This document discusses the key concepts and components of financial markets. It defines a financial market as a mechanism that allows people to buy and sell financial securities, commodities, and other assets. It notes that financial markets facilitate capital raising, risk transfer, liquidity transfer, and international trade by matching those who want capital with those who have it. The document then describes different types of financial markets including capital markets, commodity markets, money markets, derivatives markets, futures markets, insurance markets, and foreign exchange markets. It also distinguishes between primary and secondary capital markets.
Information about Financial Market, Indian Financial System, Indian Financial Institutions, Types of Financial Markets, Role of capital market and Role of Financial Institutions.
Information about Financial Market, Indian Financial System, Indian Financial Institutions, Types of Financial Markets, Role of capital market and Role of Financial Institutions.
A journey through American and Japanese capital Market.
This presentation can be used a study material for international Financial Management for MBA/PGDM.
The presentation discusses different ways that the financial sector can contribute to economic growth. It further discusses other dependencies to economic development.
The Indian Financial Market Is Touted as Benchmark in Today’s Global Economic...paperpublications3
Abstract: To describe my contents in a concise manner the above topic throws light on credentials of a Indian financial market in both theoretical and pragmatic ways. Through this I want to highlight the working of share markets and how a common investor can achieve better return from his or her capital investment. Profit is the only “mantra” that can drive success in a capital market and for ensuring profitability one needs knowledge and self-interest. I feel privileged to write this topic and describe my own experiences of share market in a pictorial and best possible manner.
A journey through American and Japanese capital Market.
This presentation can be used a study material for international Financial Management for MBA/PGDM.
The presentation discusses different ways that the financial sector can contribute to economic growth. It further discusses other dependencies to economic development.
The Indian Financial Market Is Touted as Benchmark in Today’s Global Economic...paperpublications3
Abstract: To describe my contents in a concise manner the above topic throws light on credentials of a Indian financial market in both theoretical and pragmatic ways. Through this I want to highlight the working of share markets and how a common investor can achieve better return from his or her capital investment. Profit is the only “mantra” that can drive success in a capital market and for ensuring profitability one needs knowledge and self-interest. I feel privileged to write this topic and describe my own experiences of share market in a pictorial and best possible manner.
Financial Market is the market where financial securities like stocks and bonds and commodities like valuable metals are exchanged at efficient market prices. Here, by efficient market prices we mean the unbiased price that reflects belief at collective speculation of all investors about the future prospect. The trading of stocks and bonds in the Financial Market can take place directly between buyers and sellers or by the medium of Stock Exchange. Financial Markets can be domestic or international.
The capital market connects the surplus units with the deficit units. It means that the funds are channelized from those who have excess capital to those who need it.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
1. SAAB MARFIN MBA
Finance is often defined simply as the management of money or
“funds” management. [1]Modern finance, however, is a family of
business activity that includes the origination, marketing, and
management of cash and money surrogates through a variety of
capital accounts, instruments, and markets created for transacting and
trading assets, liabilities, and risks. Finance is conceptualized,
structured, and regulated by a complex system of power relations
within political economies across state and global markets. Finance is
both art (e.g. product development) and science (e.g. measurement),
although these activities increasingly converge through the intense
technical and institutional focus on measuring and hedging risk-return
relationships that underlie shareholder value. Networks of financial
businesses exist to create, negotiate, market, and trade in
evermore-complex financial products and services for their own as
well as their clients’ accounts. Financial performance measures assess
the efficiency and profitability of investments, the safety of debtors’
claims against assets, and the likelihood that derivative instruments
will protect investors against a variety of market risks. [2]
The financial system consists of public and private interests and the
markets that serve them. It provides capital from individual and
institutional investors who transfer money directly and through
intermediaries (e.g. banks, insurance companies, brokerage and fund
management firms) to other individuals, firms, and governments that
acquire resources and transact business. With the expectation of
reaping profits, investors fund credit in the forms of (1) debt capital
(e.g. corporate and government notes and bonds, mortgage securities
and other credit instruments), (2) equity capital (e.g. listed and
unlisted company shares), and (3) the derivative products of a wide
variety of capital investments including debt and equity securities,
property, commodities, and insurance products. Although closely
related, the disciplines of economics and finance are distinctive. The
“economy” is a social institution that organizes a society’s production,
distribution, and consumption of goods and services,” all of which
must be financed. Economists make a number of abstract assumptions
for purposes of their analyses and predictions. They generally regard
financial markets that function for the financial system as an efficient
mechanism. In practice, however, emerging research is demonstrating
that such assumptions are unreliable. Instead, financial markets are
subject to human error and emotion. [3]New research discloses the
mischaracterization of investment safety and measures of financial
products and markets so complex that their effects, especially under
conditions of uncertainty, are impossible to predict. The study of
finance is subsumed under economics as finance economics, but the
scope, speed, power relations and practices of the financial system can
uplift or cripple whole economies and the well-being of households,
businesses and governing bodies within them—sometimes in a single
day.
