Unit 5 – Business Accounting – P1 and P2

Topics: Generally Accepted Accounting Principles, Management, Business Pages: 3 (696 words) Published: June 22, 2014
Unit 5 – Business Accounting – P1 and P2
Businesses such as Toyota find accounting being a very critical aspect of their business life. Accounting involves recordings of the financial transactions for the business. The importance of accounting is that great that even if a business has one of the best products in the world it could still be faced to fail for simple things such as not enough investment, too high costs to produce the products or even simply over spending on new products. Record Transactions

In a business life keeping the records accurate and up to date is very important in order for a business to run smoothly and produce good levels of profits. The accountant for the business or actual business owner, must keep either a PC document or written copy of all the money going in and out of the business. This should be to the last penny as one wrong number or one forgotten means that the businesses whole records are wrong. If a business fails to do this, it could potentially find itself forgetting to pay bills, forgetting about chasing payments from other businesses or customers and even worse finding themselves in trouble with HM Revenue and Customs. This is something a blot of businesses are worried about due to, if a recorded transaction is wrong the final report will be wrong which could lead to tax payments being wrong. If the tax payments are wrong and HMRC, also known as HM, find out then the business could even find themselves in court and with a fine. Monitoring

A businesses records will normally be updated on a regular basis which normally varies from daily to weekly however there are still some out there that do it once a month depending on the sales the business is producing. For a large business such as Toyota Manufacturing it will normally be done daily as they will have payments going in and out every day. This is to provide a good indication of how the business is doing in terms of sales, receiving payments, paying expenses and so on....
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