Single Entry and Double Entry Accounting

-
Single entry accounting/Cash accounting. This system records only cash movement of transactions and that too up to the extent of recording one aspect of the transactions. This means that only receipt or payment of cash is recorded and no separate record is maintained (about the source of receipt and payment) as to from whom the cash was received or to whom it was paid. Double entry book keeping/Commercial accounting. Double entry or commercial accounting system records both aspects of transaction i.e. receipt or payment and source of receipt or payment. It also records credit transactions i.e. recording of Electricity Bill or accruals of Salary payment etc. This concept will be explained in detail in the next lectures but for the time being it should be noted that in cash accounting date of receipt / payment of actual cash is important while in commercial accounting the date on which the expense is caused (whether paid or not) as well as the spreading of the cost of c
Post a Comment

CONTROLLING AS A MANAGEMENT FUNCTION I

-
Introduction and Overview of Controlling
Regardless of the thoroughness of the planning done, a program or decision still may be poorly or improperly implemented without a satisfactory control system in place.
 
Controlling is that process of regulating organizational activities so that actual performance conforms to expected organizational goals and standards. While interrelated with all of the other management functions, a special relationship exists between the planning function of management and controlling. Planning, essentially, is the deciding of goals and objectives and the means of reaching them. Controlling lets manager tell if the organization is on track for goal achievement, and if not, why not. A well-developed plan should provide benchmarks that can be used in the control process.
 
Controls serve other important roles including helping managers cope with uncertainty, detecting irregularities, identifying opportunities, handling complex situations, and decentralizing authority. Like planning, controlling responsibilities differ by managerial level with control responsibilities paralleling planning responsibilities at the strategic, tactical, and operational level.
 
There are several major steps usually identified in the basic control process. These are, in order, determining the areas to be controlled, establishing the appropriate standards, measuring performance, comparing the performance against standards, recognizing performance if standards are met or exceeded or take corrective actions as necessary if not, and adjusting either/or standards and measures as necessary. Of course it would be impossible to control all activity in an organization. Consequently, it is important for the manager to decide which activities should have the control process applied. Argues that managers need to consider controls mainly in areas in which they depend on others for resources necessary to reach organizational goals. Four conditions help delineate when controls should be used. These are having a high dependence on the resource, having a high expectation that the resource flows would be unacceptable without proper controls, that the instituting of a control process would be feasible, and that the total control process costs would be within the acceptable range.

Timing is one of the bases for differentiating control systems. Some major control types are based on timing. These include feed forward controls, concurrent controls, and feedback controls. These are terms which are unfamiliar to many students and special note needs to be made in reviewing this material. A variety of these types of control is frequently used in multiple control systems and usually involve non cybernetic. Cybernetic controls involve little, if any, human discretion as part of the system. Rather, it is a self-regulating system that, once put into operation, can automatically monitor the situation and take corrective action when necessary. Non-cybernetic systems, on the other hand rely on human discretion as a basic part of its process.
 
In addition to deciding the types of controls to use, managers also have the options regarding the mechanisms to be used to implement controls. The three basic approaches are bureaucratic, clan, and market. Bureaucratic controls rely on regulation through rules, policies, supervision, budgets, schedules, reward systems, and other administrative mechanisms aimed at ensuring acceptable behavior and performance Clan controls rely on the values, beliefs, traditions, corporate culture, shared norms, and informal relationships to regulate behavior and to facilitate the reaching of organizational goals. The market controls have a somewhat more limited application in organizations than do bureaucratic or clan controls; all three approaches are likely to be used to some extent. Market controls rely on market mechanisms to regulate prices for certain goods and services used by the organization.

There are some potential dysfunctional aspects of control systems the manager must consider. Behavioral displacement, game playing, operating delays, and negative attitudes are some of these. To decrease the likelihood of the effects, managers need to avoid engaging in either over-control or under-control. To be effective, control systems should be future oriented, multidimensional, cost-effective, accurate, realistic, timely monitor able, acceptable to organization members, and flexible.

Comments

Post a Comment

Popular posts from this blog

RECORD KEEPING AND SOME BASIC CONCEPTS

-
Image
We can maintain a diary of transactions and note the daily transactions like sale, purchase etc. in it. Problems Faced in Maintaining Diary of Transactions • How will we come to know the income and expenses from various sources? • We only have a sheet / page on which daily transactions are listed. • We do not know which product is selling better and which is not. Available Alternate One can go through all the transactions at the end of the month and note different types of transactions on different pages. So that every page gives complete detail for a different type of transaction like sales of different products and expenses of different types now try to go through these transactions and separate transactions of different types.   But what if the number of transactions is large? Is it really possible to go through hundreds or thousands of transactions at the month end and analyse them to obtain required results.  Sales and purchase are not always for cash. Some ti
Read more

Single Entry and Double Entry Accounting

-
Single entry accounting/Cash accounting. This system records only cash movement of transactions and that too up to the extent of recording one aspect of the transactions. This means that only receipt or payment of cash is recorded and no separate record is maintained (about the source of receipt and payment) as to from whom the cash was received or to whom it was paid. Double entry book keeping/Commercial accounting. Double entry or commercial accounting system records both aspects of transaction i.e. receipt or payment and source of receipt or payment. It also records credit transactions i.e. recording of Electricity Bill or accruals of Salary payment etc. This concept will be explained in detail in the next lectures but for the time being it should be noted that in cash accounting date of receipt / payment of actual cash is important while in commercial accounting the date on which the expense is caused (whether paid or not) as well as the spreading of the cost of c
Read more

Money Measurement Concept

-
In accounting, every transaction that is worth recording is recorded in terms of money. In other words any event or item that cannot be translated in terms of money is not recorded in books of accounts.   With the passage of time, the trading volumes and types of commodities available in the market are increased and it became difficult to exchange commodity with other commodity. That is why the concept of cash / money is introduced and people started valuing all goods / services in terms of a common commodity called money. Now the price of 10 kg wheat would be Rupees 60 instead of 2 meters of cloth. Similarly, the price of 2 meters of cloth and 5 litres of milk would also be Rupees 60.
Read more