accounting

• The internal control system consists of five components: Control environment, risk assessment, control activities, monitoring and communication.
• Internal controls are intended to prevent errors and irregularities, identify errors and ensure that corrective action is taken
• Internal controls are established to further strengthen:

  • The reliability and integrity of information
  • Compliance with policies, plans, procedures, laws and regulations
  • The safeguarding of assets
  • The economical and efficient use of resources
  • The accomplishment of established objectives and goals for operations or programs
• Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that provide responsibility and enhance society and the environment. CSR can help improve society and promote a positive brand image for companies
• CSR is not just about giving back to the community but also about how businesses manage their impact on the world around them
• control environment - the overall attitude of management and employees towards the environment and the way in which they manage it
• risk assessment - identifying risks and determining whether there is an adequate response to those risks
• monitoring - ongoing review of the effectiveness of the other four components of internal control
• control activities - actions designed to address specific risks identified through risk assessment
• information system - the hardware and software used to collect, process, store and communicate financial data
• communication and training - ensuring all staff understand what is expected of them and have the skills needed to do their jobs properly
• internal control - process to enhance the efficiency and reliability of accounting records and safeguard assets.
• limitations of internal control include:

  • collusion - two employees working together to bypass icm
  • human error
  • cost
  • low staff
  • requires review
• internal control area, NCA.

  • ensuring NCAs are safe guarded and used in an effective manner
  • security cameras
  • record keepings of NCA
  • insurance for NCA
  • training of staff
• internal control, cash.

  • secure cash storage
  • transaction records
  • regularly deposit cash to banks.
  • duty of separation
• internal control, inventory.

  • inventory levels kept appropriate
  • automated stock purchase
  • security of inventory
  • appropriate storage
  • competitive prices
• internal control, accounts receivable.

  • ensure credit sales are reliable
  • issue invoices to debtors
  • payment plans
  • discounts
  • credit limits
• internal control, accounts payable.

  • ensure payment of creditors and maintain positive supplier relationships.
  • negotiate prices and payments
  • ask for payment plan
  • communicate
• corporate social responsibility, responsibility to people and the planet, not just profits.

  involving a business aligning activities with

  • triple bottom line
  • supporting employee welfare
  • supporting communities
• environment CSR involves:

  • resource conservation - using minimal amounts of resources sustainably, ex using less plastic
  • green house gas - minimising gases, ex using renewable energy.
• social CSR: the idea that businesses should consider the impact of their activities on society

  • taxation responsibility - not avoiding tax
  • sponsorship - provide funding
  • charity donations - donate to non-profit
  • employee wellbeing - fair wage + breaks
• ethical behaviour: when decisions are made to align with guiding moral standards and principles
• unethical practices include:

  • tax evasion schemes - accounting practices used to avoid tax legislations= no tax paid
  • cash sales - sales made in cash not recorded = no tax
  • employee exploitation - employees not treated well
• CSR costs:

  • training staff
  • supply costs
  • maintenance costs
  • sponsorships and donations
• CSR benefits:

  • enhance entity reputation
  • increased customers
  • reduce of costs, ex resource use.
  • postitive media
• perpetual inventory system: inventory and cost of sales are recorded constantly requiring the use of software.


  benefits: stock levels updates in real time, income and balance sheet are easily prepared

  disadvantage: expensive

  software can't detect broken or stolen items
• business entity refers to the owner and businesses transactions being separate from each other.

  • transactions should be recorded from the pov of the business
  • owners transactions must be kept separate
• errors disclosed by trial balance

  • double entry accounting not followed
  • incorrect calculations
  • transposition errors where figures are switched around
  • doubling of debit or credit
  • not reading final balances and transferred to trial balance
• GST is an indirect tax of 10% imposed on the supply of goods and services
• GST input tax

  • Doesn't charge GST on the sale price: the final price to customers doesn't include GST.
  • Can't claim any GST credits for any GST they paid on expenses related to making the input-taxed supply.
• GST-free supplies are goods and services in the GST system that are not subject to GST, but businesses can claim credits for the GST.
• overdrafts are a borrowing facility linked to checking or current account, allowing you to withdraw money even with insufficient funds, essentially a short term loan.

  • advantages- convenience and flexibility, no fixed payments
  • disadvantages- high interest rates, risk of bank charges