Professional Accountants Play an Important Role Within

Professional accountants play an important role within an organization. There may be computers within an organization that can record transactions and produce accounts; there is still a need for accountants. Before preparing accounts, a firm and their systems, will need to determine the type of accounting policies that will be used. For any set of accounts there may be different choices which can be made regarding the way costs and revenues will be measured and recorded. For example, there are different ways that stock on hand may be assessed, such as first in first out (FIFO) and weighted average cost. Likewise, there may be choices on the way investment costs are handled, either capitalized into the investment, or counted as an immediate cost. The choices have the potential to impact the overall results. Firms may choose their accounting policies in a strategic manner, for example to minimize tax. There are accounting standards which outline what is and is not allowable and give instruction on the different allowable strategies; it is accountants that will be responsible for ensuring compliance.

Accountants may also assess overall performance, make forecasts for the firms' potential future performance, assess and compare potential investments or strategies, identify total costs associated with any course of action, identify cash flow and financing needs and assess options, and play an overall role supporting role to the firms management to make decision which will help the firms goals to be reached. Accountant can also play an overseeing role to ensure that results reported are materially correct if they are in the role of an auditor.

Question 2

Computerized book keeping systems can still result in human errors. It is unlikely that mathematical errors will be present as the processes are automated, but other error types may be present that may impact on potential accuracy. Potential errors include the wrongly categorizing of costs and/or revenues, data entry errors such as the inputting of wrong figures, the omitting of some items, the use of accounting policies that are not acceptable under the relevant accounting standards, wrong data so items are included in the wrong period, and the undertaking pr purposeful fraud,

Question 3

An employee may embezzle money form an employer by paying fake invoices for work that was not performed. Internal controls mat include a requirement for the firm to use authorized suppliers only, where the people authorizing the suppliers are different to those who are paying the suppliers. The use of a system where two signatures are required for authorized checks would provide for a check against the companies that are paid, and the amounts that are paid, matching them to the invoices. Internal audit processes checking invoices against goods that are received.

Question 4

Property and equipment are large investments and the cost of the investment is written off over the years that the assets are used. This may be seen as part of the matching principle, where there is a matching of the costs to the revenue streams that they help to create. Adjusting entries are made to ensure that the accounts will adhere to the matching principle, and may be needed in situations where there is a single transaction that may impact on the revenues or the expenses for more than one accounting period, or not all costs may be documented with the earlier period so adjustments may be needed. Where adjustments are not made there is the potential for the value of assets to be overstated and expense may be understated, by making the adjustments there is a greater compliance with the matching principle.

Question 5

Stocks, which may also be referred to as shares, represent ownership in a company, with each unit of stock being worth the same as any other unit of stock. The stock holder will have ownership rights that are directly proportional to the numbers of shares they own compared to the number of shares outstanding. For example, if a company has issued 500 shares, a stockholder that owns 100 shares has a 20% ownership stake in the firm. Stockholders to not have an automatic right to dividends, management will decide whether or not they will be issued, but when they are issued it is required that the dividends are paid on all outstanding shares equally. When a firm sells shares, the funds raised count as equality and do not need to be repaid. If a firm fails, the stockholders are the last people who will be paid after all the firms debts have been cleared. A firm may raise capital through a share issue of they do not want debt, which may impact on the firms' gearing ratios, as stock issues do not create a financial liability. However, issuing more shares has the potential to dilute the value of ownership.