswith the LIFO Inventory. GAAP allows companies to use the Last in, First out (LIFO) as an inventory cost method. But LIFO is banned under IFRS Write-downs: GAAP specifies the write-down amount of an inventory or fixed asset can't be 7 ACCOUNTING FINANCIAL ANALYSIS REPORT reversed ifthe market value of the asset subsequently increases. On the other hand, the IFRS allows the write- down to be reversed Possible Manipulations https://www.investopedia.com/articles/fu ndamental-analysis/financial-statement- manipulation.asp https://corporatefinanceinstitute.com/reso urces/knowledge/other/top-accounting- scandals/ Accounting policies are the specific principles and procedures implemented by acompany's management team that are used to prepare its financial statements. Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. Financial statements include: Balance sheet: provides an overview of assets, liabilities, and stockholders' equity as a snapshot in time. Income statement: focuses on acompany ’srevenues and expenses during aparticular period. Once expenses are subtracted from revenues, the statement produces a company's profit figure called net income. Cash flow statement (CFS): measures how well a company generates cash to pay its debt obligations, fund its operating expenses, and fund investments. Unlike accounting principles, which are rules, accounting policies are the standards for following those rules. Accounting policies may be used to manipulate earnings legally. A company's choice in accounting policies will indicate whether management is aggressive or conservative in reporting its earnings. Accounting policies still need to adhere to generally accepted accounting principles (GAAP). Accounting policies are aset of standards that govern how acompany prepares its financial statements. These policies are used to deal specifically with complicated accounting practices such as depreciation methods, recognition of goodwill, preparation of research and development (R&D) costs, inventory valuation, and the consolidation of financial accounts. These policies may differ from company to company, but all accounting policies are required 8 ACCOUNTING FINANCIAL ANALYSIS REPORT to conform to generally accepted accounting principles (GAAP) and/or international financial reporting standards (IFRS). Accounting principles can be thought of as aframework in which acompany is expected to operate. However, the framework is somewhat flexible, and acompany's management team can choose specific accounting policies that are advantageous to the financial reporting of the company. Because accounting principles are lenient at times, the specific policies of a company are very important. https://www.investopedia.com/terms/a/accounting-standard.asp Accounting standards specify when and how economic events are to be recognized, measured and displayed. External entities, such as banks, investors and regulatory agencies, rely on accounting standards to ensure relevant and accurate information is provided about the entity. These technical pronouncements have ensured transparency in reporting and set the boundaries for financial reporting measures. The two main accounting policies are GAAP and IFRS. Generally Accepted Accounting Principles (GAAP) are basic accounting principles and guidelines which provide the framework for more detailed and comprehensive accounting rules, standards and other industry-specific accounting practices. For example, the Financial Accounting Standards Board (FASB) uses these principles as abase to frame their accounting standards. Thus, GAAP encompasses:  Basic accounting principles/guidelines  Accounting Standards usually issued by the premier accounting body of the country  Industry-specific accounting practices to cover unusual scenarios International Financial Reporting Standards are accounting standards that are issued by the International Accounting Standards Board (IASB) to provide a common accounting language to increase transparency in the presentation of financial information. The International Accounting Standards Board (IASB), is an independent body formed in 2001 with the sole responsibility of establishing the International Financial Reporting Standards (IFRS). It succeeded the International Accounting Standards Committee (IASC), which was earlier given the responsibility of establishing the international accounting standards. IASB is based in London. It has also provided the ‘Conceptual Framework for Financial Reporting ’issued in September 2010 which provides aconceptual understanding and the basis of the accounting practices under IFRS. Basic Accounting Principles Generally Accepted Accounting Principles The following are the general accounting principles as mentioned earlier: Business Entity Assumption: It states that every business entity should be treated as an entity that is separate from its owners. Therefore, all financial transactions should also be distinguished in such amanner. This concept is 9 ACCOUNTING FINANCIAL ANALYSIS REPORT Financial metrics have long been the standard for assessing afirm ’sperformance. Financial management supports in establishing and monitoring specific and measurable financial strategic goals on acoordinated, integrated basis, thus enabling the firm to operate efficiently and effectively. Financial goals and metrics are established based on benchmarking the “best- in-industry ”and include free cash flow, economic value-added, asset management, financing decisions and capital structure, profitability ratios, growth indices, risk assessment and management and tax optimization. https://www.investopedia.com/ask/answers/041515/how-does-financial-accounting-help-decision-making.asp There are aseries of accounting principles that companies must adhere to in their financial accounting. The majority of publicly traded companies in the United States follow the generally accepted accounting principles (GAAP), acommon set of standards and best practice that accountants follow when they crunch their numbers and complete financial statements. Companies outside the U.S. generally follow other international standards that vary by region and country. But, regardless of which set of standards is followed. there are three main areas where