Questions
The type of work that accountants, as well as, auditors carry out requires a considerably higher level of ethical codes. Shareholders, owners of the business, the government, customers and other users of the financial records of any company heavily rely on the financial statements of the enterprise. The information obtained from such records are used to make better and informed investment decisions. They, therefore, rely on the opinions of the accountants who have prepared such documents and on the auditors who have verified them. It assists in the presentation of a true, as well as, a fair view of the organisation. Knowledge of the ethical codes thus assists the accountants in avoiding ethical dilemmas that may arise in such situations. It would allow for the right choice that even though would not benefit the prospects of the organisation, it would mostly benefit those who rely on the reports of the company. (Bragg, 2013, p. 45)
Reviewing backup schedules is an accounting procedure that is quite significant. To, therefore, ensure that backups are carried out in a consistent manner and timely, the establishment of a data schedule is required. It saves one the agony of losing his data in the case of accidental data loss. When creating the schedule, an important goal would is the restoration of the whole system in a reasonable period. It also takes into account daily conveniences. Its constant reviews incorporate simple ways that restore each of the files that may have been deleted. It is an important insurance of an organisation. A company has valuable information in its possession. Its ability continue its operations and also amicably serve its customers is heavily dependent on its database. One would thus not undermine the significance of the reviewing process as it saves the company the agony of not conducting its operations as intended.
Ramachandran (2011) defines a cost centre as any part of the organisation that does not directly contribute to the profits of the company. It, however, increases the costs of running the institution. A preferable company with cost centres is the Apple Company. Examples of its cost centres include departments such as IT, quality control, help desk, accounting and the whole manufacturing facility. Apple allocates costs to these sections for purposes of efficiency in the company. For adequate control of the company accounts and preparation of its ledgers, Apple includes all the above cost centres in its budget formations. For the successful implementation of Apple’s budgetary controls, it has met particular conditions. There is a clear statement of the goals, as well as, its objectives that have facilitated the development of a well-integrated plan. The budgeting system has enabled the setting up of an adequate control system that is aligned to fulfilling the responsibilities that have been assigned to various cost centres.
Burke & Wilks (2006) mentions that it is important for any enterprise to collect, maintain and also provide accurate reports. For success in the business, it is essential that one knows the exact financial position of his business. Accurate, as well as, regular reports permits one to monitor his successes or failures. It also provides one with the base to evaluate the consequences of his decisions. Accurate reports will lead to efficient operations, control of the Cash Flow and also a significant increase in the profitability of the business. It assists in the identification of incomes and the expenses thereby enabling the creation of an income statement. It will identify the assets, as well as, the liabilities of a company thus creation of the balance sheet. It is important for timing of the incomes and the expenses thus a creation of the Cash Flow Forecast. Lastly, accurate records will enable the comparison of the organisation with the available industrial benchmarks.
Any entity has those regular expenses which are not directly related to the specific economic activity of goods and services production. The indirect expenses are called overhead costs. They thus refer to the operating expenses that are hugely necessary to a successful business. Generally, the overhead includes those costs that don’t generate revenue. The expenses include things such as accounting, depreciation, interest, rent, travel, legal fees, advertising, customer relations and also the costs repair. They are needed to keep the business in its operations. Keeping the overhead costs at a low level gives the company a high competitive advantage. It achieves this by increasing its profitability or by allowing the competitive pricing of its products. Overhead costs have in most particular cases been labelled fixed costs. It is because they do not rise or either falls with the costs of the goods that have been sold. It is significant to monitor, as well as, control them. Since their relationship with revenues is not direct, they have the propensity of becoming a bigger share of the company’s expenses, burdening it and thus soaking its net income, as well as, profits that it may have accrued. (Collier, 2003, p. 12)
The first step in the calculation of overheads is the determination of the business expenses. The second step is establishing whether the expenses were as a result of the production of goods or the services. Thirdly, overheads for the whole month or any other period should be added to the calculation of the aggregate overhead costs. The fourth step is the calculation of the proportion of the overhead costs when compared to the sales. Example, a business that has had a sale of $1000000 and the aggregate overhead costs being $200,000, would have ($200,000/$1000, 000) * 100 = 20% overhead. Lastly, overhead costs should also be calculated as a percentage of the costs of labour.
The Australian Standard has particular relevance to record management and the maintenance of the management accounting information. The standard postulates that it is important to find any accounting record quickly, as well as, economically regardless of its format. Dropkin & Halpin (2005) affirms that records management thus applies the systematic control to the information that are available. Creation, maintenance and the disposition of the records is a logical approach that is carried out on the information contained in the files. The application of the principles of record management, as attributed by the Australian Standards, ensures that the available information can be retrieved when a need arises. The Standard, therefore, has a particular interest in the provision of a general guideline for the establishment and the maintenance of office records in the most efficient, as well as, economical ways available.
