Lesson 10 Flashcards
Why is recording transactions important
Meeting legal requirements.
Aiding in the business running smoothly.
Accurately producing end of year accounts
What is the definition of transaction
A transaction is a completed agreement between a buyer and a seller to exchange goods, services, or financial assets in return for money
What are the 4 ways transactions can be used
Internal, External, Expenditure, Income
What is an internal transaction
Transaction which involves the exchange of assets and funds within a business
What is an external transaction
Transaction that occurs outside of the business
What is an expense transaction
This consists all of the costs that a business may have
What is an income transaction
This is essentially money that is created by the business through transactions
What is an example of internal transactions
Payment of employees is an example
What is an example of external transactions
Purchase of products, refunds back towards customers
What are examples of transactions as a whole
Sales invoices, Taxes, Payroll (Wages, Pensions), Bank accounts, Orders
What is compliance
This is basically the business adhering to the laws placed by the government
Why is compliance important
Protecting the business, suppliers and customers.
How can compliance be achieved
It requires organisation from HR functions. The laws are consistently reviewed to avoid problems
What are methods in which compliance can be achieved
Monitoring expense claims.
Checking for falsification within business documents.
Monitoring shrinkages or wastage levels of raw materials
What is an audit
Process which keeps checks and balances