financial accounting helps with decision-making: Part 4 Traditional budgeting is amethod of preparation of budget in which last year budget is taken as abase year. In this budgeting current year budget is prepared by making the changes to previous year budget and by adjusting the expenses based on the inflations, consumer demand and market situations In traditional budget it can be said that it is prepared from the past data and do the changes accordingly (Traditional Budgeting 2021). It is the traditional approach were the work is done on keeping in mind of the previous data. The previous data is used to make the current budget. The people who do not want to adopt the new technique and new changes mostly use it Modern budgeting have been initiated in number of cities in recent years, this budget mainly focuses on the giving the spending agencies greater flexibility in using the resources in the exchange of holding them responsible for achieving result. It mainly focus on the spending agencies. It is one of the most used approaches for its innovations and new strategies. It help to make innovative strategies to prepare the budget (Modern Budgeting 2021). The people who welcome the changes and ready to adopt the innovation and changes use this method. It is more useful and helpful because it help to do the work fast without any delay and provide the accurate date from it. The people who can easily understand the technique and are ready to do changes use it. The difference between Traditional and Modern budgeting Traditional -In traditional budget it relies on the non-discounting criteria that do not consider the time value of money. In traditional budget, itdoes not consider the time value of money 10 ACCOUNTING FINANCIAL ANALYSIS REPORT The traditional budget is less costly and can easily be understandable by any one Here the old generation people who do not want to change the technique mainly use it It is less flexible as itmainly based in old technique According to Andrews M, traditional budgeting is the best practise Modern -In Modern budget it includes the discounting criteria where the time value of money taken into the consideration. In modern budget itconsider the time value of money The modern budget is very costly and more difficult to understand It mainly used by the coming generation where they are comfortable to adopt the new technique and innovative idea in their work It is more flexible and work is done with more innovative approaches, which increase the accuracy level of accounting. Disadvantage of traditional budget o It is infrequent and long winded budgeting report without dated and static number o It is inflexible for the improvement and it does not fit with the changing business environment o It is very time consuming process and there are high chances of error in budgeting. o Inaccuracies based on the assumptions and guess from the previous year number. o The accuracy in this method is very less as compared to new budget technique. o Now adays it is not used by more persons as the people are now interested in the new technique and approaches to do the work Disadvantage of Modern budget o It is very costly and some start-up company has problem to apply the modern budget o There are innovation and new technique are there which many company do not want to follow as they are habituated with the traditional one o Certain companies believes that this approach may not be good for the long run so they do not want to adopt it o Due to the latest technology used some company do not want to go in any new format as they are habituated in the old one and they avoid going in new changes. o It is new concept and the people who are comfortable with the traditional one and there work is done properly from that are not ready to adopt any new changes in the environment. The people think that it may take time to understand the new approach and may be this will not comfortable for the business work. Budgeting approach determines the amount of input required to support the target and output required by the company. The budgeting approach is done to find the current value of the business. There are various approaches to do the budgeting. It is the process to prepare the detail project of future budget. There are different types of budgeting approaches they are listed below:- 11 ACCOUNTING FINANCIAL ANALYSIS REPORT o Incremental budgeting- This budget is built on the past budget. This budget start with the previous budget and it add and subtract an incremental amount to cover inflation and other known charges. It help in operational strategies and helps in better decision making within the organization. It is very quick and easy to maintain. It is mostly suitable for the organization who accept historical figures. Its figure is related to the past data and the budget is made from that past data. It is mainly work on the historical data. It help to know the cost by using the previous data. o Zero based budgeting- Zero-based budgeting is a way of budgeting where your income minus your expenses is zero It make sure that the income matches with expenses during the month. It requires that all cost to be justified by the expected benefits. It help in operational strategies and helps in better decision making within the organization. In this budget, there is increase in staff involvement because it require lot more information and engagement. It is one of the more efficient and effective resource allocations o Activity based budgeting- In this approach of budgeting where the activity that incur costs are recorded, analysed and researched. It is more rigorous than traditional budgeting. Here the activity are thoroughly analysed to predict the cost. It help in operational strategies and helps in better decision making within the organization. It help in lower the cost and helps the organization to gain the competitive age in the market. It help to eliminate all sorts of unnecessary expenses, which help the business to save the cost. It can be called as planning system, which is made according to the plan and make activity is plan in such a way to reduce the cost. It help in better decision making and ithelp to reduce the cost of the company. It is the most common approach, which is used