Unit 3 - C1 - Ms Powell Flashcards
What is the Purpose of Accounting?
- Recording Transactions
- Management of Business
- Compliance
- Measuring Performance
- Control
- Finance Manager
What is meant by ‘Recording Transactions’?
To record all money entering and leaving the business. It also ensures payments are received and bills are paid.
What is meant by ‘Management of Business’?
This allows effective planning, monitoring budgets and cash flow and controlling finance.
What is meant by ‘Compliance’?
This complies with legal obligations in financial reporting and internal accounting helps to combat against fraud.
What is meant by ‘Measuring Performance’?
It allows the measurement of the growth of gross and net profits. The sales revenue and efficiency when it comes to collecting money owned, the expenditure and costs in addition.
What is meant by ‘Control’?
The control of tracking receivables and this shifting towards controlling the track of payables. This links into assisting the prevention of fraud and the access towards the key systems to be unlocked.
What is meant by ‘Finance Managers’
Role for year end close process and preparation of annual assets of tax files and first part of contact for auditors and tax auditors. This also comes in managing the budgets and preparation for foreign impact and tax auditors.
What is ‘Gross Profit’?
This is the amount of profit left after the cost of producing the good or service is deducted from the amount of sales revenue
What is ‘Net Profit’?
This is the smaller amount of profit made after all other expenses are deducted from the gross profit
What are the types of income?
- Capital Income
- Revenue Income
What is Capital Income?
Capital income is the money invested by the owners or other investors that is used to set up a business or buy additional equipment. It tends to be used to buy things that will stay in the business for a medium-to-long period of time. These are normally called ‘fixed assets’.
What is Revenue Income?
Revenue income is the money that comes into the business from performing its day-to-day function – selling goods or providing a service. The nature of the revenue income depends on the activities that the business does to bring in money.
