Accounting Roles and Transactions Flashcards
who is a bookkeeper?
someone who records all the financial transactions of a business
where is a transaction stored?
each transaction is stored in a file CALLED a book
what does the bookkeeper do?
they will record the day-to-day transaction (sales AND purchases)
where are transactions (sales and purchases) stored?
the daybook
what is recorded in the cash book
cash movement in and out of a business recorded by the bookkeeper (cash movement/flow)
what is a book of prime entry + examples
books that record the transactions as they happen meaning this is where they are first recorded, these books are sales daybook or purchases daybook or cash book
what can the bookkeeper use to record transactions if not present at the time?
prime documents like receipts or invoices
who is an accountant?
the person who deals with the presentation and interpretation of figures
what does financial information include? (3) (SIS)
- statement of profit or loss
- income statement
- statement of revenue and expense
what is SPL and what does it stand for?
a statement of profit or loss shows the financial performance of a business
what is SFP and what does it show?
also shows the financial position of a business similar to SPL but the SFP shows a businesses assets, liabilities and net worth at a specific point of time.
what responsibilities does an accountant have? (CAMG)
- calculate the amount of tax owed to HMRC
- advising and calculating taxation for individuals or companies subject to tax
- make decisions based on the history of the business
- give financial advice
what is an accounting technician?
someone who has duties of both an accountant and bookkeeper,
what does an accounting technician do? (list five) (WALMD)
- write reports
- assist with prep of financial statements
- look after and control budgets
- monitor expenses
- deal with bookkeeping
what are the six types of businesses (min 3)
- sole trader
- partnership
- limited company
- limited liability partnerships
- not-for-profit businesses
- government businesses
define a sole trader business
run and owned by one individual
responsible for most of the running of the business
unlimited liability (risk to personal belongings)
retains 100% of the profit
define a partnership business
a group of individuals (1-20) make an agreement as to the proportions received by each member
these individuals may consist of people with money and expertise
unlimited liability
define a limited company
company has a separate identity from the owner = limited liability
‘ltd’ ‘plc’
owners are shareholders as they have invested in the business, minimum shares are one, they will only lose what they have invested
both types must be registered with the companies house (government controlled to make information about a business accessible to the public)
define an ‘ltd’
a ‘ltd’ may have one or many shareholders but shares cannot be offered to the public
list 3 things about a ‘plc’
a ‘plc’ must have two or more shareholders and can be offered to the public
must have issued shared worth at least £50,000
public shareholders have the right to expect a dividend however the company does not have to issue these
define a limited liability partnership
an ‘llp’ has a limited liability
do not issue shares
only lose what they invest
no dividends
define a not-for-profit business
charities or clubs established to address a social need rather than providing a service or making profit
if they qualify they receive tax relief
Charities must register with the Charity Commission if its income is £5,000 per year or more. When charitable status is achieved, the charity will be exempt from most taxes on profits and they will be able to claim back tax
define government business types, give examples
private and public sector businesses are owned and controlled by the government
they are central/ local government, health trusts, educational bodies and some corporates
what effects does organisational structure have on a business
larger companies may have different departments for sales, wages and management, limited companies need for detailed accounting records thus meaning they need a structure to have a clear process throughout the business
what are the three different types of business structures
hierarchical, tall and flat
summarise a hierarchical structure
finance director
senior finance acct senior management acct
payables ledger sv budget supervisor
receivables ledger sv capital investment sv
cashier
accounting technician accounting technician
accounting technician accounting technician
accounting technician
summarise a tall structure
finance director
senior finance acct senior management acct
cashier cost manager
finance office supervisor cost office supervisor
summarise a flat structure
finance director
|
office manager
| | | |
accounting accounting accounting accounting
technician technician technician technician
what transactions are carried out by all businesses regardless of their type or structure
All businesses sell goods or services
All businesses purchase goods and services and pay expenses
All businesses pay money into a bank account and make payments from it
All businesses pay wages or a remuneration of some kind.
what must be done with transaction
they must all be recorded so they can be used to produce a financial statement for a business
what are the acts that require a company to retain their accounting documents? (6) (CFILTD)
Companies Act 2006 states that private limited companies must keep similar records for three years.
Finance Act 1997 amended the requirement in the Value Added Tax Act 1994 so that accounting records for VAT should be kept for six years.
Income Tax (Pay As You Earn) Regulations 2003 states that employers must keep payroll records for not less than three years.
Limitations Act 1980 requires that any action for a contract or fraud expires after six years. However, documents may be required for longer if such action is taken within the six years.
Taxes Management Act 1970 says that an assessment for tax can be made up to six years after the end of the period to which it relates, but personal tax documents need only be kept for 1 year and 10 months.
Data Protection Act states that personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes.
