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

Question 1

factors to consider when choosing the right bank account

Answer 1

• bank fees
• interest rates
• overdraft facility
• convenience & support

Question 2

overdraft facility

Answer 2

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

Question 3

what are financial control systems?

Answer 3

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)

Question 4

list of financial control systems:

Answer 4

• budgeting
• cash flow
• accounts receivable
• inventory control
• auditing

Question 5

budgeting

Answer 5

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

Question 6

cash flow

Answer 6

the money being transferred into & out of the business

Question 7

accounts receivable

Answer 7

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

Question 8

inventory control

Answer 8

ensuring the right amount of supply is available in an organisation

Question 9

auditing

Answer 9

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

Question 10

what are record keeping strategies?

Answer 10

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

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

Question 11

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

financial transactions include (2):

Answer 11

• tax invoices
• bank statements
• receipts
• employee contracts
• electronic info w

Question 12

list of record keeping strategies:

Answer 12

• source documents
• cash book
• income statement
• balance sheet

Question 13

source documents

Answer 13

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

Question 14

cash book

Answer 14

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

Question 15

income statement

Answer 15

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

Question 16

balance sheet

Answer 16

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