Page 402 - Business Principles and Management

Chapter 15 • Business Financial Records

that runs on personal computers has replaced most manual systems. However,
standardized accounting forms and records systems for manual recordkeeping
can be obtained at office supply stores.
Many small firms rely primarily on their cash register to gather most of the
information needed for their financial records. In addition to printing receipts for
customers, cash registers maintain printed tapes of the details of each sales trans-
action. This information can be used to enter data into the business’s accounting
records. However, cash registers record only information on customer sales, which
is an incomplete record of the financial transactions of the business. Records also
have to be maintained of all purchases and payments as well as any income
received that is not recorded in the cash register.

LARGE-SCALE RECORD SYSTEMS Today most large firms and many small ones use
accounting software programs to record, process, and store information. A desk-
top computer is adequate for most small companies, but larger firms need more
complex systems that can process huge amounts of data quickly and accurately.
Large corporations employ many bookkeepers and accountants. Some prefer to
hire outside firms to perform some of their required financial record keeping.
Outsourcing is hiring an outside firm to perform specialized tasks for a busi-
ness. A business outsources because the firm that is hired has specialized expertise
that the business needs. Buying these expert services may be less expensive than
creating a new department in the business. An example of outsourcing for financial
services is contracting with a data-processing center. A data-processing center is a
specialized business that provides a full set of computerized financial records to
other businesses for a fee. A business transmits financial data to the data-processing
center, which processes the data and prepares records and reports that the business
needs. Usually the center stores and maintains financial records for the business.
Many firms use a data-processing center to outsource selected tasks, such as
preparing bills for customers, keeping track of inventory, and preparing payroll Technology allows companies
records and checks. Banks and data-processing firms like ADP and EDS are popu- to have their data processing
lar for outsourcing. Data can be transmitted over the Internet and reports returned done by companies that may be
overnight, even when the data-processing centers are located in other countries. located in countries thousands
Large companies require large and complex automated systems for keeping of miles away.
records. Accounting departments usually maintain these records, although the ini-
tial recording of transactions occurs throughout
the organization. An accounting department is
commonly divided into several sections. Each
section is typically responsible for handling one
or more phases of accounting, such as cash
records, receipt and payment records, depre-
ciation records, and tax and payroll records.
Most large stores with many branches use
sophisticated cash registers connected to com-
puters. Such a register is called a point-of-sale
terminal. When cashiers use bar code scanners
to record sales, for example, each item sold is
subtracted from the inventory recorded in the
computer. The computer calculates when the
store needs to reorder merchandise (based on
predetermined inventory needs) and provides
other valuable information for management. PHOTO: © CREATAS IMAGES.
With point-of-sale terminals, scanners elec-
tronically read product codes stamped on
merchandise, thereby speeding the checkout

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