an appropriate approach to meet the manager’s needs
To come up with an appropriate approach to meet the manager’s needs, my colleague and I will first have to select a fiscal year for the company. The fiscal year will consist of twelve months, and the closing of the financial year will be set when there is a low business activity. Once this is done, it will be easy to prepare, analyze, and compare financial statements on a monthly and yearly basis based on the selected fiscal year. Since the company has several branches in Victoria and NSW, the fiscal year will be common to every branch.
In preparation for the P&L reports, each product will be accounted for differently in each month within the financial year, and this approach will enable the company to identify the seasonality of the products. Additionally, the profit and loss statement will make use of accounting principles, which include revenue recognition, matching principle, and the accrual principle. The values recorded in the P&L report, such as product sales and expenses, should be in line with other financial statements such as the balance sheet.
Moreover, to effectively come up with financial statements that cover all the company’s activities, the managerial department will implement Porter’s five forces of competitive position analysis. The five forces, which include supplier power, buyer power, competitive rivalry, the threat of substitution, and the threat of new entry, will enable the company to do a thorough analysis across every branch (Garrison, Libby, Webb, Noreen & Brewer, 2018). The study will consequently help to prepare company statements and determine which region, Victoria or NSW, is more profitable.
References
Garrison, R., Libby, T., Webb, A., Noreen, E. & Brewer, P. (2018). Managerial accounting. Whitby, Ontario: McGraw-Hill Education.