SAAB MARFIN MBA
2. SAAB MARFIN MBA
Three overarching divisions exist within the academic discipline of
finance and its related practices: 1) personal finance: the finances of
individuals and families concerning household income and expenses,
credit and debt management, saving and investing, and income
security in later life, 2) corporate finance: the finances of for-profit
organizations including corporations, trusts, partnerships and other
entities, and 3) public finance: the financial affairs of domestic and
international governments and other public entities.[4][5]Areas of study
within (and the interactions among) these three levels affect all
dimensions of social life: politics, taxes, art, religion, housing, health
care, poverty and wealth, consumption, sports, transportation, labor
force participation, media, and education. Whileeach has a vast
accumulated literature of its own, the effects of macro and micro level
financing that mold and impact these and other domains of human
and societal life typically have been treated by researchers as “policy,”
“welfare,” “work,” “stratification,” and so forth, or have been largely
unexplored. Recent research in "behavioral finance" is promising,
albeit a relative newcomer, to the existing body of financial research
that focuses primarily on measurement.
Loans have become increasingly packaged for resale, meaning that an
investor buys the loan (debt) from a bank or directly from a
corporation. Bonds are debt instruments sold to investors for
organizations such as companies, governments or charities.[6]The
investor can then hold the debt and collect the interest or sell the debt
on a secondary market. Banks are the main facilitators of funding
through the provision of credit, although private equity, mutual funds,
hedge funds, and other organizations have become important as they
invest in various forms of debt. Financial assets, known as investments,
are financially managed with careful attention to financial risk
management to control financial risk. Financial instruments allow
many forms of securitized assets to be traded on securities exchanges
such as stock exchanges, including debt such as bonds as well as
equity in publicly traded corporations.
Central banks, such as the Federal Reserve System banks in the United
States and Bank of England in the United Kingdom, are strong players
in public finance, acting as lenders of last resort as well as strong
influences on monetary and credit conditions in the economy
SAAB MARFIN MBA
3. SAAB MARFIN MBA
Financial markets
a financial market is a mechanism that allows people and entities to
buy and sell (trade) financial securities (such as stocks and bonds),
commodities (such as precious metals or agricultural goods), and
other fungible items of value at low transaction costs and at prices
that reflect supply and demand. Both general markets (where many
commodities are traded) and specialized markets (where only one
commodity is traded) exist. Markets work by placing many interested
buyers and sellers in one "place", thus making it easier for them to
find each other. An economy which relies primarily on interactions
between buyers and sellers to allocate resources is known as a market
economy in contrast either to a command economy or to a
non-market economy such as a gift economy. In finance, financial
markets facilitate:
The raising of capital (in the capital markets)
The transfer of risk (in the derivatives markets)
The transfer of liquidity (in the money markets)
International trade (in the currency markets)
– and are used to match those who want capital to those who have it.
Typically a borrower issues a receipt to the lender promising to pay
back the capital. These receipts are securities which may be freely
bought or sold. In return for lending money to the borrower, the
lender will expect some compensation in the form of interest or
dividends. In mathematical finance, the concept continuous-time
Brownian motion stochastic process is sometimes used as a model.
