Helps business to be statutory compliant Proper business accounting ensures well-timed saving our liabilities which must be paid within the approved time line. This consists of Provident finance, pension finance, VAT, sales taxes, Tax. Timely repayment of liabilities helps businesses to be statutory compliant. Creating budget and future projections Accounting data helps a venture to get ready budget and forecast for the future period. Business styles are projected predicated on past data made by the accounting system.
This type of reporting can help commit fraud. This is the reason why I feel like companies should be made to accurately report assets under the current market price. On the other hand, “Fair value accounting is a type of financial reporting method, known as the “mark-to-market” accounting practice, and is familiar with generally accepted accounting principles (GAAP)” (Way, 2018). With using this method, companies can quantify and report the value of assets and liabilities of their actual fair market values and/or any variations in the reported asset or liability values over the course of it life as a gains or losses (Way, 2018). This will accurately increase or decrease net income and the reported equity on the balance sheets (Way, 2018).
In research, there are three main form of management accounting to control the cost in an organization effectively and efficiently. They are financial accounting, cost accounting and cost management. Financial accounting is used authoritatively to prepare to account information for parties who are outside the organization, such as stockholders, suppliers and banks. Its’ purpose is to provide enough information to make decisions on business cost control and to analyze the business budgets (Baldvinsdottir et al.2009). This role will consummately help the company to forecast their capital in the future.
Two methods of verifying transactions and events are direct and indirect. Observing the value of cash is called direct method; checking the stock’s entries and recalculating the closing balance using the same methods such as FIFO is called indirect method (Man and GĂDĂU 2012). Those methods have to be done to check the accuracy of the economic phenomenon whether the transactions and events recorded have been recorded and pertain to the company. Some information may not be able to be verified, but the more verifiable the information presented in financial statements, the more it convinces shareholders that the information faithfully represents the economic phenomenon. Adversely, it is costly to verify information and to be worth providing; the benefits of information must exceed its cost of producing it (FASB 2008).
“P1 – describe the purpose of accounting for an organisation.” In this task I am going to describe the purpose of accounting, why is it compulsory for businesses and organisations to keep a record of all accounts such as “profit/loss,” the amount of cash spent on “stock”, “bills”, “wages” and numerous other things related to the business that money is spent on . Accounting also covers the cash situation, sales levels, stock levels and credit given to customers as well as their bad debts. “Record Transactions” For a business or organisation, keeping the business records accurate and updated is essential, necessary for the business to run smooth and make as much profit as possible. The owner or one of the staff members who has worked for the organisation for a long period of time must ensure all of the money coming in such as sales and money going out of the business such as expenses are recorded. If the business does not record anything, it may struggle and cause pandemonium and maybe find itself following payments or even forget to pay bills or find itself in
Budgetary control is not just a financial plan that sets forth cost and revenue goals but a device for coordination, control, communication, motivation and measuring of performance. In a business environment it is most valuable as a tool to control the flow of cash because a good system would monitor cash inflow and flag up any projected shortfalls so that corrective action could be taken, for example if some consumers were not paying promptly or there was a sudden and unusual need for expenditure. Additionally, such a system in place would also ensure that money was always available for essential business purposes like for example buying raw materials. Managers will regularly create budgets for the whole organisation and its components parts. The budget is a plan set out in figures, which enables managers to exercise control, coordination and communication.
There are different accounting concepts with different uses which are apply in the books of accounting. It is important to imply these concepts in the books to ensure the accuracy of the accounts and make it much easier for the users of accountings to compare the financial statements of the companies. This is very helpful for them to make important decision and take appropriate actions to continue to generate income from the business. However, accounting concepts also have its limitations as it cannot definitely helps to ensure the accuracy of the reports. So, when we are recording the business transactions, we should also be cautious to avoid making errors in the
The motivation behind both of these bookkeeping routines is to furnish the clients with enough data to settle on sound investment choices in regards to the organization. Consequently, both of these bookkeeping techniques will be exceptionally weighty in figuring out the budgetary status of the organization. First off, I will start by explaining what is financial accounting, and managerial accounting. Financial Accounting is concerned with reporting financial information to external parties, such as stakeholders, creditors, and regulators. Managerial accounting is concerned with providing information to managers for use within the organization (Garrison, Noreen, Brewer, 2012).
This objective substantiates the presentation and disclosure assertion. The following sections outline a list of possible audit procedures that aid in achieving the objectives mentioned. The auditors should begin verifying cash balances by performing a few initial procedures on cash balances and records. They should trace the current period's opening balances... ... middle of paper ... ...ndependent source. In doing this, they can secure a high degree of proficient, corroborating information about the validity of the year-end bank reconciliation.
This means not only including the taxes and other liabilities in considering the net profit of the company but also being prepared in providing budgets for the employment of legal and financial experts for each region needed. Forecasting is also a vital role of the CFO. If there is an effective way of forecasting over a period of time, it would give better data analysis and comparisons between the annual reports and minimise the differences in the projections for each time period. Budgeting is subjected on in-country products that will reduce too much detailed data and repetitive budget revisions.