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Importance of Management Accounting Reports

A management accounting report emphasizes on inside information received through financial accounting. Managerial accounting reports are used for planning, regulating, decision making and measuring performance. Below are some of the detailed points as to why these reports are important;

1. Provides Information – the purpose of preparing a report is to provide information to various level of management and stakeholders. The term management includes supervisors, chairman, general manager, department manager and by preparing a management report these people will have an overall trend of the business, the cash flows and fund flaws.

2. Helps In selection – most relevant and crucial information is found in the management report hence management can choose which profitable option to focus on from the alternative options stated in the report.

3. Role In Control System– management reports are used as a control tool because management can see whether employees are working towards the targets and standards. The report will be prepared in such a way that actual information and budgeted information will be compared to see variances. If there are any unfavorable variances, reasons are find out what would be the cause and corrective action or measures are put in place to rectify the situation.

4. Helpful in achieving the overall Objectives– report motivates the executives and employees to take necessary steps to increase earnings of the organization significantly, in this way the management I achieving the maximum profit with the help of reporting systems.

5. Launching a new product– when a business wants to launch a product, management reports are important because it can support every stage from the initial stage to the execution stage by giving a detailed breakdown of production capabilities and an accurate picture of the market as a whole. This is crucial for working out how much you will charge for the new product. Management reports can be used to review existing reports and the unprofitable ones and deciding on the next move.

6. Utilizing Data– Managerial accounting information provides a data-driven look at how to grow a small business. Budgeting, financial statement projections and balanced scorecards are just a few examples of how managerial accounting information is used to provide information to help management guide the future of a company. By focusing on this data, managers can make decisions that aim for continuous improvement and are justifiable based on intelligent analysis of the company data, as exposed to gut feelings

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Advantages of Outsourcing Bookkeeping

Bookkeeping can simply be described as the systematic way of recording business transactions in the books of accounts. Outsourcing refers to hiring another company or individual to perform tasks that were previously done by a company’s employees. Outsourcing Bookkeeping now refers to a service which provides a full accounting department experience for small business entities at a lower cost. There are advantages of outsourcing bookkeeping and these are explained below:

More time to provide value to clients

Bookkeeping takes up a lot of time from capturing transactions, processing them, filing them and if all this time could be used to bettering the company and improving services provided to customers or clients, this will not only maintain happy clients but also get referrals to more clients.

Increased efficiency and focus

When a company outsources bookkeeping it means it is using its time, resources and energy in an appropriate manner. Instead of putting so much focus on bookkeeping, there are other areas that are always at stake and need focus. A company can use this opportunity to achieve its overall goals such as company growth, high market share and strategizing on how to be the best in the industry.

Access to a highly trained bookkeeper

Having highly trained bookkeepers means having access to professionals who have the knowledge and skills in that specific area and will definitely make sure the books are as best as they could be to portray a good image for the business and for themselves. If bookkeepers offer a good service, more client referrals coming their way and it also means as a business owner you will have more time to focus on what you are good at.

Saves Money

Outsourcing bookkeeping saves money in the sense that you don’t have to employ an in-house bookkeeper full time, you pay for the services that you need and that’s it.Hence there will not be employee costs overheads, payroll taxes, and training costs, this becomes very vital when improving your profit margin. Furthermore having an in-house bookkeeper could lead to conflict of interest.

Team staff versus Individual

When you outsource your bookkeeping, you are placing your books in the hands of individuals who thrive on teamwork. Individuals who put their minds together in problem solving, individuals crosschecking each other’s work for accuracy purposes unlike an in-house bookkeeper who might take ages to detect an error to ensure you receive good quality services.

Scalability Options 

Outsourcing can help you expand or cutback because whether you are looking to grow your business or cut down expenses, having the best bookkeepers to provide  you with different plans and options will help you achieve your goals, it also provides flexibility which in-house cant,

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Basic Functions of Accounting Systems

An accounting System – is a set of records and the procedures and equipment used to perform the accounting functions. Manual systems consist of journals and ledgers on paper. Computerized accounting systems consist of accounting software, computer files, computers, and related peripheral equipment such as printers.

