Describe The Purpose Of Accounting

accounting Assessment: Describe the purpose of accounting for an organization. account is the systematic recording, reporting and analysis of pecuniary legal transactions in a logical argument. Businesses record pecuniary acts utilize a double-entry system which atomic number 18 put 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 tune. They bed do this by using cash transactions and/or credit transactions. The type and quantity of a transaction tin can change according to the size and nature of the extra business. Examples of record transactions could be revenue income (sales), chief city income (loans, savings), uppercase expenditure (land and buildings) and revenue expenditure (rent, wages). Businesses must monitor and guarantee their accounts to protect themselves from fraud, abuse and inaccurate data recordings. Businesses must likewise monitor and control the cash situ ation and trite situation, for example, if a business is unable to generate enough cash is it manipulable to setup a loan or setup an overdraft and a business must also know when is the correct time to revision form, how much they atomic number 18 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 cosmea 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, alter discounts). Businesses use the Operating Cycle, t his is used so 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 accept 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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