Intro To The Role Of The Accountant In Business Flashcards
What is the main responsibility of an accountant?
To provide reliable and relevant info for various stakeholders of a business
What does the role of an accountant include?
Preparing financial statements on behalf of a business
Checking whether the financial statement is prepared by business provide a true and fair view of its financial performance (auditing)
Producing budgets for a business
Analysing financial information to provide advice about where financial performance could be improved
What do management accountants focus on?
Planning, control and decision-making
Which type of stakeholders do management accountants provide information for?
Internal- owners and senior employees
Describe the planning, control and decision-making responsibilities of management accountants
Planning incl the prep of budgets
Control includes standard costing and calculating variances between standard costs and actual costs
Decision-making may be short-term (using marginal costing) or long-term (using capital investment appraisal)
What do financial accountants focus on?
Using historical info to prepare financial statements
Give examples of financial statements that financial accountants prepare
Income statement
statement of financial position
statement of cash flows
annual report
Which type of stakeholders do financial accountants provide information for?
External - mainly shareholders but also for HMRC, banks and potential investors
What is the main responsibility of bookkeepers?
Recording day-to-day transactions in the books of primary and in the ledgers
What does the role of a bookkeeper involve?
Maintaining accounting records
Entering transactions in the book of prime entry and the ledgers
Checking the accuracy of accounting records
They also assist in the prep of financial statements by preparing the trial balance
Bookkeepers may also be described as ledger clerks although the rules are not identical. Describe the difference.
LC only deal with one part of the accounting system in a relatively large business (e.g accounts receivable or accounts payable).
B tend to be responsible for recording all the financial transactions in the books of prime and the ledgers
Describe the responsibilities of an accountant when preparing an income statement and statement of financial position
Ensuring:
Accounting concepts have been applied
The financial statements show a true and fair view of the business
Describe the difference between management and financial accounting
Management accounting focuses on the planning, control and decision-making. It is prepared for internal use, to provide information for internal rather than external stakeholders e.g. employees and senior employees.
Financial accounting uses historical information produced by the business to prepare financial statements. These statements will include income statements, statements of financial position statements of cash flows and the annual report. The financial statements are prepared for external stakeholders; mainly the shareholders, but also for HMRC, banks and potential investors.
