Accounting Skills for Managers

1. Accounting Skills for Managers By Neetu Singhania CA,MBA,M.COM

2. Business Activities Sell Products and services Account Rs Transactions

3. Business Activities Finance and accounting are crucial to success

4. Accounting ? For me? Sales Technology Product Development Accounting

5. Can business people and managers really ignore accounting THE ANSWER IS NO

6. Why Learning Accounting

7. About this course • Teach you how to speak the language of Accounting • Help you understand how accounting is done within a business • Complement your core business skills and other talents with the knowledge of accounting .

8. FINANCIAL ACCOUNTING By Neetu Singhania CA,MBA,M.COM

9. INTRODUCTION TO FINANCIAL ACCOUNTING • Scope & importance • Basic Accounting Terminology • GAAP, Accounting Conventions & Accounting Concepts • Significant Accounting Standards including IFRS • Overview of financial statements

10. Accounting Mechanism • Overview of Double Entry system of book keeping. • Overview of the accounting process leading to preparation of financial statements including closing and adjustment entries.

11. Revenue recognition and measurement • Principles of Revenue Recognition as per AS 9 • Capital and Revenue items. • Concept of Deferred Revenue Expenditure

12. Fixed Assets & Depreciation Accounting • Valuation of fixed assets including revaluation of fixed assets • Concept of depreciation , methods of depreciation and accounting thereof

13. Inventory accounting and valuation

14. Corporate financial statements • Format of Balance sheet and Profit & Loss A/c in vertical form, Schedule VI requirements , Notes to accounts • Corporate Balance Sheet – Understanding various accounts of Balance Sheet viz. Assets , Liabilities , Working capital, Loan funds , Shareholders funds etc

15. Corporate financial statements • Corporate Profit & Loss Account – Understanding various accounts of Profit & Loss Account viz. Incomes , expenditures, provisions ,appropriations etc. • Understanding Cash Flow Statement • Annual Report of the company - Contents and significance of various reports.

16. Corporate financial Reporting - Ratio Analysis & funds flow

17. Inflation Accounting

18. Corporate accounting- Overview of Share capital & debentures

19. Recent developments in the field of accounting

20. Evaluation • Exams • Class Test • Annual Report Analysis • Attendance & Code of Conduct TOTAL • 60 • 20 • 10 • 10 100 Evaluation criteria Weight age

21. Books of reference • Financial Accounting –A management Perspective –R.Narayanswamy, • Financial Accounting-Khatri, • Financial Accounting-J.C. Varshney, • Financial Accounting for managers-T.P.Ghosh, • Financial Accounting for management-N.Ramachandran& Ram Kumar Kakani.

22. Chapter 1 Accounting: The Language of Business

23. Evolution of financial Accounting

24. Accounting Skills Business transaction

25. A transaction • A transaction is defined as the completed sale or exchange of goods and services. • In an exchange ,there are at least two equal actions ,something is given and something is received .

26. Types of Accounts • Assets • Liabilities • Owner’ Equity • Income • Expense

27. Types of Accounts- Examples

28. The Accounting Equation Accounting equation shows the relationship between assets and liabilities of a company. It is the relationship between what a company owns and what it owes to others. It is given as : Assets= Liabilities +Owner’s Equity

29. The effect of every business transaction can be analyzed from the above equation. Any change in one component will have a balancing change in another. If Assets increases : Another asset will decrease/ Liability will increase If Assets decreases :Another asset will increase / liability will decrease If liability increases : Asset will increase / Another liability will decrease If liability decreases : Asset will decrease / Another liability will increase

30. Question A Ltd. issues equity shares of Rs.50.00 lacs A Ltd. purchases Building for Rs.20.00 lacs A ltd. purchases Plant & machinery for Rs.15 lacs A Ltd. takes a loan of Rs.5.00 lacs from Bank A Ltd. purchases raw materials for Rs.5.00 lacs A Ltd. pays salaries Rs.1.00 lac A ltd. sells goods for Rs. 2.00 lacs in cash A ltd. sells goods for Rs. 10.00 lacs on credit A Ltd. purchases equipments for Rs.5.00 lacs on credit A Ltd. repays bank loan Rs.2.00 lacs Arrive at the final results of the above transactions on the accounting equation.

31. The Accounting Equation The equation always balances !

32. Ajay decided that he will transact only in cash. His modus operandi was to hire a cycle trolley on a daily basis, purchase fresh vegetables and fruits and sell them door to door. He could plan his purchases in such a way that at the end of each day he was able to sell all that he purchased during the day. He used to keep a record of all purchases and sales for each day in a small notebook. At the end of the month i.e 31/01/13, he found that he has a cash balance of Rs.15000. His notebook showed that he had purchased vegetables worth Rs.60000 and sales valued Rs.66000. The hire charges for the cycle trolley came to Rs.1000. He wants to know the financial position and the performance of his business at the end of the month. Prepare a Profit & Loss A/c and Balance Sheet as on 31/01/13.

33. Encouraged by his success in his first month of operation, Ajay purchases a second hand air conditioned van from Vanco a dealer in automobiles to increase sales and to obviate the difficulties of selling all the vegetables on the day of purchase. As per the agreement Ajay will pay Vanco Rs.100000 in 20 equal instalments from 01.10.11.along with interest of 12% p.a .The van was handed over to Ajay on 01.02.13. Prepare a Balance Sheet as on 01/02/13

34. Ajay could now purchase vegetables in bulk and sell them over larger area. He hired two people to pack vegetables in bags for easy handling. All these increased his sales and he also earned a good name for himself due to high quality goods and services. He continued to keep record of payments and receipts for every month. He presents the following information on 31.03.13:

35. Sales Rs.1000000 Purchases Rs.700000 Salaries and wages Rs.50000 Van running expenses Rs.50000 ( including hire charges for the cycle trolley ) Interest Rs.6000 He has paid Rs 30000 in part settlement of his liability. His cash balance showed Rs.174000. He also had with him vegetables worth Rs.20000. Prepare Profit & Loss Account and Balance Sheet as on 31.3.13.