Accountancy involves the recording of financial transactions that take place in a business, planned or actual, and the use of these figures to produce financial information. The business I am going to write about is FF I will talk about the accountancy in FF.
Record Transaction: It is important that businesses keep their records accurate and up to date for them to run smoothly. The business owner must record all the money coming into the business from sales and all of the forgetting to pay bills. They may even get into seriouse trouble with HM Revenue and customs whichisa British government department for the collection of all of all typesof taxes. If a business doesnot record its transactions correctly it cannot report it finacial performance accurately and thereforetaxpayment maybe wrong.
Monitor Activity: FF’s records must be updated on a regular basis so they have a good indication of how the business is doing in terms of sales, receiving payments, paying expenses and so on. This is useful for FF because they would realise if money going out seemed be on the increase while sales were dropping off, so they could make a change. Monitoring activity should also involve keeping an eye on the bank balance to ensure there are sufficient funds to meet day to day expenses. Overall it is important for FF to update their activity regularly so they know exactly when something changes so they can improve their business.
Control: Future Fashion needs to keep business records correct and up to date like any other business. The business owner/owners or a bookkeeper must record all of the money that comes into the business (from sales) and all the money that goes out, such as expenses which could include bills, and purchasing stock. If FF does not have accurate recordings of their transactions they may find themselves not chasing payments, forgetting to pay bills, or even more seriously, in trouble with HM Revenue and Customs. If FF does not record all their transactions correctly their financial performance won’t be recorded accurately and therefore tax payments may be wrong. Overall it is very important for FF to record all transactions because they need to know exactly how much money they make and spend, so they can get things like tax and profit right. FF needs to have the ability to control their accounts. If accurate records of transactions are maintained and activity closely monitored, then actions can be taken to control the balance between money flowing in and out the business, for example if expenses were creeping up but sales staying the same, then FF could look for ways to control or cut costs, like funding new dress suppliers to cut costs
Management of the business: Mangers of future fashion must make sure they plan and control all resources to make it easier for tehm to handle, this will make sure they consider their staff member as they help FF run. They will have to control their money as is important the right amount of money goes in and out of the business. Also stock, mangers will have to order stock and orders stock when it has run out.
Measurement of Financial performance
If FF didn’t have any financial records it would be impossible for them to know if they was making a profit or a loss, or whether or not the business was owed money or in debt to others
Indicators of financial performance include:
* Gross Profit – this is the amount of profit left after the cost of product the goods or services is deducted from the amount of sales revenue.
* Net Profit – this is the smaller amount of profit made after all other expenses are deducted from the gross profit.
* Value owed to the business – this is the amount of money owed to the business from sales that has not yet been paid for.
* Value owed by the business – this is the amount of money the business owes to others for goods or services purchased but not yet paid for.
Future Fashion has managers who are responsible for the planning, monitoring and controlling of the resources for which they are responsible. The management of a FF store involves co-ordination or resources including staff, materials, stock and money. The manager must ensure there are sufficient funds to pay wages, order new stock, pay bills and meet other demands for cash outflows by balancing this with the money coming in from sales.