by the maximum organization. o Rolling budgeting- The rolling budget also be called as continuous budget or the rolling forecast, which changes throughout the year. In this when one moth end add another month at the end of the budget. It also contain the information of the business revenue, expenses and profit. It help in operational strategies and helps in better decision making within the organization. It helps in planning and controlling very accurately. Therefore, it also helps in reducing the uncertainty of the budget it is said to be short tern rather than long term. It help to know whether the company is moving toward the profit and sales. This continuous budget update regularly when the earlier period budget expire. The budgeting processes are used in the organization for the effective decision making. For making the right decisions quickly the budgeting processes are used. But now a days it has been seen that most of the organization are struggling with the budgets as well as the forecasts. The cash flow issues are also seen which are indirectly affecting the health of the business. Most of the business are not adopting the changes as the traditional budgeting and forecasting tools such as spreadsheets are used by most of the organization. The use of the traditional budgeting is the main cause of the business struggling. In order to overcome the complexities and the issues of the productivity the organization should avoid the use of the outdated system as better solutions are available. Technologies has brought the ways to apply the strategic approaches to the budgeting as well as to the forecasting. The automation of technology has resulted in the potential for the new data that can be used for projecting and predicting the business health. The use of the smart technology mainly harnesses the most powerful aspects of the automation and it is applied to the budgeting and the forecasting processes. Most of the complex problems are solved by the use of the new smart budgets and the issues faced by the managers in budgeting 12 ACCOUNTING FINANCIAL ANALYSIS REPORT are also solved. The smart budgeting technology helps in improving the operations of the business. The use of the smarter technologies in the budgeting process helps in increasing accuracy and productivity. The employees in the accounting and finance department spends most of time on the data entry and the tracking information which is mostly lost labor and it is also loss of time and productivity. Instead of this the employees should spend the time in improving the process of the business and should also contribute to the strategy. Therefore, it can be said that smarter technology should be used so as to save time and to improve the business process (Budgeting Processes 2021). The smarter technology also helps in making the budgets better and forecasting. Budgeting and forecasting are the important tool. The traditional system mainly gives the inaccurate data which results in the loss in productivity and also leads to the bigger problems. The outdated system of budget also affects the overall health of the business. In order to make the budget better the smart budgeting technology should be used which will help in pulling the data continuously. Proper planning system will help in improving the forecasting. The smarter technology also helps in more collaborative nature. The decision makers are looking to improve the operational strategies which in turn helps in shining with the smart technology. Therefore, it can be said that smart budgets and smart technologies are the most important in improving the business and the also improving the financial health of the organization. Based on the above discussion it can be concluded that capital budgeting is the planning process used for determining long term investment of the organization. It can also be concluded that the process of budgeting helps in planning, forecasting, monitoring, controlling, implementing and also helps in evaluating the performance of the budget. Part 5 A. The main methods and techniques of investment appraisal include the payback period, accounting rate of return, net present value and the internal rate of return. All these techniques are used for appraising the performance of the new project. Payback period: It is considered to be one of the simplest investment appraisal techniques which states the time period that will be taken by the project in generating sufficient cash flow for covering the initial cost of the project (Payback Period Method 2021). The payback period has the following advantage such as it can be easily calculated and it is very easy to understand. In this method the project is evaluated very quickly and it also helps in reducing the risk of losses. The disadvantage of pay back period is that it does not consider the time value of money. This method also does not consider the cash inflows of the project after the pay back period. Accounting rate of return: It is the accounting technique which is used for measuring the profit that is expected from the investment. This technique is used for expressing the net accounting profit that is arising from the investment as apercentage of the capital investment. 13 ACCOUNTING FINANCIAL ANALYSIS REPORT It is also known as return on capital or return on investment. The advantages of accounting rate of return are: it is calculated very easily and it is simple to understand (Accounting Rate of Return 2021). It also considers the total profit over entire period of the economic life of the project. The concept of net earnings is also recognized in this method which is the most important factor in the appraisal of investment proposal. This method also gives clear picture about the profitability of the project and it is used for measuring the current performance of the company. Along with the advantage there are certain disadvantages such as: there is a difference in the result when one calculates ROI and the other calculates ARR. The time factor is ignored in this method. In this method the fair rate of return cannot be determined and the profitability of the project is also affected as the external factors are not considered. Lastly itdoes not consider the cash inflows which are more