Unit 3 Flashcards
(87 cards)
Examples of internal users
sole propiertors
partners in business
management
employess
define management accounting
preparation of accounting reports for internal users
Management accounting info includes
cost of manufacturing of a product
brea even point of a product
expected cash balance of business at end of 12 months
eg of external users
shareholders
potential investors of a business
creditors
the ATO
ASIC
what are some examples of reports produced in management accounting
Budgets and variance reports
Financial accounting documents produce..
Statement of Comprehensive Income
● Statement of Change in Equity
● Balance Sheet
● Statement of Cash Flows
Financial accounting def
The preparation of accounting reports for external
users
what is financial reporting requirments
MUST use required format for reports
● Audits required
● Reporting dates set by external bodies
● Accounting Standards MUST be followed
What is Internal reporting requirments
No specific reports required
● Audits not required
● Done when required by management
● No requirements to follow Accounting
Standards
What is Accounting Standards (AASB)
(AASB) has issued a set of accounting
rules that public companies listed on the Australian Stock Exchange (ASX) and some
other organisations must follow when they prepare accounting reports for external users
Role of accountants in managing a business (list all)
● Preparation of financial statements eg. balance sheets
● Preparation of budgets eg. cash budge
● Preparation of the payroll of a business
● Periodic review of the internal control system of a business
● Preparation of individual and company income tax returns
An external audit includes:
They express an opinion on whether the financial statements of a public company:
A: Present a true and fair view of the company’s financial position
B: Comply with Accounting Standards
● This process provides confidence to shareholders and potential investors in the company’s financial health.
● The auditor must report any breaches to ASIC.
An internal audit includes:
Reviews the efficiency of the internal control system—rules designed to protect assets and prevent fraud
● Assesses the effectiveness of other systems (e.g. supply chain)
● Checks compliance with policies and legal requirements
● Detects errors in the accounting system
What is internal auditing
Internal auditing is the checking of the operating
system of a business to ensure they are working
properly.
How is internal auditor chosen
The internal auditor is an employee of the
business and may carry out other duties assigned
by management
External Auditing def
checking of accounting reports of a business to ensure reports correct or operating system and policies of a business to ensure
efficient.
how is external auditor chosen
The external auditor is appointed by the
shareholders and is re-appointed at the annual
general meeting
What are the 7 ethical dillemas facing business managers
Exploitation of employees – e.g. unpaid overtime
Exploitation of overseas workers – taking advantage of low-paid labor in developing countries
Exploitation of investors – encouraging high-risk investments
Acceptance of gifts from suppliers – potential ethical breach
Breaches of confidentiality – mishandling sensitive information
Exploitation of foreign customers – selling products without disclosing risks or concerns
Conflicts of interest – personal interests interfering with professional duties
What is CSR
Corporate social responsibility (CSR) exists when a business builds a concern for the protection
of the environment and of the good of society into its activities
How can business do a CSR program for example
Recycling or reducing the amount of pollution it emits. (concern for environment)
● Contributing to charities or sponsoring disadvantage groups (concern for community
Advantages of CSR
Community respect and reputation
● More enthusiastic and better
motivated employees
● A greater ability to retain high quality
employees
Disadvantages of CSR
Cost of community support programs
run by business (eg. sponsorships)
● The cost of producing corporate social
disclosure reports
● A cost of protecting the environment
may be the need to purchase new
energy saving or pollution reducing
plant and equipment
Appropriate management of CASH
Handling of cash should be separate from recording cash transactions
● All cash receipts must be banked daily
● Payments require senior approval; large payments need two approvals
● Cash budgets should be prepared continuously
Appropriate management of INVENTORY
The handling of inventory should be separated from the recording of inventory
transactions
● Inventory should be stored in a secure location. Access to this location should be
restricted
● The inventory records should be maintained using the perpetual inventory system
