Unit 5 – business accounting
Jane walker
Jessica Ordish
Assignment 1 – C & V fashions. 1) What is the purpose of accounting and will the purpose vary in different types of organisation?
The purpose of accounting can vary in different types of organisations such as recording transactions, monitoring activity, control and management of a business.
Recording transactions involves the recording of finical transactions, weather the recording is a prediction or actual records this will help the owner or manager of the organisation see what money is coming in and out of the business and will help them plan for future, it also helps allows the business owner to see if the business is a success or failing if failing the owner can make changes to make the business more success and earn more money. Recording transactions also helps the business if they are paying bills or owed money they can recognise bills or payments to them haven’t been paid and they can chase them up. If payments are not paid the business can get into trouble with the HMRC (Human Management Revenue and Customs)
Monitoring accounting within an organisation will be updated on a regular basis, doing this will provide a clear indication of how the business is doing on terms of sales, receiving payments and paying out payments. Monitoring activity should involve keeping an eye on the bank balance to ensure there are sufficient funds to meet day to day expenses. The owner of the organisations would notice if the money going out of the bank was more than the sales coming through to the business this would make the owner make changes to his business.
To be able to have control would happen through recording transactions and monitoring accounting if they are done properly and the organisation continue to have the correct transactions then the owner can take control in what money is going in and out of