Financial Accounting System At Chic Paints Ltd

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Register to read the introduction… Chic Paints Ltd started to use Microsoft Excel spreadsheets instead of an integrated accounts system. The accounts ledgers were bought as a tailored system for the company to use with Microsoft Excel. Chic Paints Ltd accounts system consists of eight computers, one for each full time employee. All transactions are recorded in Microsoft Excel spreadsheets and are updated monthly to the general, accounts payable and accounts receivable ledgers that run on the proprietary software specifically written for Chic Paints Ltd. The general ledger allows Chic Paints Ltd to produce a trial balance and provides financial reports including audit trial, cash flow, income, budgetary information and other key financial indicators. The accounting system also includes an inventory control system which is used to book in goods received into the warehouse and to issue good to the production areas, a stand-alone full absorption costing system used by production, a standard cost and variance analysis system which is used to monitor and control Chic Paints Ltd monthly performance and Sage 50 Payroll system used by HR to pay employees and to store employee records.
5.6 As a limited company, one of the purposes of Chic Paints Ltd’s accounts function is to satisfy the requirements set out by “Financial Reporting Council”. By law Chic Paints Ltd must produce a set of financial statements annually for submission to Companies House. These statements are as
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The Statement of Financial Position will give Chic Paints Ltd a snap shot of the company’s current financial position and help show the liquidity. The bank would use the Statement of Financial Position as part of the decision making process in allowing Chic Paints Ltd to have an overdraft.
5.9 The Statement of Cash Flow – The Statement of Cash Flow is produced to illustrate the amount of cash and cash equivalents entering and leaving Chic Paints Ltd. The Statement of Cash Flow is designed to complement the Statement of Financial Position and the Statement of Profit or Loss to view and understand how Chic Paints Ltd operations are running. The Statement of Cash Flow helps the company’s director and management to see the liquidity position of Chic Paints and how cash has been used.
5.10 The above accounts are produced in line with the UK financial standards set out in “UK Generally Accepted Accounting Principal” or international standards “International Financial Reporting Standards” and must comply with the rules stated in the Companies Act

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