("Pass level assignment"), this assignment is the full assignment for this unit as in it’s the complete assignment (all P’s, M’s & D’s)and I have completed this unit only a few months back and it is the latest version of the assignment after all the latest syllabus changes. It's an assignm...
Business Accounting
(Describe the purpose of accounting for an organization further, explain the
difference between capital and revenue items of expenditure and income.
Provide appropriate examples from your own choice selected business and
information mentioned above.) - (P1, P2)
(Purpose of accounting as well as the advantages and disadvantages)
P1
Accounting in a business means that the business would have to ensure that
they are recording each and every financial transaction that that are
involved in. Businesses would usually put a lot of effort in recording their
figures in order to produce financial data in order to give the accountant in
the company some feedback about what do their expenses consist of
including their income and outcome, there are many advantages to
accounting as a whole as it helps the firm to be ready for any changes and
predict the future to keep away of trouble as it would help them plan ahead
to be able to operate smoothly. The income would tell the business how
much they are earing and what they receive in terms of cash and the
expenditure would tell the firm what they are spending their cash on. This
would assist the firm in helping them understanding where they are headed
financially to see if they are making enough profits to be able to pay for their
expenses and the firm could also check if they aren’t generating the right
amount of profit to pay for their expenses, will the firm go to over drawn on
their loans provided by the brank or will they try to decrease their expenses
in order to save money. When we talk about disadvantages related to
accounting there aren’t many as the advantages overshadow the
disadvantages but here are some that are worth mentioning: Accounting
information might be biased-The accountant might manipulate some data
and might develop a biased opinion while doing the accounting. Accounting
information is all based on estimates and predictions: There is no guarantee
that the predictions will be 100% true always .If the accountant who’s doing
the accounting makes a single small mistake, it can result in the entire
report being inaccurate and wrong: One small mistake in the calculation and
everything can go wrong and this would mislead the business and perhaps
even land them in issued as they would be making the wrong analysis and
predictions. Accounting is a time consuming task and takes a lot of effort
and needs a lot of concentration: The accountant must be focused for long
periods of time and this is quite a very challenging task to do.
Record Transactions
, The firm would need to ensure that they are keeping up-to-date figures to
that all of their records are accurate and free of errors. Businesses should
record all of the cash inflows and outflows. If the firm doesn’t do this, then
they might lack behind in chasing payments which they are needed, might
cause issues like forgetting to pay off a bill on time or purchase more than
what they obtain from their incomes. Tax payments will also be incorrect
and inaccurate as the firm doesn’t record all of their transactions accurately
and correctly.
1. Keep record of the Cash and credit payments that would come from
the consumers – to ensure consumers pay the business all the money
that they owe them in time.
2. Keep record of Cash and credit payments from supplier- the firm would
need to keep track and know how much cash they would have to pay
to their suppliers
3. Keep a record and track the Amount of cash in the bank- so that the
firms knows the amount of cash that they possess in the bank to avoid
getting over drawn.
4. Keep track of all Wage payments- So that the firm is able to know the
amount of money they are spending on their employees and would
also help them in decision making in the nearby future if they are in a
position and have the sufficient amount of cash to hire or employ a
new employee or in the unfortunate case that they would have to fire
some employees due to their expenses being too high.
Monitor activity
Records would need to be created on a regular basis because this would
enable the firm to understand how well or how bad they are performing on
how much are they obtaining via sales, what exactly they are paying for and
what payments are they receiving. With the firm monitoring all of this on a
regular basis, they would be able to know if the sales are decreasing and if
their expenses are increasing, then this would be an issue for them which
can cause them to be financially unstable. Monitoring each and every
business activity that happens means checking the balance sheets to check
if there is sufficient amount of funds to cop up with the daily expenses
Accounting is also important for a firm as it would help in the
management of the business and it would also be instrumental and
vital for a business in measuring their financial performance over a
period of time. Without accounting, a firm wouldn’t even be able to
produce cash-flow forecasts and budgeting analysis.
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