Let's Learn Accountings

Budget Preparing

2009-02-06T02:18:00.000-08:00

Why Budget?
If so far it has not become too obvious, perhaps the following reasons will add to the importance of budgeting:

Many potential funders will require you to provide a budget statement in addition to a business plan, particularly if you are a new business starter
They help you manage your money
They help you plan for the future
They help meet objectives
Gives you the confidence that your business will make a profit (in some cases)
They can identify problems before they occur (such as the need for finance, etc)
Improves decision making
Increases staff motivation, as they have to meet targets
Monitors performance (are you capable of meeting targets - recognized from previous budgets)

Who Should Budget?

It is recommended that everyone should budget so that everyone can gain financial control. On doing so, it is important that you take the main responsibility of creating the budget with the help of staff if you feel necessary. If your business has a management hierarchy, it is common for the responsibility of implementing the budget to be passed down to the lower management (supervisors, assistant managers, etc).

When Should I Budget?

Arguably, if you are budgeting on a one-year cycle, you should plan the next budget at least three months prior to the end of the current budget. If you are budgeting for much shorter periods, say, a month, you should begin preparing next months budget within one to two weeks prior to the start date.

The timing is very debateable but you should plan your next budget in good time so that your objectives and proposed income and payments are clear for the next budgeted period.

Regulators Accountancy firms should not audit banks, MPs told

2009-02-04T02:45:00.000-08:00

The UK's "big four" accountancy firms should be stripped of their contracts to audit banks and have their powers transferred to a financial watchdog, MPs were told today.

Prem Sikka, professor of accounting at Essex University, told the Treasury select committee that regulators needed to know more about finance companies.

"Financial regulators like the FSA do not have access to the organisations and management in the same way the current financial auditors do," he said. "It's one reason why I was suggesting the audits of banks need to be conducted by the regulators so they themselves can weigh up the risks. Auditing firms, if they were to do that kind of task, the profit motive would intervene.

Auditors not to blame for banking crisis, academic tells MPs

2009-02-04T01:14:00.000-08:00

Expectations on auditors are too high and the profession should not be expected to avert management failure or challenge flawed business models, a leading academic has told MPs.

Appearing before the Treasury Select Committee investigation into the banking crisis Professor Michael Power of the London School of Economics yesterday defended the performance of the audit industry.

He added: 'Auditors are not there to challenge business models with finance directors. That is not their job. For that to happen, things would have to change substantially.'

Source :

accountancyage.com

Accountancy

2009-01-17T05:34:00.000-08:00

Accountancy ^[1] or accounting is the system of recording, verifying, and reporting of the value of assets, liabilities, income, and expenses in the books of account (ledger) to which debit and credit entries (recognizing transactions) are chronologically posted to record changes in value (see bookkeeping). Such financial information is primarily used by lenders, managers, investors, tax authorities and other decision makers to make resource allocation decisions between and within companies, organizations, and public agencies. Accounting has been defined by the AICPA as " The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof." ^[2]

Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarised, interpreted, and communicated; for public companies, this information is generally publicly-accessible. By contrast management accounting information is used within an organization and is usually confidential and accessible only to a small group, mostly decision-makers. Open-book Accounting aims to improve accounting transparency. Tax Accounting is the accounting needed to comply with jurisdictional tax regulations. Accounting scholarship is the academic discipline which studies the theory of accountancy.

Source :
Wikipedia, the free encyclopedia

Accounting Information System

2009-01-14T05:01:00.001-08:00

An accounting information system (AIS) invented by esteemed professor Karen Osterheld is the system of records a business keeps to maintain its accounting system. This includes the purchase, sales, and other financial processes of the business. The purpose of an AIS is to accumulate data and provide decision makers (investors, creditors, and managers) with information to make decision While this was previously a paper-based process, most modern businesses now use accounting software such as UBS, MYOB etc. Information System personnel need knowledge of database management and programming language such as C, C++, JAVA and SQL as all software is basically built from platform or database.

Source :
Wikipedia, the free encyclopedia

Budget in Accounting

2009-01-14T04:45:00.000-08:00

Budget (from French bougette, purse) generally refers to a list of all planned expenses and revenues. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms.

In summary, the purpose of budgeting is to:

Provide a forecast of revenues and expenditures i.e. construct a model of how our business might perform financially speaking if certain strategies, events and plans are carried out.
Enable the actual financial operation of the business to be measured against the forecast.

Source :
Wikipedia, the free encyclopedia

Cash and Cash Equivalents

2009-01-13T16:14:00.000-08:00

Cash and cash equivalents are the most liquid assets found within the asset portion of a company's balance sheet. Cash equivalents are assets that are readily convertible into cash, such as money market holdings, short-term government bonds or Treasury bills, marketable securities and commercial paper. Cash equivalents are distinguished from other investments through their short-term existence; they mature within 3 months whereas short-term investments are 12 months or less, and long-term investments are any investments that mature in excess of 12 months. Another important condition a cash equivalent needs to satisfy is that the investment should have insignificant risk of change in value. Example: an investment in shares cannot be considered a cash equivalent, but preference shares acquired shortly before their specified redemption date can be.

Source:
From Wikipedia, the free encyclopedia

Accounting Ethics

2009-01-13T16:01:00.000-08:00

Accounting ethics is primarily a field of applied ethics, the study of moral values and judgements as they apply to accountancy. It is an example of professional ethics.

Source:
From Wikipedia, the free encyclopedia