Running Head: ACCOUNTING PRINCIPLES

Accounting Principles 1

Running Head: ACCOUNTING PRINCIPLES

Accounting Principles

Introduction

The paper discusses about an unusual or conflicting accounting principle that has impacted chosen for profit organisation and the analysis of its published financial statements for the last 2 financial years. The paper also discusses about the functions of each department of the organisation and about their strengths and the weaknesses. The organisation that has been chosen in this paper is Coca-Cola Enterprises Inc. The organisation is the highest manufacturer and the distributor of the bottle and can liquid refreshment. It is concerned with non-alcoholic refreshment. The financials of the organisation for the last two years clearly show that the organisation is doing very well.

Financials of the Company

The net operating revenue of the organisation in the financial year 2008 was $ 21, 807 million whereas the financial year 2009 it has dipped slightly to $21, 645 million. This has though not affected the Gross Profit of the organisation which has shown an increase of $ 268 million. In the financial year 2008 the organisation showed a net loss but it bounced back and turned the loss in the profit in the financial year 2009. The losses in the financial year 2008 were due to the extra indirect expenses incurred by the organisation.

The accounting principles which have been set by the finance department of the government must be followed by the organisation. These principles might get changed sometimes. There are a few cases in which the company chooses to adopt a new set of accounting principles which are inconsistent with the existing accounting principles set out by the finance department of the government. The company is forced to follow the government notified accounting principles and because of the which the organisation’s working gets affected as it has to adapt according to the new principles.

The whole of the organisation is divided into various departments. The departments are the accounts departments, secretarial department, production department and marketing department. Each and every department knows what their role is and there is no confusion between the departments. The channel of communication among the departments is also very good which avoids miscommunication. The information necessary for any department is provided to it in time so that there is no delay in the work. Many departments are linked with each other.

The production department is linked with the marketing department and the sales department. The sales department informs the production department about the demand of the product and the quality of the product and accordingly the production department makes the changes in the production. The secretarial department is linked with the finance department because the annual report preparation is the combined effort of both the departments. The functioning of each and every department is well planned and this is the strength of the organisation. The organisation can always improve on the existing standards and set up a new standards for itself and achieve the same

A problem in the organisation could be the change that is incorporated in the organisation. The employees in the organisation always resist the changes because there are a very few people who like to work in a totally different environment. In such a situation if a person is not able to work in a changed environment then he may have to lose his job (Weygandt, Kimmel & Kieso, 2010). Change creates distrust among the employees because the employees are not inclined to accept the change.

The solution to this problem is that the organisation should bring the changes gradually. The employees in the organisation should be taken in confidence and be informed about the possible change in the working environment before incorporating the change. This will definitely solve the problem to a certain extent. The effect of the issue regarding the change is that the performance of the employees will get reduced up to a certain extent thereby affecting the performance of the company. Hence the company needs to follow the above mentioned process before bringing out any change in the organisation.

The organisation is required to follow such accounting practices which are consistent with the accounting practices set out by the finance department of the government. The accounts departments of the organisation must work in such a way that the statement of accounts of the organisation show true and fair value of the working of the organisation. The companymust not make any secret profit and whatever profit the company makes must be disclosed in the financial statements of the company.

References

Weygandt, J.J., Kimmel, D. &Kieso, E. D. (2010). Accounting Principles. (9th Ed.). John Wiley and Sons