Page 2 Chapter 1

CHAPTER 1
Accounting Roles and Transactions

Financial information may also be shown in a statement of financial position. A statement
of financial position shows a business’s assets, liabilities and net worth at a specific point in
time.

The accountant may be responsible for advising on, and calculating taxation. Individuals and
companies are all liable to taxation. Unlike employees, people with businesses are
responsible for their own tax issues and the payment of amounts due. Accountants may
calculate how much tax is due and complete the forms which are to be presented to Her
Majesty’s Revenue and Customs (HMRC). HMRC is the government department which deals
with taxation in the UK.

An accountant may also be responsible for interpreting financial information. He or she may
have to make decisions on future events in the business based on the business’s past
record. This may involve giving advice on the selling prices of goods, if it would be financially
viable to go ahead with a new product, or whether to buy new machinery for the factory.

Accounting Technician

An Accounting Technician is someone who performs some of the duties of both the
bookkeeper and the accountant. He or she may assist with the preparation of financial
statements, deal with bookkeeping, look after and control budgets, monitor expenses and
write reports. In many larger organisations, accounting technicians work alongside members
of chartered accountancy bodies. In smaller organisations, they may be the only financially
trained member of staff.

In practice the roles of the bookkeeper, accountant and accounting technician are all not as
clearly defined as above, but this is a guide to the traditional duties of each.

Types of Business

There are three main types of business which will be dealt with in the AAT course.

Sole Trader

This is the business most dealt with in this Unit. The business
will be owned and run by an individual. He or she will
probably be responsible for most of the running of the
business. He or she will be in charge of buying and selling
goods or services and be in charge of hiring and firing staff.
Many sole traders maintain their own books and then employ
an accountant to prepare the final accounts ready for the tax
calculation at the end of each financial year.

It is important to remember that a sole trader not only has the rights to all the profits a
business makes, but also he or she is personally responsible for any losses. If a sole trader
finds that he or she cannot pay his or her creditors from the business’s income, then the

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