Financial Accounting December 2026

Q.1: A newly established retail business has started expanding its operations and is now seeking a bank loan for further growth. The owner maintains basic records of transactions but is unsure how accounting information can support different stakeholders.

As a financial consultant, explain how accounting information can be applied to support the decisions of the owner, managers, employees, bankers and government authorities. Also explain how the financial statements prepared from accounting records can assist these users in evaluating the business.

Answer:

Introduction:

Accounting information is a significant source of financial information for a business as it enables recording, classification, summarisation and communication of financial activities of an organisation. For a new retail business, maintaining proper accounting records is highly important while expanding the business and applying for a bank loan. Basic recording of purchases, sales, expenses, assets, liabilities, and cash flow can be converted to useful information for different groups of people. Accounting information is not only beneficial for the owner of a business but also for managers, employees, bankers and government authorities as it supports them in taking effective decisions. Every stakeholder is interested in the relevant information for their purposes based on their relation with the business. Income statement, balance sheet and cash flow statement are some of the financial statements that properly showcase the financial status of a business.

This is partially solved sample answer

Buy complete NMIMS solved assignments for the December 2026 session.

General/Generic Assignment at just ₹180 per assignment.

Customized/ Unique Assignment at just ₹500 per assignment.

Contact No: +91 9741410271 (WhatsApp)

OR

Mail to: smu.assignment@gmail.com

Q.2 (A): A company's finance manager asks the accountant to postpone the recognition of certain expenses so that the current year's profit appears higher and the company can meet its performance target. The accountant is concerned that doing so may mislead investors and other stakeholders.

As the accountant, propose an appropriate course of action in this situation and justify your recommendation using relevant ethical principles of accounting.

Answer:

Introduction:

Any information obtained from the process of accounting should give an accurate representation of how well the company has performed financially. In this scenario the finance manager is pressuring the accountant to defer the recognition of some expenses so that the profit appearing in the income statement for the current year is increased. Whilst this may help the company to hit its performance target for the year, it could be misleading to investors, lenders and other stakeholders. It is important for the accountant to record his expenditure in the proper period. Accounting professionals are required to be honest, objective, professionally competent and have integrity when preparing financial information.

Q2 (B) The following information is available for ABC Ltd.:

Using 2022 as the base year, calculate the trend percentages for Sales and Profit Before Tax for 2023 and 2024. Based on the results, comment briefly on the trend in the company's performance.

Answer:

Introduction:

Trend analysis is a useful accounting method used to analyze and understand the performance history of a firm. It works by comparing the figures for a particular accounting period (usually years) against a certain base year which is given a value of 100%. For ABC Ltd., 2022 will be the base year for both Sales and Profit Before Tax (PBT). The percentages for 2023 and 2024 will indicate an increase or decrease in the sales and profits for the two years relative to the base year. In this way the analysis provides information that can help the management and other interested parties assess changes in the business trends.