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Describe the purpose of accounting for an organisation.

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´╗┐Unit 5 ? P1 Purpose of accountancy Accountancy involves the recording of financial transactions that take place in a business, planned or actual, and the use of these figures to produce financial information. The business I am going to write about is FF I will talk about the accountancy in FF. Record Transaction: It is important that businesses keep their records accurate and up to date for them to run smoothly. The business owner must record all the money coming into the business from sales and all of the forgetting to pay bills. They may even get into seriouse trouble with HM Revenue and customs whichisa British government department for the collection of all of all typesof taxes. If a business doesnot record its transactions correctly it cannot report it finacial performance accurately and thereforetaxpayment maybe wrong. ...read more.


If FF does not have accurate recordings of their transactions they may find themselves not chasing payments, forgetting to pay bills, or even more seriously, in trouble with HM Revenue and Customs. If FF does not record all their transactions correctly their financial performance won?t be recorded accurately and therefore tax payments may be wrong. Overall it is very important for FF to record all transactions because they need to know exactly how much money they make and spend, so they can get things like tax and profit right. FF needs to have the ability to control their accounts. If accurate records of transactions are maintained and activity closely monitored, then actions can be taken to control the balance between money flowing in and out the business, for example if expenses were creeping up but sales staying the same, then FF could look for ways to control or cut costs, like funding ...read more.


* Net Profit ? this is the smaller amount of profit made after all other expenses are deducted from the gross profit. * Value owed to the business ? this is the amount of money owed to the business from sales that has not yet been paid for. * Value owed by the business ? this is the amount of money the business owes to others for goods or services purchased but not yet paid for. . Future Fashion has managers who are responsible for the planning, monitoring and controlling of the resources for which they are responsible. The management of a FF store involves co-ordination or resources including staff, materials, stock and money. The manager must ensure there are sufficient funds to pay wages, order new stock, pay bills and meet other demands for cash outflows by balancing this with the money coming in from sales. ...read more.

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