This function is one of the most roles in a company. Bookkeeping Temecula CA every organization if the organization wants to reach their vision. This function is the stepping stone of Audit. The auditors inspect the entries made in order to come up with an opinion whether they are true and fair view of the company.
The functions involves very many steps which should be done by different people. Example the one initiating an order should not be the one doing the accounting entries and at the same time authorizing the transaction. This minimizes chances of fraud. Advantages of keeping books of accounts are
Ensures that fraud is identified and dealt with. An effective book keeping function will capture all the transaction and activities of the organization. This means that if a very awkward transaction is captured, or the books of accounts do not balance then there may be chances of fraud. This must be investigated further to unearth fraud and then disciplinary and corrective measures taken. This also makes people conscious if the activities in terms of finance.
An effective accounting system helps produce timely information for decision making. When book keeping is done well, on time, without mistakes, then managers can use this information to make strategic decisions. From past trends the managers can know whether to merge, downsize or even make decisions relating to acquisitions and other strategic alliances.
It helps the organization identify areas that need to improve in terms of cutting costs. Without the financial information, the organization would not know which item drains their finances.
Each country has compliance requirements for each company to file returns. The returns must be done based on the company's financial data entered or captured. Misstatement of this data can lead to compliance issues. Statutory audits for public limited companies are required to be audited and results published publicly. Effective book keeping helps achieve this obligation.
Budgeting also is done based on this function. Data from past activities can inform the financial planning for the future. It gives the company a perspective of the future and what to expect in terms of costs and income levels. Budgets can have a variance which can be explained by reference to the book keeping function.
This function can assist in correcting misstatements of figures. Reconciliation is an activity that helps look for these mistakes and also reasons for the mistakes. Proper book keeping can assist in correcting the mistakes from the source documents. Understatement and overstament of facts can lead to wrong decision making.
this function must be done by a qualified accountant because there are set standard of accounting that must be followed. The function is also guided by principles and assertions by the management.
The functions involves very many steps which should be done by different people. Example the one initiating an order should not be the one doing the accounting entries and at the same time authorizing the transaction. This minimizes chances of fraud. Advantages of keeping books of accounts are
Ensures that fraud is identified and dealt with. An effective book keeping function will capture all the transaction and activities of the organization. This means that if a very awkward transaction is captured, or the books of accounts do not balance then there may be chances of fraud. This must be investigated further to unearth fraud and then disciplinary and corrective measures taken. This also makes people conscious if the activities in terms of finance.
An effective accounting system helps produce timely information for decision making. When book keeping is done well, on time, without mistakes, then managers can use this information to make strategic decisions. From past trends the managers can know whether to merge, downsize or even make decisions relating to acquisitions and other strategic alliances.
It helps the organization identify areas that need to improve in terms of cutting costs. Without the financial information, the organization would not know which item drains their finances.
Each country has compliance requirements for each company to file returns. The returns must be done based on the company's financial data entered or captured. Misstatement of this data can lead to compliance issues. Statutory audits for public limited companies are required to be audited and results published publicly. Effective book keeping helps achieve this obligation.
Budgeting also is done based on this function. Data from past activities can inform the financial planning for the future. It gives the company a perspective of the future and what to expect in terms of costs and income levels. Budgets can have a variance which can be explained by reference to the book keeping function.
This function can assist in correcting misstatements of figures. Reconciliation is an activity that helps look for these mistakes and also reasons for the mistakes. Proper book keeping can assist in correcting the mistakes from the source documents. Understatement and overstament of facts can lead to wrong decision making.
this function must be done by a qualified accountant because there are set standard of accounting that must be followed. The function is also guided by principles and assertions by the management.
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