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What are the Advantages and limitation of financial accounting?
Accounting has many advantages: Provides financial information about the business Provides assistance to management Helps in comparison of financial results comparison of its own results of different years comparison of financial results with other firms in the industry Helps in decision making Accounting information can be used as an evidence in legal matters Helps in valuation of the business Following are the limitations: Financial accounting permits alternative treatmentsAccounting is based on concepts and it follows " generally accepted principles" but there exist more than one principle for the treatment of any one item. This permits alternative treatments with in the framework of generally accepted principles. For example, the closing stock of a business may be valued by anyone of the following methods: FIFO (First-in- First-out), LIFO (Last-in-First-out), Average Price, Standard Price etc., but the results are not comparable. Financial accounting does not provide timely information It is not a limitation when high powered software application like HiTech Financial Accenting are used to keep online and concurrent accounts where the balance sheet is made available almost instantaneously. However, manual accounting does have this shortcoming. Financial accounting is designed to supply information in the form of statements (Balance Sheet and Profit and Loss Account) for a period normally one year. So the information is, at best, of historical interest and only 'post-mortem' analysis of the past can be conducted. The business requires timely information at frequent intervals to enable the management to plan and take corrective action. For example, if a business has budgeted that during the current year sales should be $ 12,00,000 then it requires information whether the sales in the first month of the year amounted to $ 10,00,000 or less or more? Traditionally, financial accounting is not supposed to supply information at shorter interval less than one year. With the advent of computerized accounting now a software like HiTech Financial Accounting displays monthly profit and loss account and balance sheet to overcome this limitation. Financial accounting is influenced by personal judgments'Convention of objectivity' is respected in accounting but to record certain events estimates have to be made which requires personal judgment. It is very difficult to expect accuracy in future estimates and objectivity suffers. For example, in order to determine the amount of depreciation to be charged every year for the use of fixed asset it is required estimation and the income disclosed by accounting is not authoritative but 'approximation'. Financial accounting ignores important non-monetary information Financial accounting does not consider those transactions of non- monetary in nature. For example, extent of competition faced by the business, technical innovations possessed by the business, loyalty and efficiency of the employees; changes in the value of money etc. are the important matters in which management of the business is highly interested but accounting is not tailored to take note of such matters. Thus any user of financial information is, naturally, deprived of vital information which is of non-monetary character. In modern times a good accounting software with MIS and CRM can be most useful to overcome this limitation partially. Financial Accounting does not provide detailed analysis The information supplied by the financial accounting is in reality aggregates of the financial transactions during the course of the year. Of course, it enables to study the overall results of the business the information is required regarding the cost, revenue and profit of each product but financial accounting does not provide such detailed information product- wise. For example, if business has earned a total profit of say, $ 5,00,000 during the accounting year and it sells three products namely petrol. diesel and mobile oil and wants to know profit earned by each product Financial accounting is not likely to help him unless he uses a computerized accounting system capable of handling such complex queries. Many reports in a computer accounting software like HiTech Financial Accounting which are explained with graphs and customized reports as per need of the business overcome this limitation. Financial Accounting does not disclose the present value of the business In financial accounting the position of the business as on a particular date is shown by a statement known as 'Balance Sheet'. In Balance Sheet the assets are shown on the basis of "Continuing Entity Concept. Thus it is presumed that business has relatively longer life and will continue to exist indefinitely, hence the asset values are 'going concern values.' The 'realized value' of each asset if sold to-day can't be known by studying the balance sheet.
How does an accountant help in planning and controlling a large commercial organization?
The functions of accounting can be enumerated as follows : (i) Maintenance of business records. All financial transactions are recorded in a systematic manner in books of accounts so that there is no need to rely on memory. It is not possible for any human being to remember all what happened in daily operations of a business. (ii) Preparation of financial statements. Systematic records enable the accountant to prepare the financial statements-trading and profit and loss account to calculate profit or loss during a particular accounting period and balance sheet to state the financial position of the business on a particular date. Profit is a measure of the successful running of thel business. (iii) Comparison of results. Systematic maintenance of business records enables the accountant to compare profit of one year with those of earlier years to know the significant facts about the changes. This helps the business to plan its future affairs accordingly. (iv) Decision-making. For day-to-day solving of a number of problems like what should be the selling price of goods produced? Whether a part should be made in the factory or purchased from outside? etc., the accountant helps the management by providing the relevant information. (v) Good evidence in courts. Records of business transactions are treated as satisfactory evidence in courts of law. (vi) Planning and control operations. Planning operations like sales, production, cash requirements for next accounting periods are achieved with the help of accounting information and estimates based on that information. Management is also interested in observing that the operations in the business are going on according to plan and all the departments are spending within their prescribed limits. (vii) Provides information to interested groups. Various interested parties ar groups like owners, creditors, management, employees, government, consumers, creditors are interested in accounting information related to various aspects, viz., sales, production, profits, etc. Accounting provides suitable information to such interested parties. (viii) Taxation problems. In settlement of taxation matters, systematic maintenance of records is a big help. (ix) Valuation of business. Accounting records kept in a proper way enable a business unit to determine the purchase or sale price in a simple manner. (x) An insolvent person is able to explain the past transactions without difficulty if proper accounting records are maintained.
