Functions and Procedures of Concepts in Accountancy

This article discusses the functions and procedures of accounts payable, accounts receivable, account reconciliations, bank and credit cards reconciliations, month end reporting, annual reports, director reports and corporate governance reports in accountancy. It also provides references for further reading.

FUNCTIONS AND PROCEDURES OF CONCEPTS IN ACCOUNTANCY 1
FUNCTIONS AND PROCEDURES OF CONCEPTS IN ACCOUNTANCY
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Introduction
The functions and procedures of accounts payable, accounts receivable, account
reconciliations, bank and credit cards reconciliations, month end reporting, annual reports,
director reports and corporate governance reports are discussed below.
Accounts Payable
The function of accounts payable comprises all payments from the company that are
made outside of the payroll. The main function of this department is to pay off only the bills and
invoices of the company that are accurate and legitimate. This involves entering the vendor’s
invoices into the accounting books and scheduling for a payment. Internal controls should be set
in the accounts payable function to safeguard the cash and other assets of the company.
Fraudulent, inaccurate and duplicate vendor invoices should not be paid (Brealey & Mohanty
2012, p. 63).
Accounts Receivable
The key functions of accounts receivable include preparing cash and check payments for
bank deposits, reconciling accounts receivable ledger for ensuring that all payments are posted
properly, recording payments received by recording them in the accounting system, preparing
invoices for services provided and collecting on accounts by sending invoices. This function is
concerned mainly with managing cash inflow to the company resulting from sales (Horngren and
Foster 2002, p. 88).
Account Reconciliations

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Account reconciliations ensures bank statements are equal to company accounting
statements. The main function of this department involves gathering suitable account data such
as invoices, confirming the account balances and correcting them, looking for discrepancies and
setting policies for preventing errors (Scott 2016, p. 101).
Bank and Credit Cards Reconciliations
Reconciliation function allows the accountant to match transactions entered in the
accounting system with the Company’s credit card or bank records. This is essential in
maintaining accuracy in the accounting records. The process involves setting up credit card or
bank account in the accounting software with a correct opening balance. All uncleared
transactions for the period are then entered and cross-checked against the bank or credit card
statement received. Any discrepancies or errors are then identified and corrected (Brealey &
Mohanty 2012, p. 64).
Month End Reporting
Month end reporting ensures financial records of a company are balanced and closed
properly before starting a new month. The balance of each account is determined and all
numbers entered into the accounting software to generate the reports. The process involves
running reports for checking transactions and balances, and preparing management accounts for
assessing the company’s financial position (Scott 2016, p. 101).
Annual Reports, Director Reports and Corporate Governance Report
An annual report is a summary of company’s financial activities during a financial year,
analyzing the current financial position and the management’s future plans. They are prepared at

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the end of a financial period for keeping external users informed about financial performance and
position of a company (Brealey & Mohanty 2012, p. 64).
A director’s report is a statement by the company’s directors expressing their opinions on
the state of the company, and how much company shareholders should receive as dividend
payment (Hilton 2013, p. 42).
A corporate governance report is a statement by the management providing detailed
information about the company’s structures of governance, ownership, risk management and
internal control systems (Scott 2016, p. 102).

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References
Brealey, R.A and Mohanty, P., 2012. Principles of Accounting (Vol. 2). Tata: McGraw-Hill
Education.
Hilton, R.W., 2013. Financial accounting: business finance (Vol. 4). Harlow: Financial
Times/Prentice Hall.
Horngren, C.T. and Foster, G., 2002. Introduction to Financial accounting (Vol. 7). Harlow:
Financial Times/Prentice Hall.
Scott, W.R., 2016. Financial accounting theory (Vol. 2, No. 0, p. 0). Berlin: Springer.
Online PDF Links
Account Reconciliation? The Strategic CFO. (2018, February 20). Retrieved from
https://strategiccfo.com/account-reconciliation/
Accounts Payable Process | AccountingCoach. (n.d.). Retrieved from
https://www.accountingcoach.com/accounts-payable/explanation/2
Bank Reconciliation - principlesofaccounting.com. (n.d.). Retrieved from
https://www.principlesofaccounting.com/chapter-6/bank-reconciliation/
Policies & Procedures for Accounts Receivable. (2012, June 26). Retrieved from
https://smallbusiness.chron.com/policies-procedures-accounts-receivable-49701.html