Basic Functions

Interpret and record business transactions.

The records that are kept for the individual asset, liability, equity, revenue, expense, and dividend components are known as accounts Every time an organisation conducts a business transaction, the status of the account changes. Bookkeeping process keeps track of these changes in various ledgers and journals. The financial statements are then prepared using this information.

Classify similar transactions into useful reports.

Statement of financial position has 3 sections

Assets – the things of value that the company owns.

Liabilities – obligations to pay or provide goods or services at some later date.

Equity – the amount of net assets (assets – liabilities) owing to the owners of the business.The income statement – communicates the inflow of revenue, and the outflow of expenses over a given period of time.

The Cash Flow Statement – records inflows and outflows of cash during a period of time, and is divided into cash flow from operations, financing, and investing activities. 

Summarize and communicate information to decision makers. 

An accounting system is capable of generating summarized and comprehensive statistical reports that provide management or interested parties with a clear set of data to aid in the decision-making process.

An accounting system can also manage

Expenses – An automatic accounting system allows quick entry, categorisation and automatic balance of expenses.

Invoices – Some accounting systems allow for instant invoice creation with the ability to customize and automatically keep track of paid invoices and income.

Funding – All the business liabilities, whether accounts payable, bank loans taken to support the business, or mortgages, etc. An accounting system keeps track of these liabilities as payable values and automatically updates the balances as soon a payment is made and accounts are settled.

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The difference between management reports and financial reports

Financial and management reports are the fundamental to the success and going concern of a business. For large businesses, various departments have to contribute for these reports to give a true picture of the organizational operations. 

However, for small businesses one person might be able to handle the reporting of an organization. While some may think reporting is just about calculating numbers, management reports and financial reports contain a number of differences in content and the generation process. Before hiring a specialist, it is important to understand the differences in the two types of reporting.

Financial reporting refers to the process of providing financial information to company stakeholders in order to influence business goals. The process includes three important components which are the cash flow, the profitability and the value of assets (current and non-current). The finance person tasked with preparing these reports must have an understanding of the variety of statements and the accounting standards required.

The several different types of financial management and reporting are Statement of profit or loss and comprehensive income, Statement of financial position, Accounts that are to be paid (Creditors), Accounts from where funds are coming and Statement of transactions (Debtors). Financial reporting has to be done accurately by a sharp and diligent professional.

On the contrary, management reporting is key to assess a company’s operation and performance. Management accountants send monthly management reports to the CEO.

These inform stakeholders who in turn can better make decisions about the company’s profit points, performance, and tactical steps to benefit the company as a whole. The monthly reports that are sent to the management outline the company’s overall performance in the fiscal year. It is important that management reporting is done by a critical thinker to produce the best results.

Financial reporting includes external reports that require certain standards and guidelines to be followed. They demonstrate the company’s overall performance. Moreover, they facilitate easier comparison between successive financial years.

In contrast, management reporting includes internal reports, including information regarding banks, investors and CEOs. Flexible guidelines. Management reports demonstrate the company’s reports for segments. The way they help business forecasts the company’s future cannot go unmentioned.

In conclusion, it is important to note that management and financial reports are different. However, both are concerned with making a business viable. In order for a business to remain competitive sound financial and management reports are top priority.

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QuickBooks Online is the Leading Cloud Accounting Software in the world with over 5,6 Million subscribers.

Cloud Accounting is the future of Accounting “ In UK he UK, 18% of firms have over 98% of their clients in the cloud, while worldwide, almost a third (31%) have more than 80% of their clientele online “ In the UK, it’s predicted that 78% of small businesses will rely solely on cloud accounting software by 2020

Why Cloud Accounting

In recent years, cloud technology has revolutionized our day-to-day lives. We post our family photos to Facebook, we pay our household bills through online banking and we use our smartphones to check our email on the move.

So, if we are utilizing the cloud in our everyday lives, why are we not doing the same in our business lives? Cloud-based accounting software now offers all the functionality and reliability of your tried and trusted desktop accounting system, but with the advantages of cloud accounting.


