13. Accounting And Finance Functions

Question 1

What is accounting ?
What are 3 key functions?

Answer 1

Recording, reporting, analysis of fin. Transaction

Functions:
Management
Financial
Treasury

Question 2

What is financial accounting ?

Answer 2

Annual production of fin. statements according to standards

Question 3

What are books of prime entry ?

Answer 3

Purchase/sale day books (receipts in/invoices out), cash book (bank trns.), petty cash book, journal(non routine adjustments)

Question 4

What are 3 financial statements ?

Answer 4

P/L (income and costs)
SOFP (assets,liabilities, equity)
Statement of cash flow (cash in & out)

Question 5

Financial statements let various stakeholders _____

Answer 5

See How profitable business is
Plan for future
See if can repay loans
Obey laws

Question 6

Presenting wide view and covering different aspects of business performance is possibles through_____

Answer 6

Integrated reporting

Question 7

What are 6 types of capital ?

Answer 7

-financial (shares, banknotes)
-manufactured ( goods, assets)
-human (knowledge, skills)
-social ( communities, organisations)
-natural (resources,land)
-intellectual (company knowledge, training)

Question 8

International integrated reporting council has 7 guiding principles to consider when prepare report :

Answer 8

-strategic focus
-connectivity of info
-stakeholders relationships
-materiality
-conciseness
-reliability
-comparability

Question 9

What are content elements of iirc framework ?

Answer 9

Governance
Business model
Performance
Strategy
Risks and opportunities

Question 10

What is management acc ?

Answer 10

Measuring, analysing, interpreting & communicating info to management.

It uses fin acc

Question 11

What are key mngmnt reports ?

Answer 11

-cost schedule (cost to manufacture 1 unit)
-budget
-variance report ( compares budget to actual result)

Question 12

How standard cost card can help business ?

Answer 12

-pricing decision
-break even analysis (loss or profit making ?)
-key factor analysis (made in-house or outsource?)
-investment appraisal (should we buy machine?)

Question 13

Why budget is useful ?

Answer 13

Coordination
Responsibility
Motivation
Planning
Evaluation

Question 14

After establishing reason why variance occurred business may:

Answer 14

-prevent from occurring again
-repeat favourable variance
-go back to targets from budget

Question 15

Mangmnt vs Fin accounting what is the purpose of info ?

Answer 15

Mngmnt - to help plan, control and make decisions

Financial - to record financial performance

Question 16

What treasury management is ?

Answer 16

Corporate handling of all finance

Question 17

Main function of treasury

Answer 17

1 capital mngmt (monitor to never run out of money)

2 cash mngmt (budgets+overdrafts)

3 financing (monitor investments & loans)

4 foreign currency (monitor ex. Rates)

5 tax ( legally avoid)

Question 18

How business can raise finance ?

Answer 18

Debt - borrowing, adv: interest against tax, ownership of org. Stays the same, debt is cheaper and secured against assets

Equity - selling stake in the business
adv: dividend can be suspended if profits are low, no security required