ACCOUNTS

QUESTION 1

The internal controls placed within the hypermarket to ensure the safety of its patrons as well as to monitor its inventory movement are having security guards. Guards have to make sure that patrons are safe and protected in the supermarket. The management should also place security guards in the parking lot to prevent any crime from occurring. Customers’ safety should always be the priority instead of gaining profits. This is because they are the ones that help the management to maximize the profits of a hypermarket. 

Besides that, hypermarkets must provide shop assistants. Shop assistants job is to guide the customers, provide information to the customers about the products; collect payment for the goods bought and display merchandise.  By maintaining good customer service skills, consumers will have a better shopping experience. Shop assistants should make sure that they maintain proper communication skills and be honest to the customers. Therefore, shop assistants play a vital role in a hypermarket.

Furthermore, there have to be sensors in the hypermarket. In order to avoid shoplifting problems, the management has to be wise and put up sensors at the entrances and exits of supermarkets to trigger alarm sounds.  Antitheft systems should be used widely, so that they are able to catch those who are stealing. Supermarkets have to increase their security measures by paying close attention to this issue and by adapting their systems to new shoplifting methods.  By maintaining safety precautions, shoplifters can be prevented.

One of the popular methods used is the installation of camera system. Camera surveillance with high resolution is used to capture all details that are happening in the hypermarket. Retail security officers are incharged to monitor the CCTV system carefully and being alert. Installing cameras at the cash counters to supervise the cashier’s actions should also be practiced in order to avoid any wrongdoings during the payment process. By this way, patrons’ safety is assured and boosts the hypermarket’s profits. 

In addition, additional security is required at the entrance and exits point. Retailers should appoint extra staffs to keep an eye of suspicious people and their actions. Essential roles of the additional staffs are to prevent crime and theft issues.  For example, they are required to verify the receipt of the patrons once they are about to leave the store. Fully trained workers are available to deal with thieves and help the management with security resources. 

QUESTION 2

Ways that Tesco can contribute positively to non-profit organizations are by donating cash. The company should set up a charity trust in order to show their support to local community charities. For instance, Tesco’s charity fund must exhibit their initiative in offering one-off donations to charity homes and not for profit organizations for the welfare of children, elderly people and people with disabilities. Organization should encourage their employees’ to support this cause. Employees’ may apply to the Tesco’s charity fund to play a part in helping the needy ones.

                       

Besides that, Tesco can provide a better interest to non-profit organizations through product donations rather than cash donations. For instance, Tesco as a large multinational grocery company sells food products. This company can proactively donate food to local nonprofit organization to be partly responsible to the well-being of the community. Non-perishable or fresh foods are example of items that can be donated. It is easier to be well connected to the community as well as educating their employees.

In addition, Tesco should organize a fundraiser event. A fundraiser event is a campaign whose main reason is to raise money for non-profit organization. The company must implement a program that attracts the attention of large groups of donors and also the involvement of their staffs. For example, free items can be donated for an auction by local businesses. Employees should join and help to gather money for the benefits of the community. 

QUESTION 3

      Important characteristics of quality information contained in financial statements are relevance. Relevance is useful information that will be used by decision makers. Relevant information must possess predictive value to allow decision makers to make prediction about the future. For example, companies will show their accounting information to stakeholders for decision making. If the relevant information reaches the expectations of the investor, then the net income of a company has confirmatory value for investors. 

Besides that, comparability is also important in financial information. Users will be able to derive similarities and differences between the financial statements of an accounting period. The financial statement of a company must be consistent with other companies. By maintaining consistency throughout the entity, investors can compare information among companies. This is also to enable the users to analyze the performance of a company.   

Understandability of the information in financial statements must be comprehended by users that have reasonable knowledge about accounting, business and economic activities. Users may have different ways of understanding information. Complex matters of accounting information and financial statements should be presented to the users that are having difficulties. These types of information should be prepared in such a way to provide relevance to the users about financial information. 

　　　　

Another characteristic that is essential to the users is completeness. Information contained in financial statements is only complete when relevant information is provided to the users. This is to help users to make financial decision making. Incomplete information may reduce the relevance and reliability of the financial statements as users are not presented to the whole view of the details. This can lead to misleading and incorrect decision making and thus not helpful to the users. 

Prudence is a key accounting principle which makes sure that assets and income are not overstated and liabilities and expenses are not understated. For example, inventory is recorded at the lower cost rather than expected selling price.  This ensure profit on sale of inventory is realized when the actual sale takes place. However, prudence does not require management to deliberately overstate its liabilities and expenses or understate its assets and income. Prudence should eliminate bias from financial statements but its application should not reduce the reliability of the information. 

Neutrality is information contained in the financial statements that must be free from bias. It should reflect a balanced view of the affairs of the company without attempting to present them in a favored light. For deliberate bias to occur is when circumstances and conditions cause management to intentionally misstate the financial statement. For example, when the managers of a company are provided bonus on the basis of reported profit. This tempt the management to adopt accounting policies that results in higher profits rather than those better reflect the company’s performance in line with GAAP. 

An example of cash flow and expenditure graph.