Page 4 Chapter 1

CHAPTER 1
Accounting Roles and Transactions

 Central government
 Local government
 Health trusts
 Educational bodies e.g. schools and colleges
 Some corporations such as the BBC.

Then there is the ‘voluntary sector’. This includes charities or clubs. Typically they will have
been established with the objective of addressing a social need, rather than simply to
provide a service or generate revenue. Often they are non‐profit making, or will reinvest
revenue for the purpose of serving their client group or achieving their objective.

Organisational Structures

It may be becoming clear that the organisational structure of a business is dependent on the
type of business. A small sole trader may do all the bookkeeping him‐ or herself. This is
perfectly possible (although a lot of hard work) since the amount of information required
will be limited. Basically all that is required in a one‐man business is a list of what was sold
and a list of what was bought. Taking the books to an accountant each year will be sufficient
for the sole trader to see how well (or otherwise) the business is going and to satisfy HMRC
regarding taxation.

In partnerships a little more work is required, although each partner will be responsible for
his or her own tax liabilities. Since the company has more than one owner, a track of sales
and purchases needs to be kept and the revenue and expenses created by each partner. It
would be wise for a partnership to employ at least a bookkeeper to record the day to day
transactions.

Limited companies will require more detailed accounting records. The format of the
accounting records is regulated and more than simply what was bought and sold will need
to be recorded and reported. Larger companies will have different departments for sales,
purchases, wages, and management accounts. Management accountants assist
management in decision‐making, planning, and control. Financial accountants report the
financial position and performance of a business.

Where there is more than one person in a company some sort of organisational structure
will be required. The most common structure for larger businesses is the hierarchical
structure. Responsibility passes from the director, to senior management, to middle
management, and then to supervisors.

Then there is the ‘tall’ structure. This has many levels of management with a long chain of
responsibility.

Another structure is the ‘flat’ structure.

The following pages show each structure in diagrammatic form.

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