Alex Lote-Greenfield
P1 – Describe the purpose of accounting for an
organisation.
In this assignment will be describing the purpose of accounting for
an organisation, I will be covering why it is important for
businesses to record transactions, monitor and control accounting
records and appropriate actions to take, make management
decisions to plan for the future, including the need to monitor and
control those plans and finally why it’s important for businesses to
measure financial performance.
The owner of the business or the bookkeeper of the business
must record all the money coming into the business from the
sales, so the trading income of the business. Income can be either
trading income which is the money generated form the business
activities through trading, whether it with other businesses or
usual customers. Or there is another way of income which is
referred to as non-trading income which is the money brought
into the business but not through trading, so things like rent
received or commission received, so the business activities are
not bringing in the income. They must also have a record of all
the money coming out of the business, so the expenditure.
Expenditure is the action of spending funds and can be capital
expenditure or revenue expenditure.
Transaction is an instance of buying or selling something.
Business transactions are the interactions between businesses
and their customers, vendors and others with whom they do
business. It is very important that businesses record the
transactions they have. Businesses have different type of
transactions like complex transactions or ongoing transactions
because of the different type of suppliers and the amount of
different payments there is. On a daily basis a business will deal
with many transactions, with things like purchase orders being
sent out, cash or cheques received, sales orders received from
customers and many more. The reason that businesses record
transactions is because then they have evidence in case of an
audit trail and they just have evidence that the purchase
P1 – Describe the purpose of accounting for an
organisation.
In this assignment will be describing the purpose of accounting for
an organisation, I will be covering why it is important for
businesses to record transactions, monitor and control accounting
records and appropriate actions to take, make management
decisions to plan for the future, including the need to monitor and
control those plans and finally why it’s important for businesses to
measure financial performance.
The owner of the business or the bookkeeper of the business
must record all the money coming into the business from the
sales, so the trading income of the business. Income can be either
trading income which is the money generated form the business
activities through trading, whether it with other businesses or
usual customers. Or there is another way of income which is
referred to as non-trading income which is the money brought
into the business but not through trading, so things like rent
received or commission received, so the business activities are
not bringing in the income. They must also have a record of all
the money coming out of the business, so the expenditure.
Expenditure is the action of spending funds and can be capital
expenditure or revenue expenditure.
Transaction is an instance of buying or selling something.
Business transactions are the interactions between businesses
and their customers, vendors and others with whom they do
business. It is very important that businesses record the
transactions they have. Businesses have different type of
transactions like complex transactions or ongoing transactions
because of the different type of suppliers and the amount of
different payments there is. On a daily basis a business will deal
with many transactions, with things like purchase orders being
sent out, cash or cheques received, sales orders received from
customers and many more. The reason that businesses record
transactions is because then they have evidence in case of an
audit trail and they just have evidence that the purchase
