Work effectively in accouning and finance Chapter 1,2,3

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Chapter 1 Summary

Finance - involves providing and managing funds and resources for an organisation such as a business, whereas accounting is a system for recording, analysing and reporting financial transactions and the financial position of a business.

Accounting - has a number of basic roles within a business, including the recording of financial information, financial reporting, forecasting, planning and managing.

Financial accounting - deals with the reporting of past financial transactions and their presentation in financial statements both for internal and external use.

Management accounting - provides past and projected financial data to managers so that forward planning can take place in the form of budgets, and decisions made about the use of resources.

Book-keepers and accounts assistants deal with the basic financial records of an organisation in a number of defined areas:

sales order processing

purchasing

cashiering

payroll

costing

inventory control

Accountants - are the qualified managers of the accounting function. They may be line managers (supervisors) or more senior managers and are likely to have a specific area of responsibility.

Auditors - are accountants whose role it is to check that accounting procedures have been followed correctly and that no shady practises are taking place.

Internal auditors - are employees of the organisation that look over its accounting systems.

External auditors - are independent outsiders who are contracted by the shareholders of larger companies to validate the accounts.

The accounting functions within an organisation provide support to other departments and information about the financial implications of their activities

A Reporting line - is the direct relationship between a manager and the people who work under him/her. It involves the passing of information, suggestions and complaints. Well-developed reporting lines are essential in any well-run organisation, especially the larger organisations.

Finance – providing

and managing funds and other resources for an organisation

Book-keeping –

recording financial transactions

Accounting – recording,

analysing and reporting financial information

Financial accounting –

analysis and reporting of past financial transactions in financial statements

Management accounting – providing

past and projected financial information for managers to help with planning, decision

making and control

Stakeholder

– a person or organisation that has an interest in the financial performance of

a business

Internal auditing – internal

checking of the financial records by an employee of the organisation

External auditing – external

checking of the financial records by independent accountants

Reporting line –

the line of communication between different levels within an organisation

Chapter 1 - Key terms

Efficiency – in

an organisation means achieving the right result with the minimum of wasted

time, effort or expense. To achieve this the accounting and finance function

must provide information, internally and to other departments. This information

should be complete, accurate and on time.

Solvency

– means paying debts when they become due. If there is a shortage of cash there

is a risk of insolvency. The accounting and finance function must ensure that

management are made fully aware at all times of the cash position of an

organisation: cash coming in should meet the requirement for cash going out.

Organisation should draw up formal policies and

procedures which are documents which regulate a wide variety of areas of

the business, for example accounting records and accounting procedures, health

and safety in the workplace, confidentiality and conduct.

The accounting and finance function will be subject

to external regulations, some of them set down in law, which must be

complied with. Failure to do so may result in fines and extra work by

accounting and finance staff.

Policies and procedures also affect working

practises in the accounting and finance function. These include internal

requirements such as the setting of deadlines, procedures for authorisation of

purchases, payments, cheques and details of who can sign different types of

authorisation.

Policies and procedures also affect the working

area in the accounting and finance function. Strict regulation of issues

such as health and safety, organisation of the workspace, secure storage of

documents and confidentiality of information must be complied with if the

organisation is to remain efficient.

Guidance policies and procedures may also be drawn

up by the organisation to ensure that the office becomes ‘green’ – in other

words environmentally friendly. This will cut down on wastage of resources such

as energy and paper and so make the organisation more efficient.

Chapter 2 Summary

Efficiency – achieving

the right result with the minimum of wasted time, effort or expense.

Solvency – being

able to repay your debts when they are due

Working capital –

the day-to-day funds that you have available to pay your debts when they are due.

Policies and procedures – regulations

set down by an organisation for the running of defined areas of activity, e.g.

payroll.

Reporting line – the

line of communication between different levels and departments within an

organisation

Health and safety –

the aspect of an organisation which

involve both employer and employee having regard for health and safe

working environment for all concerned.

Confidentiality –

the need for all employees not to reveal any information relating to customers

and other employees to people who are not authorised to have that information.

Data protection ­–

the legal requirement not to reveal without authorisation personal information

held on computer or on paper records by an organisation.

Chapter 2 Key terms

Calculations – addition,

subtraction, multiplication and division – carried out in the workplace should

always be checked for accuracy, firstly by using common sense estimation and

then ideally by another employee carrying out the same calculation.

Percentages – are

based on the concept of fractions and are commonly used in accounting and

finance, for example in the calculation of discounts, Value Added Tax,

comparison of performance data, and in budgeting for measuring the difference

between actual and benchmark (forecast) figures.

Averages are

used in accounting and finance, for example in calculating inventory (stock)

values in the AVCO (average cost) process.

The presentation of numerical data

in table format is an important skill for working in accounting and finance.

Tables are often incorporated in reports

for management, sometimes supported by graphs and charts which

illustrate results and trends very effectively.

Chapter 3 Summary

WEAF - Chapter 1

WEAF -Chapter 1

WEAF - Chapter 2

WEAF - Chapter 2

WEAF - Chapter 3