Describe The Purpose Of Accounting

accounting Assessment: Describe the purpose of accounting for an organization. accounting system is the systematic recording, reporting and analysis of pecuniary legal movement in a logical argument. Businesses record fiscal acts victimisation a double-entry system which atomic number 18 situated in spite of appearance the General record (book of accounts) they do this to make it easier to track what is going on within their demarcation. They potty do this by using cash transactions and/or credit transactions. The type and quantity of a transaction freighter change according to the size and nature of the extra business. Examples of put down transactions could be revenue income (sales), chief city income (loans, savings), crownwork expenditure (land and buildings) and revenue expenditure (rent, wages). Businesses must monitor and tranquilize their accounts to protect themselves from fraud, abuse and inaccurate data recordings. Businesses must excessively monitor and control the cash situation and trite situation, for example, if a business is unable to generate enough cash is it yielding to setup a loan or setup an overdraft and a business must also know when is the correct quantify to point stock-taking, how much they argon selling the products for and how much they are purchasing the products for and which lines should be dropped, if any.

There are various stock control systems that a business can use, one humans the Economic Order Quantity (EOQ), this is where the amount of stock order minimizes the cost of holding stock (rates, rent, insurance) and ordering stock (shipping, admin fees-paperwork, alienated discounts). Busine sses use the Operating Cycle, this is used s! o a business knows the average time it takes between purchasing to receiving cash from a sale, this is important as it gives the business an idea of what is to come in the future, if done correctly we will be able to toy that the more trading that takes place in the business the large the Operating Cycle will grow. Businesses must measure their financial performance,...If you want to get a full essay, order it on our website: OrderEssay.net

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