Here are some of the advantages of using cloud accounting over desktop versions.

Mobile access at any time

Access your data anywhere at any time 24/7 so long you have internet access, unlike desktop application where your data and your accounts are all sat on a local drive and that limits the access you can have to your financial information.

You can also access your data on Mobile and Tablets which help can translate into a more flexible lifestyle while running your business. You can have certainty over the financials and banking even when you are not physically present in your business.

A cost and time-effective solution

Working online reduces your IT costs and saves you time by keeping you constantly connected to the business. Desktop-based systems require an investment in IT hardware, server, and maintenance of the hardware whilst online accounting is carried out entirely from the cloud.

There is no costly IT infrastructure for you to maintain, and you can access the software whether you are in the office or out at a customer meeting.

Watertight security and no time-consuming back-ups

When you are cloud-based, your accounts and records are all saved and backed up with military levels of encryption. With desktop accounting, you have to back up data each and every day and make updates every time the provider provides new updates.

On a cloud platform, back-ups and software updates become a thing of the past. You’re always logged in to the most up-to-date version of the software, with all the latest functions which save time and money with tedious backup.

Cloud accounting is more secure than the desktop version where the file is set in Sever or laptop hard drive all information is encrypted and save in cloud servers.

Share and collaborate with ease

Working with colleagues, and sharing data with your advisers, is an extremely straightforward process when you’re based in the cloud. Using the old, desktop approach, you had limited access to your accounts – and that made collaboration with colleagues and advisers difficult.

If your accountant needed specific numbers, they would need to be emailed back and forth, or saved to a USB memory stick and couriered directly to their office.

Reduces paperwork and is more sustainable

Using cloud accounting can deliver the dream of having a paperless office. With an online accounting  system, you can significantly reduce your reliance on paperwork.

Invoices can be emailed out directly to clients, removing the costs of printing and postage – and speeding up the payment process. Incoming bills and receipts can be scanned and saved directly with the associated transactions in your accounting software because your documents are all digitized and stored in the cloud also known as e filling.

Also, you banks transaction can automatically add into QuickBooks, Please note this function does not integrate with Zimbabwean banks, However, you can upload your CSV file bank statement into QuickBooks then, categorize or reconcile the transaction and then posts into QuickBooks

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The importance of submitting annual returns

All private limited companies by law have to file annual returns once every year within the required time frame as regulated by the Companies Act.

By filing the annual returns with the Registrar of Companies, the company confirms whether they are still in business or trading, or if it will be in business in the near future. An annual return is a statutory return in terms of the Companies Act and is a summary of the most relevant information pertaining to a company. 

The prescribed filing fees for annual returns are legislated, and as such cannot be waived by the Registrar of companies. When a company fails to submit its annual returns for a long time, the Registrar of Companies will assume the company is no longer trading and may start the deregistration of the company. 

Once a company has been deregistered, the Registrar of companies removes the company from its active records. Legally, the company will now cease to exist and the company name will become available to the general public for registration. 

Once the company is in the deregistration process due to the non-payment of annual returns, it is possible for the deregistration process to be cancelled if all outstanding annual returns are paid up to date.

If however the company is in final deregistration, then the company can apply for reinstatement upon filing of the required documentation. If the application is successful and all reinstatement criteria are met, the Registrar of Companies will change the status of the company to “in reinstatement process”, at a prescribed fee.

To keep your company in good standing with the Registrar of Companies and to avoid any penalties, possible deregistration, or the aggravation of trying to reinstate the company, every company is advised to lodge their annual returns timeously within the stipulated timeframe.

Avoiding Penalties

Ways to avoid incurring penalty fees include:

  1. Being aware of your company’s Annual Return Date
  2. Ensuring that your company’s financial statements are prepared well (Know your authorised & issued share capital)
  3. Seeking assistance from a company secretarial firm such as M&J Consultancy so the annual return is taken care of and reminders are sent to the company

To conclude, filing your Annual Returns is of the utmost importance. If you are not sure of the whole process, then get in touch with us for a detailed guide and walkthrough.