Question

1. Relate the importance of keeping records.

2. Compare and contrast receipts and invoices.

3.Briefly describe the difference between cash and accrual methods of record keeping.

4.Briefly discuss the fundamental purpose of accounting principles in effective recordkeeping.

5. Design a human resource management system for a very small employer with 10 employees or less.

6. The if–then construct is often used to describe a business process. For example, “if the person is a Member, then enrollment proceeds. “   This is an example of which business process element?

Answer 1

1. Relate the importance of keeping records.

• It will help to monitor the progress of your business
• It will helps to improve the all expenses you will claim for business and helps to minimize the tax obligations
• It will help to document your financial statements
• It makes easy and quicker to complete your accounts at the year ens
• It identifies your source of income
• It gives all the details you need to run your business as well as grow your business
• It helps to identify your strength and weakness in your business
• manage to improve and change your business style
• It keeps the eye on deductible expenses in your business
• looks on your business basis in property
• It helps to document and prepare tax returns in the business
• It Avoids the under/over tax payments.
• it makes easy to distribute the profits of the business to shareholders and other business partners , where share profit and loses are equally shared.

2. Compare and contrast receipts and invoices.

Both the receipt and the invoice are non negotiable commercial factors that are used to when the course of transaction. The invoices are the documents which are mad e by the seller which are issued to the buyer for the buying the product or service. It contains all the details of product or services , price , discount, date, dates of delivery of the item and address of the parties of the transaction. In contrast to the receipt , it is the simple acknowledgement given to the buyer that shows the goods or the service has been received. It is prepared by the seller or vendor and given to the customer, that shows the ownership of the product or service.

• Receipt is the document issued by the vendor to buyer that shows the proof that payment has been done, The invoice is the commercial document issued by the vendor to the buyer , it is a requests made before the payment
• invoice is issued before the payment made, whereas the receipt are issued once after the payment is done
• Invoice give the information about total amount of due or payment has to be made. Receipt is the details shows how much amount of payment has been made and what is the mode of the payment.
• Invoice goes to the consumer who need to make the payment , where as the receipt goes either to the consumer who done the payment or the third party as a proof of the payment.
• Invoice is used to keep the track of the product of service which is sold and the receipt used to just acknowledge that the payment has been done,
• Invoice e contains the details of Price, quantity, discount, invoice number taxes and the total due. whereas the receipt contains the details of price, quantity,receipt no, discount, taxes paid, total money paid and the mode of payment.

3.Briefly describe the difference between cash and accrual methods of record keeping.

It is common that in all the business only the transaction related to the money are recognized and recorded. There are two account system are there in business based on which the transactions are recognized and recorded. those are cash system of accounting and the accrual system of accounting.

• In cash system accounting the recording is done when there is an outflow and inflow of the cash in the business, whereas in accrual system accounting the recording is done when revenue and the expenses arises.
• In cash system , accounting the entries are made when the money is earned or it paid . In accrual system accounting the transactions are recorded and when the money is pending. here the income and the expenses are recorded on the basis of mercantile
• Cash accounting is used for personal finance or the small business, where revenue is recorded only when the money is paid or received - revenue id recorded only when cash received and expenses is recorded only when cash is paid
• in Accrual accounting- Revenue occur on the income statement when it is earned and money for the same is not paid and expense on the income statement is recorded within the time when they expires or when they occurs.
• Cash accounting is simple as compared with the accrual accounting
• Cash accounting is not recognized as per companies act where as Accrual method is recognized by the company act.
• In cash accounting income statement shows lower income whereas in accrual accounting income statement shows higher income
• Cash accounting the degree of accuracy is less whereas in accrual accounting it is more.

4.Briefly discuss the fundamental purpose of accounting principles in effective record keeping.

A set of guidelines ,accounting standards and procedures are used to keep the effective record keeping in both government and non government bodies. Usually the accepted record keeping principles are the frameworks that are used to manage the records in such a way that that will help the organization future and also for the immediate use, This will help to legal and risk mitigation and operational and environmental requirements. There are some accounting principle that helps to keep the good recording are as follows

• Accountability: An organization or the business should keep the senior person or the executive who will work and oversee the record keeping so that he will not miss any information's and he is responsible for the adopting the policies and procedure to guide the personnel and in order to make sure the program audit ability
• Transparency: The record keeping process and activity in an organization should be documented in such a way that it should be understandable and available for all the people and appropriate interested parties in an organization whenever it is required.
• Integrity: The record keeping activity should be constructed so that the information or the records are generated and managed for the business have a suitable and reasonable grantee of the reliability and the authenticity.
• Protection: The record keeping activity should be constructed in order to make sure proper level of the safety provided to the information and the information's are confidential , private, privileged or essential for the business continuity.
• Compliance: The Record keeping activities are constructed in such a way that , it should comply with the applicable laws , organizational policies and other supporting authorities.
• Availability: The record should be maintained in such a way that it should available at timely, efficient and accurate retrieval.