every organization has some form of book keeping. Whether a big organization or a small organization, the bookkeeping Temecula CA important function for the company. From the initiation of a transaction to the end of the transaction, the information must be captured some how in the system.
The functions involves very many steps which should be done by different people. Example the one initiating an order should not be the one doing the accounting entries and at the same time authorizing the transaction. This minimizes chances of fraud. Advantages of keeping books of accounts are
Ensures that fraud is identified and dealt with. An effective book keeping function will capture all the transaction and activities of the organization. This means that if a very awkward transaction is captured, or the books of accounts do not balance then there may be chances of fraud. This must be investigated further to unearth fraud and then disciplinary and corrective measures taken. This also makes people conscious if the activities in terms of finance.
Decision making by management becomes easy. This is because there is ready information from accounting entries for reference. Decisions that involves money should be done on a basis of what is available in the bank, otherwise irrational decisions made on the basis of gut feeling can lead to losses. Decision making can be for future or for the present example whether to purchase now or then, whether to expect 100% collection rate or not, decisions associated with the levels of provisions.
It helps the organization identify areas that need to improve in terms of cutting costs. Without the financial information, the organization would not know which item drains their finances.
For compliance purposes, company s must keep there books of accounts. When a company does its tax returns, they would need information for book keeping function. It is important that these information is accurate and true. This is validated by a certified accountant who appends their signature that the accounts are true and fair picture
Forecasting is also very important for a company. This helps the company know what they put as priorities. Budgeting also is informed by past financial information which is gotten from the books of accounts. No period can attain the same costs or income so the variances can e explained with proper books of accounts.
It identifies errors and mistakes in financial figures. When Book keeping can be used to identify mistakes by way of paper and audit trail. When a mistake is discovered, it is easy to go back to the original documents of entry and trace the whole trail. Mistakes can be intentional or not intentional. Intentional mistakes mostly lead to fraud in a company.
The book keeping function must be seamless because this is the most area where fraud occurs. Checks must be done frequently and also segregation of duties done to reduce chances or irregularity. Internal auditors also ensure that financial controls are implemented and followed. Auditing these controls also prevents mistakes, fraud, loss of resources in the organization.
The functions involves very many steps which should be done by different people. Example the one initiating an order should not be the one doing the accounting entries and at the same time authorizing the transaction. This minimizes chances of fraud. Advantages of keeping books of accounts are
Ensures that fraud is identified and dealt with. An effective book keeping function will capture all the transaction and activities of the organization. This means that if a very awkward transaction is captured, or the books of accounts do not balance then there may be chances of fraud. This must be investigated further to unearth fraud and then disciplinary and corrective measures taken. This also makes people conscious if the activities in terms of finance.
Decision making by management becomes easy. This is because there is ready information from accounting entries for reference. Decisions that involves money should be done on a basis of what is available in the bank, otherwise irrational decisions made on the basis of gut feeling can lead to losses. Decision making can be for future or for the present example whether to purchase now or then, whether to expect 100% collection rate or not, decisions associated with the levels of provisions.
It helps the organization identify areas that need to improve in terms of cutting costs. Without the financial information, the organization would not know which item drains their finances.
For compliance purposes, company s must keep there books of accounts. When a company does its tax returns, they would need information for book keeping function. It is important that these information is accurate and true. This is validated by a certified accountant who appends their signature that the accounts are true and fair picture
Forecasting is also very important for a company. This helps the company know what they put as priorities. Budgeting also is informed by past financial information which is gotten from the books of accounts. No period can attain the same costs or income so the variances can e explained with proper books of accounts.
It identifies errors and mistakes in financial figures. When Book keeping can be used to identify mistakes by way of paper and audit trail. When a mistake is discovered, it is easy to go back to the original documents of entry and trace the whole trail. Mistakes can be intentional or not intentional. Intentional mistakes mostly lead to fraud in a company.
The book keeping function must be seamless because this is the most area where fraud occurs. Checks must be done frequently and also segregation of duties done to reduce chances or irregularity. Internal auditors also ensure that financial controls are implemented and followed. Auditing these controls also prevents mistakes, fraud, loss of resources in the organization.
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