Morri Young: "Cash or accrual? Setting up an accounting system that works for you".
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Morri Young: "Cash or accrual? Setting up an accounting system that works for you".

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ALA presentation 25 May 2012: There are so many decisions that need to be made when setting up an accounting system for your organisation....

ALA presentation 25 May 2012: There are so many decisions that need to be made when setting up an accounting system for your organisation.
In this session, presenter Morri Young from Matrix On Board will provide an overview of financial reporting; in particular the advantages and disadvantages of cash and accrual accounting systems.
Cash and accrual are the two methods of accounting for income and expenses. Behind these methods are the essential concepts of financial reporting. With the use of interactive exercises and easy to understand language, participants will learn the differences and benefits of each accounting method.
Morri Young is the Managing Director, Strategy and Market, for Matrix on Board. Morri has been working with government and community non-profits for 25 years. His strengths are project management, strategic planning and innovative solutions to organisational issues.
Matrix on Board has supported non-profit organisations across Australia since 1997 to create tailored training and development solutions.

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  • Wrote books on mathematics, chess, magic..Franciscan monk, born in 1447 and moved to Venice in 1464Eventually worked with Leonardo da Vinci. Published a textbook in Venice 1494, for use in the schools of Northern Italy. It was a synthesis of the mathematical knowledge of his time It is also notable for including the first published description of the method of bookkeeping that Venetian merchants used during the Italian Renaissance, known as the double-entry accounting system.The system he published included most of the accounting cycle as we know it today. He described the use of journals and ledgers, and warned that a person should not go to sleep at night until the debits equalled the credits. His ledger had accounts for assets (including receivables and inventories), liabilities, capital, income, and expenses — the account categories that are reported on an organization's balance sheet and income statement, respectively. He demonstrated year-end closing entries and proposed that a trial balance be used to prove a balanced ledger. Also, his treatise touches on a wide range of related topics from accounting ethics to cost accounting.For a wonderful read, check out “Double Entry” by Jane Gleeson-White.Rollicking…
  • Even in the simplest methods, we use DE bookkeeping.Our organisation gets a donation, we show it as income in the profit and loss accounts as Donations.And the other side of the entry is that it appears in an Asset Account in our Balance Sheet as Cash in the Bank.One side is something we earn, and it is now matched with something we own, cash at bank…Sometimes we can just change one thing to another.. Eg cash at bank becomes a computer.. One asset to another.

Morri Young: "Cash or accrual? Setting up an accounting system that works for you". Morri Young: "Cash or accrual? Setting up an accounting system that works for you". Presentation Transcript

  • Cash and Accrual Accounting Webinar Adult Learning Australia May 25, 2012Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Housekeeping• Introductions• Room etiquette• Scope of the sessionAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Matrix on Board o Three MDs from the NFP sector o Established in 1997 o Building capacity in NFPs and Social Enterprises o Our services • Management support • Financial management • Education and training www.mob.com.auAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Matrix on BoardAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Matrix on BoardAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Matrix on BoardAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • AccountingThe Science and the Art of AccountingAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accounting The Science is recording what we earn, and spend, and own and owe.Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accounting The Art is putting a value on what we earn, and spend, and own and owe.Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accountants are not Gods These “rules” are individual and unique.Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accountants are not Gods These “rules” are individual and unique. These “rules” are arbitrary and agreed.Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • The father of AccountingFra Luca de PacioliAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Double Entry Bookkeeping Donation Donations Cash at Received Bank Income Asset Account AccountAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accounting Methods CASH ACCRUALAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accounting MethodsCASH Accounting for what we earn and spend when we earn and spend it. Simple to process. [“Spend money” “Receive Money” buttons on MYOB] Enters transactions at the date payment is made or received. Reflects cashflow. But not a „real‟ financial picture.Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accounting MethodsACCRUAL Accounting for the value of „obligations and commitments‟ we make to others and they make to us More complicated to process. [“Purchases” “Sales” buttons] Enters transactions at the date commitment is made or received. Reflects a combination of owing and owning, earning and spending. A more „real‟ financial picture.Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Accounting MethodsACCRUAL MANTRA “Allocate the Right Amount in the Right Account for the Right Period”Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • ExampleThe Coveted Bookshelf Its March 21 and its your birthday! Fortunately you were paid today in cash, and you have a fortnight’s pay of $1000 in your purse. On the way home, you see that nice little bookshelf, the one you have admired for months. You know that the monthly household rent of $1000 is due in two weeks (April 1), there is food in the fridge, and there are no bills on the kitchen bench. Your regular birthday money from Grandma hasn’t arrived, but it is due any day and she has sent you $250 each year for the past 10 years! You see that the bookshelf has been reduced to $400…. You are very tempted, (little knowing that there is a $300 telephone bill for the month in the mail heading towards you!) The bookshelf is a bargain! Should you buy it?Adult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • The Coveted Bookshelf My Income Statement CASH ACCOUNTING for the Fortnight ended 31 March 20XX Income Wages Birthday Money Total Income Expenditure Bookshelf Delivery Rent Food Phone Bill Total Expenditure Surplus/DeficitAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • The Coveted Bookshelf ACCRUAL ACCOUNTING My Income Statement for the Fortnight ended 31 March 20XX Income Wages Birthday Money Total Income Expenditure Bookshelf Delivery Rent Food Phone Bill Total Expenditure Surplus/DeficitAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • ExampleThe month of OctoberAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Way Forward Inc Income Statement CASH ACCOUNTING for the Month ended 31 October 20XX Income Grant Received Total Income Expenditure Electricity Phone Photocopy Lease Total Expenditure Surplus/DeficitAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Way Forward Inc ACCRUAL ACCOUNTING Income Statement for the Month ended 31 October 20XX Income Grant Received Total Income Expenditure Electricity Phone Photocopy Lease Total Expenditure Surplus/DeficitAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012
  • Thank you…From Adult Learning AustraliaAnd Morri Young from Matrix on BoardAdult Learning Australia Webinar: Cash and Accrual Accounting 25 June 2012