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All accounting systems are subject to the risk of error or misstatement.
Describe the components parts of an accounting system and with reference to an accounting software package or your choice, for each part identify one control that helps to ensure that the accounting records are complete or that the organizations assets are safeguarded.
Accounting system refers to the collection, storage and processing of both the accounting and financial data vital for making decisions in any given business activity. In the current world, the introduction of the accounting information system in most cases involves a computer-based system essential in the tracking of accounting activities in the business. In obtaining the resulting statistics reports, as a result of the tracking, the information is vital and usable by internal management. However, in other cases, the resulting statistics is used externally by other interested parties such as tax authorities, investors and creditors. The components parts of an accounting system entail of the accounts receivable, accounts payable, order entry, cost accounting and payroll.
Accounts receivable refers to the legally enforceable claims that any business activity might represent to the customer for supply of a given amount of commodity/service. In most cases, the accounts receivable exists in the forms of invoices raised by the business and forwarded to the customers for payment in a distinct time frame. Since the accounts receivable represent the cash that the organization own, they usually appear in the balance sheet as assets. In the accounting system transaction, the accounts receivable shows the billing that the customer needs to pay for the services and commodities ordered (Collier and Sam 52). However, it is essential to differentiate the notes receivable from the accounts payable. The notes receivable gives an indication of the debts created through formal legal instruments referred to as promissory notes.
In trying to minimize the risk exposed to the accounts receivable, the most appropriate tool to utilize in this case is the acumatica which is proprietary software. In utilizing the acumatica tool, the risk of invoice errors also known as incorrect charges become minimal. The invoice error always results into excess/loss of revenue hence contributing to inaccurate accounting. However, in utilizing the acumatica the control that will assist in ensuring the accounts receivable give accurate data is the proper segregation of duties. The proper segregation of duties in most accounting system becomes a challenge since all the personnel want to have access to the cash (Collier and Sam 71). However, the acumatica tool will assist in proper segregation of duties hence ensuring that individual that have access to cash in the firm do not play any given role in updating accounts receivable records.
Accounts payable refers to the money owned by businesses to the various suppliers of commodities. In an effort to record the accounts payable, the accountants of any given businesses activity will always record it as a liability on the balance sheet. The accounts payable have a distinct difference with the notes payable liabilities which refer to the debts that occur in the business through the legal instrument documents. One of the risks that face organizations when it comes to the accounts payable is aspect of additional amounts of cash of the actual amount of debt needed by any organization.
In most of the cases, the accountants responsible for the accounts payable will always have difficult to record the appropriate debt of the firm. In other cases, firms also face difficult in depicting the actual debt of the firm since the cash receipts go missing. The high risks of theft involvement in the business organizations require high and strong control to safeguard the cash receipts. In using the acumatica software, the firm will always safeguard the receipts and have a computerized based system to store the debts of the firm. The access to the stored debts and accounts payable becomes only known to some restricted members of the organization hence reducing levels of theft.
The order entry refers to the process through which an order becomes recorded into the business organization entry system. Immediately an order becomes part of the business information, the management becomes capable of viewing information concerning the order. Necessary adjustments concerning the order can take place once the information becomes part of the system (Collier and Sam 92). In an effort to ensures that the order entry records are complete hence the organization assets becomes safeguarded, the acumatica accounting package makes it possible for the computerized system to store the original order entry. Regardless of the several changes made on the order entry, the original entry is the most vital when it comes to balancing of accounts.
Cost accounting refers to the complex process of collecting, summarizing analyzing and evaluating various alternative decisions made by the management of the organization. The chief goal of the cost accounting is to advise the management on the course actions in relationship with the cost capability and efficiency. Through the cost accounting, the management of the business activity learns to utilize the cost information that manages current and future plans of the firm. In utilizing the acumatica accounting tool, it assists in ensuring that accounting records in relationship to cost accounting records given are safeguarded. The acumatica accounting package assi.............
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