THE ACCOUNTANT
Collecting all transactions details resulting from business
operations. This data will take the form of purchase invoices,
sales invoices, cheques, etc.
Recording these details in a permanent, logical, and consistent
manner. The accountant will record the total received income,
but will record separately eg, any income, received from holding
investments in other businesses, that has been generated in the
normal course of trading. Furthermore, he will exclude from
income any proceeds received from the sale of non-trading items
such as old machinery.
Expenses incurred in generating the income will also be categorised
separately. This includes purchases of stock for resale, salaries
and wages, rent, advertising, and interest charges.
Money spent on consumables for the day-to-day running of the
business (revenue expenditure) will be recorded separately from
money spent on capital equipment, eg, plant and machinery.
Arranging the recorded information as statements of profit and
loss and value of resources employed by the business. The computer
will print out at the end of a trading period (one month, three
months, one year, as required) a comparison of income received
during that period, with the costs incurred in generating the income.
If the income exceeds the cost, then the business has made a profit,
if the costs exceed the income, the business has made a loss.
The accountant will also prepare a statement that describes and values
the resources owned by, and the debts owing by, the business at the time
of preparation. Prior to computerisation of accounts, such an accurate
statement would probably be made only for the end of the financial year.
Because a business is a continuous operation - resources and debts change
daily - this latter statement describing the affairs of the business on
a particular day is valid for that day only.
Interpretation and communication of the financial performance of the
business to the management and the owners. From the financial or costing
statements that the accountant has prepared, the management will draw
conclusions about:
The efficient employment of the business's resources, both as a complete
entity, and analysed as individual areas of operation.
The ability of currently-owned resources to meet the business's operational
requirements, and potential ways of finding additional resources.
The taxation consequences of financial operations.
The policy of distributing profits (dividends) to shareholders.
The computer can automatically print out the results of the accountant's
activities for the benefit of management (directors) who will use the
information as a basis for financial policies and decision-making, and as
a basis for their accountability to the shareholders.
Forecasting and planning. Management will require the accountant to
evaluate the validity of proposed operations, and to be closely involved
with operational planning and the setting of targets in the short and long
run.
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