Question

Write a business report (about 600 words) critically evaluating spreadsheets as a tool for accounting. Use Internet resources. Include a section on the advantages and disadvantages of spreadsheets. Refer to the Internet for advice on Business Report structures. Reference ALL your sources.

Answer 1

Spreadsheets as a tool for accounting

Spreadsheets have traditionally been used by accountants to record/ analyse columns of data, but the widespread use of computers has enabled a whole new raft of potential uses for these programs. While accounting remains the most common use of spreadsheets in veterinary practice. They were among the first applications for Macs and PCs and helped encourage businesses to invest in computer networks. The format of every spreadsheet program is the same. The environment presents a scrollable view on a page of cells, with rows identified by numbers, and columns identified by letters. Each cell is identified by an address using column letter and row number. In any accounting role, one can benefit by incorporating spreadsheets into everyday tasks. They can support in many possible ways. Fluency with spreadsheets and data analysis is essential in any accounting role, and is developed through widely recognised qualifications.

1. Ease of keeping a track of payment:

Small business owners and those new to accounting find it difficult to keep a track of payment, and spreadsheets offer a simple solution. Spreadsheets are commonly employed analyse money that has been spent and receipts that have been received. They allow to split the amount of money spent and received according to time period and source from which they are received or spent.

For example, we can separate out different types of expenditure like rent/ insurance, and track precisely how much can been spent on these in each month, by using a simple table. In any accounting role, we can benefit from incorporating spreadsheets into everyday tasks.

1. Linking related data

Another benefit of using spreadsheets is to link worksheets together which is useful for cash flow, where it is required to link the actual balance in the bank at the end of last month to the opening balance for current month. For this, just press “=” in the cell to be linked from, and put the cursor in cell to be linked. This works well for budgets too, especially if there is a completed production budget in one worksheet, and needs to be linked to master budget. Then, if the production budget changes, it automatically updates the master budget.

1. Suitable formatting:

When working with lots of financial data, it is required to make it comprehensive to navigate. Appreciatively, most spreadsheet software offers a variety of tools to help make the spreadsheets visually appealing and easy to understand. Like if we use ‘Ctrl + B’ when a cell is selected to make all of the text in that cell bold, it is useful for quickly helping titles and labels stand out, also can be done is to colour code cells, and then sort your data by colour.

1. Spreadsheet functions

‘IF statements’ - The use of functionality such as IF statements is very helpful in accounting. It helps to analyse the amount of money spent on wages for a period. We could use an IF statement to indicate whether or not a member of staff has been paid overtime which could be something as

if(A1>37, Yes, No), which means that if the number of hours indicated in cell A1 is greater than 37 hours, the answer ‘Yes’ will be generated; otherwise, ‘No’ will be selected.

IF statements can also be used in calculations. Hence if we are looking at the sales staff for an organisation, it may be that if they make sales greater than £10,000, in a week we give them 0.5% of the total sale, which can be achieved by the following function ‘=if(A1>5000, cell A3*0.05, 0’

‘SUM function’ – It is a very quick and easy function which saves an awful lot of time. Rather than adding up huge amounts of data on calculator, one can reach a total just by selecting the SUM function, and highlighting everything to be included.

LOOKUP functions: A tool in Excel which is used often by accountants is the HLOOKUP or VLOOKUP. This function searches for information associated with specified information, and can be extremely useful in a stock control environment. For example, if we want to know if a particular part is available in stock, we can use a HLOOKUP to find out the number of items associated with a particular item number which makes the process of searching for values related to other values much quicker.

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