How does business inventory software benefit the small business?
Businesses depend on the smooth flow of all of it's processes thus inventory software further enables this flow to occur efficiently. Knowing where all your stock is located and indeed the levels of such stock enables the efficient distribution a business relies on.
Learning QuickBooks: The Fast Track?
Mastery of the advanced features inside of QuickBooks will provide college students and working professionals with a competitive edge in today's challenging job market. Enroll today in an online training program, and learn how to properly set up a chart of accounts or prepare comparative financial statements. Video training also enables students to gain experience by using advanced accounting concepts. Tutorial training is particularly useful as a method of practicing general ledger entries and other critical business transactions.
What is transparent financial reporting?
Transparent financial reporting is the practice of openly and accurately disclosing an organization's financial information to all stakeholders, including shareholders, investors, and the public. It involves providing a comprehensive overview of the company's financial performance, including revenues, expenses, assets, liabilities, and cash flow. One of the key aspects of transparent financial reporting is ensuring that the information is presented in a clear and understandable manner. This involves using standard accounting principles and providing detailed explanations of financial terms and figures. The aim is to enable stakeholders to make informed decisions and assess the company's financial health. Transparent financial reporting also includes the disclosure of any potential risks or uncertainties that could impact the organization's financial position. This helps stakeholders to understand the potential challenges that the company may face and make appropriate investment decisions. By practicing transparent financial reporting, companies can build trust and credibility among their stakeholders. Investors and shareholders are more likely to invest in an organization that provides transparent financial information, as it demonstrates accountability and a commitment to good governance. Transparent financial reporting is about being open, honest, and accountable in disclosing an organization's financial information. It promotes trust, enables informed decision-making, and helps build long-term relationships with stakeholders.
How does ssl keep information secure while internet shopping?
SSL/TLS is a communications protocol (a strict set of rules) that enables encryption (an ordered method to scramble data involving the password so that no third party can understand it) to protect personal information such as identity information and financial information while transactions are being conducted.
Is information technology as vital to modern global business as money Why or why not?
Yes and no. Information technology can be and is very vital to global business, but money is the main thing. In this day and age, everything has a price and money will ultimately be the more vital approach.
Which task pane enables you to search online resources such as reference books and business and financial sites?
research task pane
Is Business Intelligence BI an enterprise-wide information hub that enables analysis of data from SAP and other business application?
True
What button enables users to perform transactions such as print search for data and move within a transaction?
The menu button enables users to perform transactions such as print search for data and move within a transaction.
Aadhar AEPS is a bank-led model that enables compliant online financial transactions at the Point of Sale (POS/Micro ATMs) through Business Correspondent (BC)/Mitra Bank of any bank using Aadhaar authentication?
AEPS Services: (AEPS) AADHAAR ENABLED PAYMENT SYSTEM (POS/Micro ATMs)
What accounting concepts are regarded as fundamental and provide reasons why they are called fundamental?
# Principle of separate entity # Going concern # conservatism # matching of revenue & cost are considered fundamental accounting concepts as it enables to record transactions executed in business properly & figure out true profit earned as a result of undertaking the business. # Principle of separate entity # Going concern # conservatism # matching of revenue & cost are considered fundamental accounting concepts as it enables to record transactions executed in business properly & figure out true profit earned as a result of undertaking the business.
What sort of information could be held on a smart card?
- Used to store data on debit,credit, loyalty,phone and other cards. - Used in financial transactions and saves the user from carrying cash.
What is the role of a small business ERP?
With financials, sales, CRM, analytics, inventory management, reporting and much more in one, easy to use solution you have everything you need to manage your unique business. You can start small, with just one licence and add users as you need it.
What are the accounting software made by Netsuite?
NetSuite OneWorld is the accounting software from Oracle. As cloud-based, true SaaS Financial Management Software, NetSuite expedites daily financial transactions, accelerates the financial close while ensuring compliance. By delivering real-time visibility into the financial performance, NetSuite enables top management to make well informed decision. NetSuite accounting software seamlessly integrates with NetSuite order management, inventory, CRM and ecommerce functions to streamline critical business processes. By delivering comprehensive finance and accounting capabilities alongside strong compliance management, NetSuite improves business performance and increases financial close efficiency while reducing back-office costs. NetSuite offers real-time access to financial data, enabling decision makers to quickly drill into details while generating statements and disclosures that complies multiple regulatory financial compliance requirements. With unparalleled visibility of your global business, NetSuite ensures compliant management across the organization, locally and globally. For more information connect with inoday
Need more differences between acounting and financing?
Accounting generally refers to how transactions are recorded and reported. Finance generally relates to initiating transactions to aid in cash, investment and other working capital management - including interest and foreign exchange hedging. Some senior accounting or finance staff have cross-over in their jobs and perform both tasks.
Application of business mathematics in business management?
It enables students to interact with numbers.