Definition
the term market means the aggregate of possible buyers and sellers of
a certain good or service and the transactions between them. The term
"market" is sometimes used for what are more strictly exchanges,
organizations that facilitate the trade in financial securities, e.g., a
stock exchange or commodity exchange. This may be a physical
location (like the NYSE, BSE, NSE) or an electronic system (like
NASDAQ). Much trading of stocks takes place on an exchange; still,
corporate actions (merger, spinoff) are outside an exchange, while any
two companies or people, for whatever reason, may agree to sell stock
from the one to the other without using an exchange.Trading of
currencies and bonds is largely on a bilateral basis, although some
bonds trade on a stock exchange, and people are building electronic
systems for these as well, similar to stock exchanges. Financial
markets can be domestic or they can be international.
SAAB MARFIN MBA
4. SAAB MARFIN MBA
Types of financial markets
The financial markets can be divided into different subtypes:
Capital markets which consist of:
o Stock markets, which provide financing through the
issuance of shares or common stock, and enable the
subsequent trading thereof.
o Bond markets, which provide financing through the
issuance of bonds, and enable the subsequent trading
thereof.
Commodity markets, which facilitate the trading of commodities.
Money markets, which provide short term debt financing and
investment.
Derivatives markets, which provide instruments for the
management of financial risk.
Futures markets, which provide standardized forward contracts
for trading products at some future date; see also forward
market.
Insurance markets, which facilitate the redistribution of various
risks.
Foreign exchange markets, which facilitate the trading of foreign
exchange.
The capital markets may also be divided into primary markets and
secondary markets. Newly formed (issued) securities are bought or
sold in primary markets, such as during initial public offerings.
Secondary markets allow investors to buy and sell existing securities.
The transactions in primary markets exist between issuers and
investors, while in secondary market transactions exist among
investors.
Analysis of financial markets
Much effort has gone into the study of financial markets and how
prices vary with time. Charles Dow, one of the founders of Dow Jones
& Company and The Wall Street Journal, enunciated a set of ideas on
the subject which are now called Dow Theory. This is the basis of the
so-called technical analysis method of attempting to predict future
changes. One of the tenets of "technical analysis" is that market trends
give an indication of the future, at least in the short term. The claims
of the technical analysts are disputed by many academics, who claim
that the evidence points rather to the random walk hypothesis, which
states that the next change is not correlated to the last change.
The scale of changes in price over some unit of time is called the
volatility. It was discovered by Benoît Mandelbrot that changes in
prices do not follow a Gaussian distribution, but are rather modeled
better by Lévy stable distributions. The scale of change, or volatility,
SAAB MARFIN MBA
5. SAAB MARFIN MBA
depends on the length of the time unit to a power a bit more than 1/2.
Large changes up or down are more likely than what one would
calculate using a Gaussian distribution with an estimated standard
deviation.
A new area of concern is the proper analysis of international market
effects. As connected as today's global financial markets are, it is
important to realize that there are both benefits and consequences to
a global financial network. As new opportunities appear due to
integration, so do the possibilities of contagion. This presents unique
issues when attempting to analyze markets, as a problem can ripple
through the entire connected global network very quickly. For example,
a bank failure in one country can spread quickly to others, which
makes proper analysis more difficult.
Cost accounting
Cost accounting information is designed for managers. Since
managers are taking decisions only for their own organization, there is
no need for the information to be comparable to similar information
from other organizations. Instead, the important criterion is that the
information must be relevant for decisions that managers operating in
a particular environment of business including strategy make. Cost
accounting information is commonly used in financial accounting
information, but first we are concentrating in its use by managers to
take decisions. The accountants who handle the cost accounting
information generate add value by providing good information to
managers who are taking decisions. Among the better decisions, the
better performance of your organization, regardless if it is a
manufacturing company, a bank, a non-profit organization, a
government agency, a school club or even a business school. The
cost-accounting system is the result of decisions made by managers
of an organization and the environment in which they make them.
The organizations and managers are most of the times interested in
and worried for the costs. The control of the costs of the past, present
and future is part of the job of all the managers in a company. In the
companies that try to have profits, the control of costs affects directly
to them. Knowing the costs of the products is essential for
decision-making regarding price and mix assignation of products and
services.
