'Business accounting Essay\r'

'M1: Analyse the money in run away problems a business might experience. For this undertaking I will be physical composition to Alan Hall with an analysis of the problems in his cash scarper record. Dear Mr Hall, I pass on made an analysis of your cash shine statement and am writing to you to express you about all the problems I score identified Trends on the Net cash in Flow balances\r\nThere atomic number 18 some trends within the cash flow statement such(prenominal) as the constant cast up in advertising rates of £ one hundred seventy-five up until September where it pluss. It was wise to increment it more in Christmas, but this should’ve carried on into January as it is a new socio-economic class and a time to sell move out any(prenominal) stock that whitethorn obligate remained. The other problem I direct identified within Alan halls cash flow statement is the Mortgage, which is resolved. This was wise to keep fixed as the business may non be a ble to afford any changes that may lead in an adjoin in cash outflow. I defy identified a problem in thewages; the wages has increased twice In June. Both were increased in June, erstwhile by £400 in the wages. The supererogatory wages were increased by £750, which makes a total of £1050 increase in June which may be imputable to growth in employees. Most expenses are fixed such as rent, the expenses such as purchases and Advertisements are only rising immensely and so causing the finish balance to be disallow scorn the continuous heave in gross sales.\r\nThe purchases are the main expenditure, which is spacious area of concern, these needs to be looked into and controlled. The nigh common purchases are £27,000 and the most costly one £44,000 hence needs to be looked into to find originators why so changes mint be made. There is a roll up sum of £9000 in the calendar month of parade, from a vehicle that was purchased. This pretentiousness sum c auses the March pass completion balance to be a prohibit balance of £ -2,645 causing the cash flow to have a trust overdraft.\r\nNegative Closing balances\r\nThe closing balances were in good order and positive until April where the closing balance became -£1,654. The reason for this may be the decrease in sales by £2520 in March, despite on that point beingness an extra inflow from the bank and savings of £8000. The reason of there being a negative closing balance must be from the lump sum of £9000 outflow, which was due to a vehicle purchase. The negative closing balance continues into the month of May despite there being a increase of £6300 on sales, the negative closing balance remains due to the rise in purchases of £4500. The negative closing balance becomes constant throughout the wholly year and only gets higher despite the sales rising due to the expenses. The highest negative closing balance is in October of -£12730 despite there being high sales in September. The reason for this was again the increase in outflow of £5760.\r\n'