Business Organisation and Accounting

Question 1

Office definition

Answer 1

A centre for information and administration

Question 2

Common areas/functions in an office

Answer 2

○ Purchasing
○ HR
○ General administration
○ Finance
○ Selling & marketing

Question 3

Purchasing department function

Answer 3

○ Ensure that business purchases from suppliers providing the best overall deal: price, service, quality

○ Ensure only necessary purchases are made

Question 4

Human resource department function

Answer 4

○ Hiring staff
○ Firing staff
○ Training staff
○ General welfare of employees

Question 5

General administration department function

Answer 5

○ Secretarial support
○ Dealing with queries
○ Arranging matters (etc: rent of properties)

Question 6

Finance department function

Answer 6

○ Sending invoices to customers
○ Receiving invoices from supplier
○ Payment of supplier
○ Receiving money from customers

Question 7

Selling & marketing department function

Answer 7

○ Taking sales orders
○ Advertising

Question 8

Organisation chart

Answer 8

A traditional way of depicting the various roles and relationships of the formal structure

Question 9

What is organisation chart showing ?

Answer 9

A simplified and standardised way of showing :-

○ Units/Department divided - how they relate
○ Formal communication & reporting channels
○ Structure of authority, responsibility & delegation
○ If there’s any problem - excessively long lines of communication, lack of coordination between units, unclear areas of authority

Question 10

Functional departmentation

Answer 10

Setting up department for people who do similar jobs

Question 11

Geographical departmentation

Answer 11

Organisation is structured according to geographic area

Question 12

Product/Brand departmentation

Answer 12

Group based on products/ product lines

Question 13

Centralised administration

Answer 13

Many administrative tasks are being carried out at a single central location - (head office)

Question 14

Decentralised administration

Answer 14

Administrative tasks are carried out at various separate locations

Question 15

Advantages of centralised

Answer 15

○ Consistency
○ Decision are made at one point - easier to co-ordinate
○ Better control over operations - easier to enforce standards
○ Senior managers can take a wider view of problems and consequences
○ Decisions are made that benefits organisations as a whole - not just local office
○ Quality of decisions is higher (theorotically) - senior managers have skills & experience
○ Economies of scale available - reducing duplication, increasing efficiency, and lowering costs
○ Specialised staff can be hired
○ Duplication of services can be avoided

Question 16

Advantages of decentralised

Answer 16

○ Local offices do not have to wait for tasks to be carried out centrally
○ No reliance on head office - self-sufficient
○ Problem at head office didn’t impact local office
○ Procedures tailored to suit local offices
○ People with knowledge of local situations made decisions
○ Opportunities for junior managers to take on responsibility
○ Greater continuity between functional & general management - junior can upgrade to senior more smoothly
○ Top managers are not overly burdened with local concerns
○ Improved controls, performance measurement & accountability

Question 17

Business policy

Answer 17

• Ensure all staff follow procedures & best practices
• Employees are expected to read areas relevant to their functions
• Policy should be always readily available for easy reference

make sure policy doesn’t create inflexibility

Question 18

Main types of transactions of a business

Answer 18

○ Sales
○ Purchases
○ Paying expenses
○ Paying employees
○ Purchasing NCA

Question 19

Making sales

Answer 19

Sales in retail - Made on the shop floor/online

Sale in manufacturing organisation - Involve Sales & marketing function

Question 20

How is sale made to existing customer

Answer 20

1) Doesn’t exceed credit balance !!
2) Sales person takes order
3) Pass order details to :
i) store department - despatch
ii) accounts department - invoicing

Question 21

How is sale made to a new customer

Answer 21

More senior-level management involved

1) Credit status must be determined
2) Decides to proceed or not

Question 22

Who initiates it?

Making purchases

Answer 22

Started by purchasing/store department

Question 23

Which department paying employees

Answer 23

Large organisation - Payroll department
Small organisation - Accounting department

Question 24

Payroll function job

Answer 24

• Determine gross pay
• Calculate statutory and other deduction
• Organise methods of payment to employees

Question 25

Control over 4 transactions ?

Answer 25

1) Sales on credit to a new customer
2) Purchases of goods/NCA
3) Payment of expenses
4) Payment of wages

Question 26

Computerised accounting system

Answer 26

Allow much quicker & more accurate entries to accounting system

Question 27

Cycle of processing data

Answer 27

Inputting data –> Processing –> Output

Question 28

Data file

Answer 28

A collection of records with similar characteristics

○ receivable ledger
○ payable ledger

Question 29

Record

Answer 29

Data relating to one logically definable unit of business information

○ Collection of similar records –> File

Question 30

Field

Answer 30

An item of data relating to a record

○ Collection of fields –> Records

Question 31

Types of data processing operations involving files

Answer 31

1) File updating
2) File processing
3) File enquiry

Question 32

Batch processing

Answer 32

Transactions being grouped & stored before being processed at regular intervals

• Suitable for internal, regular task (etc : payroll)

Question 33

Disadvantage of batch processing

Answer 33

• Lack of up-to-date information
• Not suitable for systems involving customer contact

Question 34

Real-time, online processing

Answer 34

Transactions being input and processed immediately

Question 35

What does it means if a terminal is said to be online ?

Answer 35

It communicates with the central processor

Question 36

Examples of real-time, online processing uses

Answer 36

○ Sales in supermarket - inventory record are updated immediately when item barcode is scanned @ point of sale terminal
○ Banking & credit card systems - immediate access to customer balances, credit position
○ Travel agents
○ Airlines
○ Ticket

Question 37

Reports produced by computerised accounting system

Answer 37

○ Inventory record
○ Aged receivable listings
○ Trial balances/SOFP/SOPL
○ Inventory valuations
○ Payroll analysis

Question 38

Main advantage of computerised accounting system

Answer 38

○ Quicker than manual system
○ Generally more accurate
○ Able to provide variety of reports & analyses

Question 39

Integrated computerised ledger system

Answer 39

One transaction is input on the computerised –> All relevant records & accounts are updated too

———————————————–Example : Input purchase invoice

1) Record purchase in GL
2) Record invoice in individual supplier’s account in Payable Ledger
3) Increase inventory balance in inventory record