Tracy Wants to Start Her Own Business, but Knows Little

question 248

Multiple Choice

Tracy wants to start her own business, but knows little about how to set up an accounting system or interpret financial information. "I'm not worried about accounting," she tells her friends. "I'll just hire a part-time bookkeeper to handle all that type of stuff, and focus my attention on what I like-finding ways to satisfy my customers." Which of the following is the best response to Tracy's comments?

• A) Fine. Just make sure the bookkeeper you hire knows how to use a database, since this type of software is the heart of any efficient accounting system.
• B) Although you can hire someone to keep your books, you'll still need to know how to read, understand, and interpret basic accounting reports in order to make good business decisions.
• C) Most entrepreneurs would agree with your opinion. The work done by accountants is mainly clerical in nature, so time spent by business owners on accounting tends to take them away from more important tasks.
• D) You have a good plan. Only managers of large firms require knowledge of accounting. Owners and managers of small businesses can easily get by with just a part-time bookkeeper.

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Definitions:

Returned by Bank

Transactions or items that a bank cannot process and are sent back, such as bounced checks due to insufficient funds in the account.

Not Sufficient Funds

A term used by banks to indicate that a check cannot be honored because the account on which it was drawn does not have enough money.

NSF Check

A cheque that has been returned by the bank because it cannot be honored due to insufficient funds in the account.

Bank Statement

A summary issued by a bank detailing all transactions in an account over a specific period.