Accounting Process And Business Entities Accounting Essay

Category: Accounting

What is Business?

Business can be defined as an organization that provide goods and services to others, who want to do or need them, when people think of business careers, they have to think of job in large wealthy corporation, there are wide verity of career areas in business line.

Definition of business Entities: -

Business Entity is an organization that possesses a separate existence for tax purposes. Some types of business entities include corporations and foreign corporations, business trusts, limited liability companies, and limited partnerships.

Types of Business Entities;

A business entity is the vehicle a person or group of people use to carry on a trade or activity.

There are fore main type of Business Entities,

sole trader

partnership

limited liability partnership

limited liability company

reference:- http://www.completeformations.co.uk/companyfaqs/business_entities/types.html

Business entities are the things that are stored and maintained by a business component, such as customers or orders. It may be helpful to think of business entities as the nouns in the application. Entities always contain data, and may contain processing capabilities that can act on that data.

Each of these business entities has its own particular benefits and its own set of drawbacks, such as limited liability ease of set-up and the level of bureaucracy, which is required to run them

When choosing a form of business entity, compare the tax, liability and management impacts of a sole proprietorship, corporation or flow through to see which will work best for your arts / crafts business.

Reference:-http://artsandcrafts.about.com/od/startingyourbusiness/tp/compareentities.htm

Note;

The structure your business assumes is important in determining your limitations and liabilities. Depending on the type of structure you choose, additional paperwork may be necessary to establish the business, may your accountant help you to decide what type of business structure best fits your needs.

Q2) Describe the Accounting Process in the terms of

a) Recording

b) Analysing

c) Interpreting Financial Data

Ans: -

Accounting Process: -

Accountings process is an overview of the step of the accounting cycle, beginning with a transaction and ending with the closing of the book and reversing, book keeping is the actual recording of the company's transaction,

The recording process in accounting is the process of summarizing, classifying, and recording analysed transaction data in the journal in a systematic and chronological order and posted those to the ledger.

The process of Recording transction in the journal is call journalizing.

http://wiki.answers.com/Q/What_is_the_recording_process_in_accounting

When the accounting process is complete a set of financial statements is issued. Financial statements are crucial for investment decisions, tax assessments, and conflicts resolution,

Analysing a transaction grant reliance and relevance to the financial information, accounting information must be reliable and relevant,

When analysing transactions the following questions should be posted and answered:

1) what are the accounts involved in a transaction?

2) What are the classifications of the accounts involved? Are they Assets, Liabilities, Owners' Equity, Revenue, or Expense accounts?

3) Are the accounts increased?

4) Are the accounts decreased?

http://www.bellaonline.com/articles/art48482.asp

Business transactions are events that have a direct economic impact on an entity and are expressed in terms of money.

Interpreting performance of the business to the management and its owners,

The purpose of financial accounting statements is mainly to show the the financial position of a business at a particular point in the time and show the how the business is going on,

Financial information is always prepared to satisfy in some way the need of various interested parties,

The process by which accounting information is collected,reported interpreted and and actioned is called finacial manegment,

Q3) Explain the term Accounting and the 3 purposes discussed earlier

Ans:-

Accounting is a business discipline that allows companies to record, analyse and retrieve critical financial information that can be used to determine a company's financial status and provide reports and insights needed to make sound financial decisions,

The primary purpose of accounting is to identify and record all activities that impact the organization financially, that will help the various external and internal parties of the business to appraise the profitability as well as the solvency of the business. The three main financial statements that are prepared for the purpose of accounting information are as follows

http://www.ehow.com/about_4679149_purpose-accounting_. Him

There are three purposes of accounting, the first one is to make sure the that all you have everything that you need to run a successful business that include that you have the right stock, which is recorded its means keep stock the business,

The second purpose of accounting is for score keeping its meaning is to make sure the business has the right stock to make profit,,,

Third purpose of the accounting is to analysing the information about the business profit and lose, to help the business direct area, where is the best profit can be made,

For example; 'to buy the things that sale the most to make the business profit'

The above three purpose of accounting are important to run your

Business,

Q4) Describe the range of Organisational Structures

Ans:

Organisational are a variant of types of Entities. An organization can be structured in many different ways and styles, depending on their objectives and ambience,

Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, and individual. Individuals in an organizational structure are normally hired under time-limited work contracts or work orders, or under permanent employment contracts or program orders.

Director

Manager

Assistant Manager

Front Line Staff Main Staff

For example another diagram.

Board of Director

Chief Executive

General Manager Financing Manager

Front Line Staff Finance Administration

General Line Staff

This is a diagram about organisation and structure in business.

Q5) Explain the importance of budgeting

Ans;

Importance of Budgeting. You don't have to over spend, to keep control of your finance shows that you don't over spend. If you spend you going to debt, it means business loss. So you have to control your budgeting in business.

It also has record keeping that records how much money you have. If you don't control budgeting your business will not grow successfully.

It is also to keep better control of all your finances so that you can buy the right amount of stock which will earn the business a better profit and keep the business going for longer.

It helps to keep agreements on all your money for longer periods, for example if you keep a budget plan for 5 years then you have control of not spending the profits that you make.

End of assignment