Objective And Limitations of Financial Accounting

Financial accounting is a process for identifying, measuring and communicating economic information to users. This is one part of accounting related to recording, classifying, summarizing and presenting daily transactions.

Financial accounting aims to ensure gains and losses incurred over a specified period of time through an income statement. Financial accounting is historical because its use is to record past transactions. Therefore it can be applied in all types of organizations.

Based on the concept of money measurement, accounting principles and standards in finance are generally universally accepted and practiced in order to provide information about the results of business operations and financial position to internal or external parties.

Objective of Financial Accounting

1. To record financial transactions
   The main objective of accounting finance is to record all business financial transactions systematically and scientifically. The need for recording transactions arises because of the limitations of human memory. Under financial accounting, all transactions are recorded in various account books.
2. To disclose operational results
   Another important objective of financial accounting is to disclose the operational results of gains or losses incurred over a period of time. This can be done by preparing the profit and loss statement.
3. Disclose the financial status
   Financial accounting is also useful for disclosing a company's financial condition on a certain date. To that end, the asset and liability statement commonly referred to as the balance sheet is prepared.
4. To provide the required financial information
   Financial accounting aims to provide information to various parties such as investors, creditors, owners and so forth. Usually this information will be available at the end of the accounting period through various financial reports.

Limitations of financial accounting

1. Only reveal the overall result
   Financial accounting reveals the overall business results. It's just that this report fails to reveal the results of every department, process, product, job, and more.
2. Not helpful in price fixation
   Financial accounting does not provide sufficient information for the fixation of sales of products produced or services provided by the business. So unable to prepare the tender or determination.
3. No cost control
   Financial accounting does not classify costs into different categories such as materials, labor and other costs. Cost control procedures can be adopted using standers, but they are not held in financial accounting.
4. There is no cost classification
   Financial accounting does not clarify costs into different categories.
5. Failed to offer a standard system
   Financial accounting fails to measure the level of material efficiency because it can not offer a standard system.

With that in  mind, you probably start considering the use of a robust accounting system because it can give many benefit to your business.

10 Advantages Of Integrated Retail Management System

The growth in a business is something we really want, but these growth will certainly bring new problems that certainly need a new solution. If we manage to overcome it, new opportunities will emerge.

Managing a growing business usually requires us to add an application that can meet business needs quickly but still manage the operational inefficiency stage, time, resources and also risk.

The best solution to consider is to integrate retail management systems that are designed to manage all aspects of the business. With integrating retail management system to the business, we can get many benefits from it especially in inventory management.

10 advantages of having an integrated retail management system

1. Real-time visibility to all aspects of the business
2. Eliminating IT maintenance and integration costs
3. Increase productivity and eliminate conflicting responsibilities
4. Convenience in data management
5. Better communication between departments resulting in more harmonious operations
6. Ease in deployment and system expansion into new location
7. Ease in training new employees or changing employee duties
8. Faster and more efficient in customer service
9. Have better capabilities in upsell and cross-sell
10. Provide more time management to focus on business strategy

Using integrated retail management to manage the retail business will also provide significant advantages in data analysis. With systems and applications that can communicate with each other, we can see the overall business and the ability to compare data in new ways

Role of Distribution in Marketing And Financial of Your Business

Distribution is one important blend of marketing mix. The role of distribution in marketing and overall economy can be grouped as follows:

1. Shipping Satisfaction
   The marketing concept emphasizes on profit revenue through customer satisfaction. In addition to market research for the development and sale of goods according to the needs and desires of consumers, distribution channels also helped manufacturers in producing new goods.
2. Standard of living
   Distribution functions help improve the lives of consumers in the community. The distribution of the right goods and services to the consumers easily can not only satisfy them but also bring about changes in their standard of living. Distribution brings improvements in consumers' living standards through job creation, income generation and ownership transfer. Hence, the distribution has brought about a positive effect in society.
3. Added value
   Distribution functions such as transportation, warehousing, inventory management, etc., increase the importance of the product by creating place utilities, utility time and utility quantities. The distribution mix plays an important role to increase the value of the product through the delivery of the right amount of goods, in the right place and at the right time.
4. Communication
   Distribution serves as a link between producers and consumers. Producers can create information flows and orders to consumers about products, prices, promotions and more. Similarly, they receive information about customers, competitors and also environmental changes.
5. Creating jobs
   Distribution functions create jobs in the community. Market brokers work as a source of direct and indirect employment. Different manufacturers need to supply their countless products to consumers. Thousands of distributors, agents, wholesalers, retailers, brokers etc. are involved in supplying products to consumers. Similarly, many people in the community can find employment in the transport sector, warehouses, etc.
6. Efficiency
   Manufacturers produce a limited number of items. But consumers are demanding various types of goods in small quantities. When the goods are produced in large quantities, the price can be obtained at a lower price. Distribution helps to meet the needs of consumers by providing a variety of products from different manufacturers. From here, efficiency can be achieved both in production and distribution.
7. Financing
   The intermediary itself makes arrangements to store reserves and inventory. Manufacturers now no longer need to make arrangements and management at distribution centers and warehouses. Manufacturers do not need to do anything except focus in production, timely payments by intermediaries and financial aid becomes more important for smooth production. Similarly, the role of finance is also decisive in mobilizing other means of production.

