yFinancial Records
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4 Terms
What is the need for recording accounts/accounting?
Decision making: support strategic planning,budgeting and investment desicions.
Legal and regulatory compliance: protect businesses from penalties and legal disputes.
Financial reporting: allow stakeholders( investors,creditors,regulators) to access perfomance.
Audit trail: reduce fraud risk by ensuring traceability.
Business sustainanbility: help identify trends,strengths amd weaknesses.
Whats the role of accounting/recording accounts?
In every business, a number of transactions and events take place everyday.
Its to effectively measure the effects of those transactions and events,record the effects on the business and summarise those transactions and their consequences in a format that is useful to the users of financial statements.
It assists managers in understanding the assets and liabilities of the business and in monitoring income and expenditure.
Whats the difference between bookkeeping and accounting?
Bookkeeping: the recording of monetary transactions in a business.
while
Accounting: the collecting,recording,summarising and communicating financial information about an organisation to enable users of that info to make informed decisions and judgements.
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