importance of establishing bank accounts, financial control systems and record keeping strategies Flashcards

1
Q

factors to consider when choosing the right bank account

A
  • bank fees
  • interest rates
  • overdraft facility
  • convenience & support
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2
Q

overdraft facility

A

enables business to withdraw more money than they have available in their account

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3
Q

what are financial control systems?

A

the systems and processes used to help the business monitor, manage, report its financial performance

(helps prevent fraud, theft, lack of cash flow, incorrect pricing)

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4
Q

list of financial control systems:

A
  • budgeting
  • cash flow
  • accounts receivable
  • inventory control
  • auditing
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5
Q

budgeting

A

creating a plan for how a business will spend its money over a certain period of time

system for estimating business financial performance in the future

understanding future revenue & expenses

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6
Q

cash flow

A

the money being transferred into & out of the business

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7
Q

accounts receivable

A

the funds that the customers owe business for products/services that have been invoiced/charged

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8
Q

inventory control

A

ensuring the right amount of supply is available in an organisation

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9
Q

auditing

A

external professionals testing/evaluating a business’s accounting processes & internal control

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10
Q

what are record keeping strategies?

A

strategies to help the business monitor, manage, report its financial performance

businesses need to develop a system of efficiently categorising & sorting its records

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11
Q

businesses are required to keep records of their financial transactions for AT LEAST 5 YEARS for tax purposes.

financial transactions include (2):

A
  • tax invoices
  • bank statements
  • receipts
  • employee contracts
  • electronic info w
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12
Q

list of record keeping strategies:

A
  • source documents
  • cash book
  • income statement
  • balance sheet
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13
Q

source documents

A

written documents that provide evidence of a financial transaction
(e.g., receipt)

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14
Q

cash book

A

summary of business’s cash receipts/payments
compiled from source documents!!

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15
Q

income statement

A

help business calculate amount of profit made over a period of time
(profit & loss statement)
= revenue - expenses

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16
Q

balance sheet

A

shows business’s assets & liabilities (the financial position of a business) at a point in time