Roles and Function of Accounting

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4.3 Objects of the reports.
Objective(s) of the report (state clearly) – What’s the purpose of writing the report?

4.4 Brief introductory information.

OCB Berhad was set up in 29 May of 1959, it offered the sales of electronic and telecommunications equipments and the provision of system designs and related engineering services in Malaysia. It has three divisions, which are consumer food, bedding products and building materials. Consumer food division provide instant noodles, garlic oil, seasoning-oil, sauces and so on, Bedding products division offered mattresses, pillows, bolsters, etc. The division of building materials supplies building products for hotels, housing, medical institutions,prisons and educational institutions. Nowadays OCB has become the major role of supplying instant noodle industry, bedding production industry and also building material supply industry.

4.5 Roles and functions of accounting, financial statement and accountants in preparing the annual report.

Accounting: Information for decision making and it is widely used to describe all types of business activity. In addition, it has several functions which are interpret and record the effects of business transactions, classify the effects of similar transactions in a manner that permits determination of the various totals and subtotals useful to management and used in accounting reports, summarize and communicate the information contained in the system to decision makers.

Financial statement: Financial statement is simply a declaration of what is believed to be true about an enterprise, communicated in terms of a monetary unit It summaries the important information of finance and profitability about a company.

Accountants in preparing annual report: Annual reports provide a great deal of information about the company and it is mailed directly to all shareholders of the corporation and available to the public either through Internet, in library or by writing or calling the investor relations department of corporation.

4.6 Analysis
(i) Firm’s assets, liabilities and equities.
|Year |Assets (RM) |= |Liability (RM) |+ |Equity (RM) | |2011 |336,252,000 |= |123,648,000 |+ |212,604,000 | |2010 |344,031,000 |= |132,042,000 |+ |211,989,000 | |2009 |402,602,000 |= |184,115,000 |+ |218,487,000 | |2008 |411,242,000 |= |190,143,000 |+ |221,099,000 |

We can know from this table: during the year of 2008 to 2011, this company’s Asset was reducing from RM411,242,000 to RM 336,252,000, liabilities was reducing from RM190,143,000 to RM123,648,000, and its equities changed slowly. Assets are the resources that controlled by a business and from which future economic benefits are expected to flow to the business, liabilities are financial obligations or debts and both of them were reduced. So we can deduce that during these four years, this company’s financial activities were being reduced, it’s total scale was becoming narrow.

(ii) Firm’s expenses and profits.

|Item |2011(RM’000) |2010(RM’000) |2009(RM’000) |2008(RM’000) | |Year | | | | | |Profit/Loss |4,904 |(6,998) |(1,012) |(8,855) | |Expenses |68,898 |80,039 |78,092 |83,362 |

Ratio of expense to net profit across the 4 years period:
|Year |2011 |2010 |2009 |2008 | |Ratio |14.05 |-11.44 |-77.17 |-9.41...
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