P1: Describe the main reason of accounting within an organization

The purpose of accounting in Sainsbury’s it to record financial transactions, actual or planned. By using the figures given you can produce financial information. Here are some reasons why accounting in a business is important.

Recording transactions is important for Sainsbury’s because by keeping up to date records this will allow them to have a smooth running business.
Monitoring activity is important for Sainsbury’s because there records will be updated on a daily basis and by using monitor activity it will provide good information on how Sainsbury’s is doing in paying expenses, sales and receiving payment.

Another reason why accounting is important for Sainsbury’s because it provides managers important information for decision making. Also it is important for accounting in Sainsbury’s because Sainsbury’s need to provide up to date information to the stakeholders about financial information.

P2: Difference between Revenue Income, Revenue Expenditure, Capital Income and Capital
Expenditure.

Capital income:

Capital income is when money is invested by other investors or by the owner to buy equipment and start up a business. The equipment brought will stay in a business long and medium periods of time for example equipment, premises and vehicles and they are called fixed assets. When you buy opining stock the money will come out of the capital income and after a month or so your stock will be paid by revenue income.

Capital expenditure:

Capital expenditure is the amount of money spent to upgrade or acquire assets for example vehicles, building, equipment and machinery. So by acquiring these assets you can increase the company’s efficiency or capacity for more than one accounting period.

Revenue income:

Revenue income is when the money comes into a business from day to