The cost accounting systems can be important sources of information
for the managers of a company. For this reason, the managers
understand the forces and weaknesses of the cost accounting systems,
and participate in the evaluation and evolution of the cost
measurement and administration systems. Unlike the accounting
systems that help in the preparation of financial reports periodically,
the cost accounting systems and reports are not subject to rules and
standards like the Generally Accepted Accounting Principles. As a
result, there is a wide variety in the cost accounting systems of the
SAAB MARFIN MBA
6. SAAB MARFIN MBA
different companies and sometimes even in different parts of the same
company or organization.
The following are different cost accounting approaches:
standardized or standard cost accounting
lean accounting
activity-based costing
resource consumption accounting
throughput accounting
marginal costing/cost-volume-profit analysis
Classical cost elements are:
o Raw materials
o Labor
o Indirect expenses/overhead
Elements of cost
Material (Material is a very important part of business)
o Direct material
Labor
o Direct labor
Overhead (Variable/Fixed)
o Indirect material
o Indirect labor
o Maintenance & Repair
o Supplies
o Utilities
o Other Variable Expenses
o Salaries
o Occupancy (Rent)
o Depreciation
o Other Fixed Expenses
(In some companies, machine cost is segregated from overhead
andreported as a separate element)
They are grouped further based on their functions as,
Production or works overheads
Administration overheads
SAAB MARFIN MBA
7. SAAB MARFIN MBA
Selling overheads
Distribution overheads
Financial Expenses
Classification of costs
Classification of cost means, the grouping of costs according to their
common characteristics. The important ways of classification of costs
are:
By nature or element: materials, labor, expenses
By functions: production, selling, distribution, administration,
R&D, development,
By traceability: direct and indirect
By variability: fixed, variable, semi-variable
By controllability: controllable, uncontrollable
By normality: normal, abnormal
Types of accounts
Asset accounts: represent the different types of economic
resources owned by a business, common examples of Asset
accounts are cash, cash in bank, building, inventory, prepaid
rent, goodwill, accounts receivable]
Liability accounts: represent the different types of economic
obligations by a business, such as accounts payable, bank loan,
bonds payable, accrued interest.]
Equity accounts: represent the residual equity of a business
(after deducting from Assets all the liabilities) including Retained
Earnings and Appropriations.]
Revenue accounts or income: represent the company's gross
earnings and common examples include Sales, Service revenue
and Interest Income.
Expense accounts: represent the company's expenditures to
enable itself to operate. Common examples are electricity and
water, rentals, depreciation, doubtful accounts, interest,
insurance.[citation needed]
Contra-accounts: Some balance sheet items have corresponding
contra accounts, with negative balances, that offset them.
Examples are accumulated depreciation against equipment, and
allowance for bad debts against long-term notes receivable.
SAAB MARFIN MBA
8. SAAB MARFIN MBA
Trial balance
A trial balance is a list of all the nominal ledger (general ledger)
accounts contained in the ledger of a business. This list will contain
the name of the nominal ledger account and the value of that nominal
ledger account. The value of the nominal ledger will hold either a debit
balance value or a credit value balance. The debit balance values will
be listed in the debit column of the trial balance and the credit value
balance will be listed in the credit column. The profit and loss
statement and balance sheet and other financial reports can then be
produced using the ledger accounts listed on the trial balance.
The name comes from the purpose of a trial balance which is to prove
that the value of all the debit value balances equal the total of all the
credit value balances. Trialing, by listing every nominal ledger balance,
ensures accurate reporting of the nominal ledgers for use in financial
reporting of a business's performance. If the total of the debit column
does not equal the total value of the credit column then this would
show that there is an error in the nominal ledger accounts. This error
must be found before a profit and loss statement and balance sheet
can be produced.
The trial balance is usually prepared by a bookkeeper or accountant
who has used daybooks to record financial transactions and then post
them to the nominal ledgers and personal ledger accounts. The trial
balance is a part of the double-entry bookkeeping system and uses
the classic 'T' account format for presenting values.
Accounting period
Accounting period in bookkeeping is the period with reference to
which accounting books of any entity are prepared.
It is the period for which books are balanced and the financial
statements are prepared. Generally, the accounting period consists of
12 months. However the beginning of the accounting period differs
according to the jurisdiction. For example one entity may follow the
regular calendar year, i.e. January to December as the accounting year,
while another entity may follow April to March as the accounting
period.
