Give an example of how a specific transaction is captured in the accounting information system as an input, a process and an output.Explain the importance of an audit trail in financial accounting.

Assume that the sole trader business referred to above has previously only used the same unqualified accountant to submit a tax return to the government tax office. The business owner is now considering employing a qualified accountant to perform the same service. Give two disadvantages and three advantages for such an action.

b.
i. Using your knowledge of Figure 2.1 in Book 1, Chapter 2, as well as your general knowledge of double-entry accounting, give an example of how a specific transaction is captured in the accounting information system as an ‘input’, a ‘process’ and an ‘output’.

ii.Explain the importance of an ‘audit trail’ in financial accounting. Your answer should include an explanation of why a transaction that is separately and properly recorded as an ‘input’, a ‘process’ and an ‘output’, might help to provide a rigorous ‘audit trail’.

iii.An example of a financial accounting statement for a sole trader is a year-end balance sheet that is ready to be submitted to the government tax office. An example of a management accounting statement is a monthly balance sheet that is available on the last day of each month. Compare the two statements. In your comparison be sure to include at least one distinct advantage of each statement.

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