Analyzing financial data The are interpreted and analyzed for different purposes. Accounting has fivemajor functions; 1. Business owners often take this accounting information and develop future budgets to ensure they have a financial road map for their businesses. Communicating financial information Interested parties related to the business organization such as owners, employees, suppliers, investors, researchers, government, etc. For example, what products are to be sold at what prices? New rule and regulations are to be framed which affect a number of personnel and hence there is a possibility of resistance from some or other. So it has supplementary service function and has no final say in taking decisions and their implementations.
It is essentially concerned with not only ensuring that all business transactions of financial character are in fact recorded but also that they are recorded in an orderly manner. The data is mapped from one system to the other and data files are created that will work with the tools that are developed. This also plays a vital role and can be used as a tool for testing and training before rolling out the system. As a steward, he is supposed to be responsible for all economic activities of a business concern. In all simplicity, accounting information prepares us for the future.
The overriding purpose of financial accounting is to summarize financial activity in your business in the profit and loss statement, balance sheet and cash flow statement. System activity should be traceable as well. While the specific roles may vary from business to business, one thing is certain: if your accounting department does not perform these key functions effectively and efficiently, you could be headed for some serious and not so pleasant surprises. They might be skilled in hiring, selecting and documenting stuff, they should not be left alone do as they might miss out on some salient points. For the data to be useful, it must be complete, correct and relevant.
In addition, proper tax is assessed and tax payments are on time with state and federal government agencies. These are listed below; 5 Managerial Functions of Accounting for the smooth running of the business. The resulting financial can be used internally by management or externally by other interested parties including , and tax authorities. However we can consider the following definition: 1. Financial accounting must be feasible, so the cost of presenting this information should not exceed its benefit.
The functions of the accounting and finance department in any business can get a little confusing. As part of the budgeting process, management accountants prepare budgeted forecasted financial statements, often called proforma statements. If the transactions are journalized it becomes easier to transfer them in ledger accounts. Accounting information can also provide insight on growing or expanding current business operations. This process leads to the preparation of the following statements: 1 Trial Balance, 2 Income statement 3 Balance sheet. . This is where the proper documentation will be put to good use.
Knowing what you need means knowing what you need to input into the system. Feedback allows the managers to decide to let the operations and activity continue as they are, take remedial actions to put some actions back in harmony with the original plan and goals or do some rearranging and re-planning at midstream. Decisions and their implementations are done, by Mgt. Most documentation and procedures are online and it is helpful if organizations can add to the help instructions provided by the software vendor. This can be ascertained through ratio- analysis. Accounting Objectives The accounting department will have a set of objectives the employees work toward.
A budget is the financial planning showing how resources are to be acquired and used over a specified time interval. With an accounting information system, an clerk enters the , provided by a , into the system where it is then stored in the database. Historical or Stewardship Function: This part relates to the past transactions of the business firm, Accounting records, classifies, reports, analyses and interprets the transactions already effected. Calculating the mix of and unit volume at which a business exactly breaks even, which is useful for determining for products and services. Cost control A standard cost is estimated ahead of each cost. Meeting Legal Requirements: Accounting is to devise and develop such a system of keeping record and reporting the results as will always meet and legal requirements to enable the proprietor or the authority to file various statements like Income-Tax Returns, Sales-Tax Returns etc.
At the very basic, they will a. Billing and Credit control: accounting and finance department is saddled with the responsibility of ensuring that customers pay their correct bill on time. This role asks which opportunities and problems should I look into? The success of the organizations relies on the data being gathered. They typically do not take a strategic role. Excellent manufacturing at a low cost coupled with high customer service become a major block in business survival. These activities of Accounting are regarded as managerial functions.