GST is a value added taxes placed on several transacted products and services in Australia. It is notable that the reconciliation of GST control accounting varies with the accrual and cash based accounting. On the basis of reporting through the GST method, revenue is recorded when cash is received. Expenses are also noted when they are paid. On the other hand, based on the accrual method, expenditures and revenues are recorded with their occurrences throughout the year. In the reconciliation of GST accounts, the Goods and Services Tax is charged on every transaction that takes place within the supply chain. However, registered enterprises receive credit for the GST that are payable on purchases. As a result, it adequately becomes a ten percent tax on the retailing prices of the goods and services. Therefore, companies that charge GST are entitled to issue their tax invoices that clearly outline the GST payable thus enabling a refund from the tax authorities. (Duska & Duska, 2003, p. 67)
The process of collation of data is the assembly of information into a particular standard form. Many collation systems are based on a numerical or alphabetical order. The process is a significant element of several filing systems in offices, library catalogues, as well as, referencing books. The process is concerned with ordering information items, usually based on their identities. Therefore, the process of collation offers a definition of the total order in an information system. Coding of data, on the other hand, is the translation of answers into various numerical values. It is also the assignment of numbers to different categories of variables that are used in data analysis. Coding is carried out by the utilisation of a code book, computer card and also the code sheet. The process is done on the basis of the code book’s instructions which offers a numerical code for every variable. Currently, the assigning of codes is carried out during the constructions of the schedule or the questionnaire before going to the field.
Hall (2001) defines data classification as a form of distribution of scores that are obtained for particular categories or variables. Frequency, percentage, cumulative and the statistical classification of data during its processing exists. In frequency classification of data, frequency occurrences of the variables are presented in a certain category. The cumulative classification points out the propensity of a random variable being less or even equal to a particular referential value. In the statistical classification, the average is calculated within a respondents’ sample. It is also notable that frequencies can be denoted in percentages and not just absolute numbers.
Project part a
Keeping track of the electricity costs is a significant part of conducting the business. It assists in determining the accurate idea concerning the regarding the consumption of electricity by the various processes and departments in the organisation. Apple considers electricity costs as an indirect cost. It is because it is less clear and relevant for meet the standard operations of the firm. It is also used in running the equipment of the company. To effectively calculate the electricity costs, the general cost accrued is divided and then allocated to the different supporting activities, as well as, programme services. The allocation of the electricity costs is a backward process. Apple, therefore, applies an estimated rate in its calculation of electricity costs. After the approval of the estimated rate of electricity costs, Apple reviews its budgetary allocations so that the appropriate amount is allocated to every department of the organisation. It is for achieving accountability in every activity that it undertakes thus enabling proper record keeping.
Apple, therefore, allocates a percentage of the electricity costs to all its departments by assigning a percentage to each. It determines and renews each of the rates on a monthly basis. It is notable that the electricity bill is allocated in relation to the size of each department. This is in terms of the square feet available. This method of allocating electricity costs is critical to apple as it assists in making both the short term, as well as, the long term decisions that may be used in the budgetary allocations. It assists in the planning and the monitoring of the activities of the company. As a recommendation to Apple, the costs should always be distributed using an acceptable method of the accounting standards that are based on the actual bills that have been accrued. An effective base for the calculation of the electricity cost should also be identified. It is that point where the organisation which, in this case, is Apple, derives maximum benefits for the costs are not too high.
Project part b
The financial situation of a company is approached by the managerial accounting through an operational way. It gives information in a way that is supporting the administrative planning and controlling procedures. Different formats of budgets in accounting do influence the forecasting of departmental activities and how the associated manager would address the progress of the organisation and also the shortfalls to meeting the intended goals. Organisations would make use of differing managerial budgets at the same time. Budgets thus measure the achievements of the goals of the organisation by establishing the outflow of the resources of the institution that are significant in the accomplishment of the said goals. Budgetary allocations also track the inflow of the economic resources that are required in meeting the aims of the organisation. It is thus notable that budgets assists in determining the direction that the agency will take. It is because a company is able to make suitable decisions to its operations.
References
Bragg, S. (2013). Accounting best practices. Hoboken, N.J.: John Wiley & Sons.
Burke, L., & Wilks, C. (2006). Management Accounting. Burlington: Elsevier.
Collier, P. (2003). Accounting for managers. West Sussex, England: J. Wiley.
Dropkin, M., & Halpin, J. (2005). Bookkeeping Methods. San Francisco, CA: Jossey-Bass.
Duska, R., & Duska, B. (2003). Accounting ethics. Malden, MA: Blackwell Pub.
Hall, J. (2001). Accounting information systems. Cincinnati, Ohio: South-Western College Pub.
Ramachandran, A. (2011). Gnucash 2.4 small business accounting. Birmingham, U.K.: Packt.