The International Financial Reporting Standards even allows a period of
52 weeks as an accounting period instead of a proper year.[1]
In some of the ERP tools there are more than 12 accounting periods in
a financial year. They put one accounting period as "Year Open" period
where all the carried over balances from last financial year are cleared
and one period as "Year Close" where all the transactions for closed for
the same financial year.
SAAB MARFIN MBA
9. SAAB MARFIN MBA
Bookkeeping
Bookkeeping is the recording of financial transactions. Transactions
include sales, purchases, income, receipts and payments by an
individual or organization. Bookkeeping is usually performed by a
bookkeeper. Bookkeeping should not be confused with accounting.
The accounting process is usually performed by an accountant. The
accountant creates reports from the recorded financial transactions
recorded by the bookkeeper and files forms with government agencies.
There are some common methods of bookkeeping such as the
single-entry bookkeeping system and the double-entry bookkeeping
system. But while these systems may be seen as "real" bookkeeping,
any process that involves the recording of financial transactions is a
bookkeeping process.
A bookkeeper (or book-keeper), also known as an accounting clerk or
accounting technician, is a person who records the day-to-day
financial transactions of an organization. A bookkeeper is usually
responsible for writing the "daybooks." The daybooks consist of
purchases, sales, receipts, and payments. The bookkeeper is
responsible for ensuring all transactions are recorded in the correct
day book, suppliers ledger, customer ledger and general ledger.
The bookkeeper brings the books to the trial balance stage. An
accountant may prepare the income statement and balance sheet
using the trial balance and ledgers prepared by the bookkeeper.
Abbreviations used in bookkeeping
A/C – Account
Acc – Account
A/R – Accounts receivable
A/P – Accounts payable
B/S – Balance sheet
c/d – Carried down
b/d – Brought down
c/f – Carried forward
b/f – Brought forward
Dr – Debit record
Cr – Credit record
G/L – General ledger; (or N/L – nominal ledger)
P&L – Profit and loss; (or I/S – income statement)
PP&E – Property, plant and equipment
TB – Trial Balance
GST – Goods and services tax
VAT – Value added tax
CST – Central sale tax
TDS – Tax deducted at source
AMT – Alternate minimum tax
SAAB MARFIN MBA
10. SAAB MARFIN MBA
EBITDA – Earnings before interest, taxes, depreciation and
amortisation
EBDTA – Earnings before depreciation, taxes and amortisation
EBT – Earnings before taxes
EAT – Earnings after tax
PAT – Profit after tax
PBT – Profit before tax
Depr – Depreciation
Dep'n – Depreciation
Bookkeeping systems
Two common bookkeeping systems used by businesses and other
organizations are the single-entry bookkeeping system and the
double-entry bookkeeping system. Single-entry bookkeeping uses
only income and expense accounts, recorded primarily in a revenue
and expense journal. Single-entry bookkeeping is adequate for many
small businesses. Double-entry bookkeeping requires posting
(recording) each transaction twice, using debits and credits.
Daybooks
A daybook is a descriptive and chronological (diary-like) record of
day-to-day financial transactions also called a book of original entry.
The daybook's details must be entered formally into journals to enable
posting to ledgers. Daybooks include:
Sales daybook, for recording all the sales invoices.
Sales credits daybook, for recording all the sales credit notes.
Purchases daybook, for recording all the purchase invoices.
Purchases credits daybook, for recording all the purchase credit
notes.
Cash daybook, usually known as the cash book, for recording all
money received as well as money paid out. It may be split into
two daybooks: receipts daybook for money received in, and
payments daybook for money paid out.
Petty Cash daybook, for recording small value purchases paid
for by cash
General Journal daybook, for recording journals
Petty cash book
A petty cash book is a record of small value purchases usually
controlled by imprest system. Items such as coffee, tea, birthday cards
for employees, stationery for office working, a few dollars if you're
short on postage, are listed down in the petty cash book.