important than accounting profit. Net present value: The most common and the most use investment appraisal technique is the net present value method. The net present value is the sum of the discounted future cash inflow and outflow that are related to the project. In the net present value method, the weighted average cost of capital is the discounting factor for the future cash flows (Net Present Value 2021). The positive net present value is always considered to be better and the positive net present value indicates the project should be accepted. The advantages of net present value include: it considers the time value of money and also helps in the decision- making process. The disadvantages include in this method the guidelines for the required rate of return are not set and this method is also not suitable for comparing the projects of different sizes. In this method the hidden cost of the projects is not considered. Internal rate of return: It is considered as the discounting rate which is used for bringing the discounted future cash flows at par with the initial investment. In other words, itis considered as the rate of discount in which the company will neither make profit nor make any loss. In this technique the trail and error method are used (Internal Rate of Return 2021). In this method the net present value of the project will be zero. The advantages of IRR include: it finds the time value of money and itis very simple and easy to understand. In this method the hurdle rate is not required. The disadvantages are: this method ignores the size of the project and also ignores the future costs and the reinvestment rate. Another disadvantage is the it provides an incomplete picture of the future and italso ignores the overall sizes and scope of the project. It ignores the future costs within the calculation and it also struggles to keep the multiple cash flows. B. The time value of money is considered as the most important aspect in the capital budgeting decisions as itis used by the small business owners in adjusting the cash flows for the passage of time. The time value of money is very important as it allows the investors in making more informed decision about what to be done with their money. The time value of money helps in understanding which option may be best based on interest, inflation, risk and return. The time value of money problems involves two techniques such as compounding and discounting. The concept of time value of money indicates the idea that the sum of money today is worth more than the same sum in the future (Time Value of Money 2021). For making the capital budgeting decision by using the time value of money at first the cash flows of the project are estimated and then all the cash flows are converted into their present value. A change in the time value of money affects the decision-making process. 14 ACCOUNTING FINANCIAL ANALYSIS REPORT C. Based on the above discussion about the investment appraisal techniques it can be said the best and the two most popular methods for the investment appraisal techniques are net present value and internal rate of return. The net present value method is the most popular method as it considers the time value of money and it also helps in the decision-making process (Net Present Value 2021). It is the most popular method as itis used to determine the future cash flows generated by the project including all the capital investment. It is the most popular and the most used technique in the capital budgeting as it helps in establishing the projects that are likely to turn the greatest profits. It is considered to be the best way to analyse the evaluate and the select big investment projects. The internal rate of return method is also considered as the best method as the timing of cash flows in the future years are considered and each flow is given the equal weight by utilising the time value of money. Therefore, among all the methods the net present value method and the internal rate of return method is the best and the most popular method and itis widely used method. Reference (2021) Bartleby.com .Available at: https://www.bartleby.com/essay/The-Npv-Rule-Is-the- Best-Investment-P38HACE36YYA (Accessed: 30 April 2021). Accounting Rate of Return (ARR) |Definition & Formula (2021). Available at: https://gocardless.com/guides/posts/calculating-accounting-rate-of-return/ (Accessed: 30 April 2021). Activity-Based Budgeting (ABB) (2013). Available at: https://www.cgma.org/resources/tools/essential-tools/activity-based-budgeting.html (Accessed: 30 April 2021). Bragg, S. and Bragg, S. (2021) Rolling budget definition — AccountingTools ,AccountingTools .Available at: https://www.accountingtools.com/articles/what-is-a-rolling- budget.html#:~:text=A%20rolling%20budget%20is%20continually,one%20year%20into%2 0the%20future. (Accessed: 30 April 2021). Conservatism Principle: Definition |Example |Explanation |WIKIACCOUNTING (2016). Available at: https://www.wikiaccounting.com/conservatism-principle-definition-example/ (Accessed: 30 April 2021). Critical warning signs in financial statements FASB Home (2021). Available at: https://www.fasb.org/home (Accessed: 30 April 2021). Full Disclosure Principle -Definition, Explanation and Requirements (2021). Available at: https://corporatefinanceinstitute.com/resources/knowledge/accounting/full-disclosure- principle/#:~:text=The%20Full%20Disclosure%20Principle%20states,financial%20analysis %20and%20financial%20modeling. (Accessed: 30 April 2021). Girsch-Bock, M. (2020) The Revenue Recognition Principle: Definition & Examples ,The Blueprint . Available at: https://www.fool.com/the-blueprint/revenue-recognition-principle/ (Accessed: 30 April 2021). How the Historical Cost Principle Affects Business Accounting (2021). Available at: https://www.thebalancesmb.com/how-the-historical-cost-principle-affects-business- accounting-4158384 (Accessed: 30 April 2021). https://corporatefinanceinstitute.com/resources/knowledge/other/top-accounting-scandals/ 15 ACCOUNTING FINANCIAL ANALYSIS REPORT https://www.accaglobal.com, A. (2021) Comparing budgeting techniques |F5 Performance Management |ACCA Qualification |Students |ACCA |ACCA Global ,Accaglobal.com . 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