Managing Inventory - The Big Factor For Many Business

Managing inventory is a big factor in many businesses, especially in manufacturing. The inventory record is the most likely business area to be computerized, and every ERP system and CRM system is built around the inventory management function.

Basic inventory management maintains what is commonly called perpetual inventory records. Simply put, the system receives reports of inventory movement (transactions) and keeps a continuous record of quantity.

Of course, inventory management software can do more than that. Here are some tools that can and should be integrated with any inventory management to give you the full control and visibility you need to support efficient and effective operation.

1. Collection of barcode data
The perpetual inventory system relies heavily on timely and accurate reporting.
Manually crafted reporting can be compromised by delays, errors, lost transactions, and labor loads for collecting and entering data. Automatic data collection, most commonly done through barcode scanning, eliminates a lot of reporting load so as to improve the accuracy and timeliness of transactions.

2. Cycle counting
Accuracy of inventory is essential for effective inventory planning and control. Unfortunately, most inventory tracking systems are highly inaccurate without an active and disciplined cycle counting system.

Cycle counting replaces the number of periodic physical inventories that are impractical and error-prone (usually yearly) with regular programs to calculate selected items so that more important items can be calculated on a regular basis.

The magic of calculating this cycle is to provide a structure for identifying and eliminating sources of error so as to improve accuracy on an ongoing basis.

3. ABC Analysis
Cycle calculations are usually performed using ABC analysis to identify more important and less important items.

The most common ABC analysis (or so-called Pareto analysis) is sorting out all the inventory items according to the total value each year (annual use or unit unit cost movement).

Typically, the top 20 percent of the items represent 80 percent of the annual value through a warehouse (80/20 rule). The next 30 percent (item B) reaches 15 percent of the value and the remaining 50 percent, item C, a total of 5 percent of the annual value.

In addition to regulating the frequency of cycle counting, the ABC classification should direct the location of the goods in the warehouse, lot size regulations and inventory regulations, as well as other management parameters to focus on important items, where you can earn more for your investment.

4. Integrated planning and implementation
The main focus of ERP is improving customer service (meeting demand) while optimizing resources including inventory (and reducing costs).

While the inventory system provides important information for system planning and implementation within the ERP, this function supports by managing the use and addition of inventory to minimize deficiencies and decrease overall inventory investment.

5. Tracking and searching lots
Not all companies require serial numbers or lottery search tracking; The more accumulated information is in recognition of the increased risk of product withdrawal.
In addition, lifecycle information, genealogy, configuration history and product performance data can be very useful for engineering, development, product service, parts supply, and other business fields.

Inventory tracking is a requirement for financial control and basic business management processes. However, with erp system, your inventory management will change to the better. Besides, inventory data can be a valuable resource for performance improvement, higher customer service levels, cost control, product development, and overall company success.

The integrated inventory management system provides significant basic tools and additional capabilities to make ERP Software more useful for your company's future

What is General Ledger?

General Ledger is a major accounting note for your business if you use double-entry bookkeeping. Or it could be said to be a complete record of all your company's financial transactions. General ledger is commonly used in preparing financial statements, examining out-of-balance conditions, internal and external audits, and also includes accounts for assets, liabilities, owner's equity, revenues and costs.
The general ledger contains all the financial information used in making the income statement as well as the balance sheet report, and also presents some of the main goals in your business's financial operations.

If the general journal is a chronological record of the transaction, the general ledger is prepared by the account and transaction records, and in the formal notes, the company is able to display the account balance in each post.

Chart of Accounts

The general ledger account is built on your Small Business Account Chart showing the main account that will appear in the financial statements. Chart of Accounts can consist hundreds of accounts depending on the size and complexity of the business.

The general ledger consists of charts such as current assets, fixed assets, current liabilities, long-term liabilities, owner's equity accounts, sales revenue, expense accounts, profits and losses.

The general ledger is built by transferring journal entries from a company's financial transaction or accounting journal to a general ledger.

Entry Journal

Most businesses usually put most of their financial transaction data into an accounting journal.
When a financial transaction occurs and a source document is generated, the transaction goes into the general journal. This general journal will list transactions in chronological order. The date, amount, affected account, and direction of the affected account report will be recorded. When you record transactions, you should make sure your debits and credits stay in balance.

Companies may also have a variety of specialized journals. Some of these specialized journals such as sales journals, cash receipts journal, and cash dispensing journals. The number and type of special journals that the company keeps is determined by each company. If a company uses a computerized accounting system, different special journals will be generated when you enter your financial transactions to a computer.

General Ledger Entry

Once the financial transaction entries are made in the appropriate journal, they will be summarized and entered into the general ledger, generally once a month. Each account has a separate page. Details of the company's financial transactions will be stored in the journal. The general ledger shows all summary information for financial transactions for the company from general journals as well as special journals