Journals
journals are recorded in the general journal daybook. A journal is a
formal and chronological record of financial transactions before their
SAAB MARFIN MBA
11. SAAB MARFIN MBA
values are accounted for in the general ledger as debits and credits. A
company can maintain one journal for all transactions, or keep several
journals based on similar activity (i.e. sales, cash receipts, revenue,
etc.) making transactions easier to summarize and reference later. For
every debit journal entry recorded there must be an equivalent credit
journal entry to maintain a balanced accounting equation.[2]
Ledgers
A ledger is a record of accounts. These accounts are recorded
separately showing their beginning/ending balance. A journal lists
financial transactions in chronological order without showing their
balance but showing how much is going to be charged in each account.
A ledger takes each financial transactions from the journal and records
them into the corresponding account for every transaction listed. The
ledger also sums up the total of every account which is transferred
into the balance sheet and income statement. There are 3 different
kinds of ledgers that deal with book-keeping. Ledgers include:
Sales ledger, which deals mostly with the accounts receivable
account. This ledger consists of the financial transactions made
by customers to the business.
Purchase ledger is a ledger that goes hand and hand with the
Accounts Payable account. This is the purchasing transaction a
company does.
General ledger representing the original 5 main accounts: assets,
liabilities, equity, income, and expenses
Cash basis
Cash basis tax payers include income when it is received, and claim
deductions when expenses are paid.[5]A cash basis taxpayer can look to
the doctrine of constructive receipt and the doctrine of cash
equivalence to help determine when income is received. Most
individuals start as cash basis taxpayers. There are four types of
taxpayers that cannot use the cash basis: (1) corporations with over
$5,000,000 in gross receipts; (2) partnerships with at least one C
corporation partner; (3) tax shelters;[6]and (4) taxpayers required to
keep inventory (retail, wholesale, manufacturer etc...)[7]Exceptions (1)
Farming Businesses (2) Qualified PSC's (3) Entities with gross receipts
of not more than $7,000,000 [8]
Similar definition of cash basis accounting is true for financial
accounting purposes.[9]
Accrual basis
Accrual basis taxpayers include items when they are earned and claim
deductions when expenses are incurred.[10]An accrual basis taxpayer
looks to the “all-events test” and “earlier-of test” to determine when
income is earned.[11]Under the all-events test, an accrual basis taxpayer
generally must include income "for the taxable year when all the
SAAB MARFIN MBA
12. SAAB MARFIN MBA
events have occurred that fix the right to receive income and the
amount of the income can be determined with reasonable
accuracy."[12]Under the "earlier-of test", an accrual basis taxpayer
receives income when (1) the required performance occurs, (2)
payment therefore is due, or (3) payment therefore is made, whichever
happens earliest.[13]Under the earlier of test outlined in Revenue Ruling
74-607, an accrual basis taxpayer may be treated as a cash basis
taxpayer when payment is received before the required performance
and before the payment is actually due. An accrual basis taxpayer
generally can claim a deduction “in the taxable year in which all the
events have occurred that establish the fact of the liability, the amount
of the liability can be determined with reasonable accuracy, and
economic performance has occurred with respect to the liability.”[14]
Similar definition of accrual basis accounting is true for financial
accounting purposes, except that revenue can't be recognized until it's
earned even if a cash payment has already been received.[9]
Management accounting or managerial accounting is concerned with
the provisions and use of accounting information to managers within
organizations, to provide them with the basis to make informed
business decisions that will allow them to be better equipped in their
management and control functions.
In contrast to financial accountancy information, management
accounting information is:
primarily forward-looking, instead of historical;
model based with a degree of abstraction to support decision
making generically, instead of case based;
designed and intended for use by managers within the
organization, instead of being intended for use by shareholders,
creditors, and public regulators;
usually confidential and used by management, instead of
publicly reported;
computed by reference to the needs of managers, often using
management information systems, instead of by reference to
general financial accounting standards.
Management accounting or managerial accounting is concerned with
the provisions and use of accounting information to managers within
organizations, to provide them with the basis to make informed
business decisions that will allow them to be better equipped in their
management and control functions.
In contrast to financial accountancy information, management
accounting information is:
primarily forward-looking, instead of historical;
model based with a degree of abstraction to support decision
SAAB MARFIN MBA
13. SAAB MARFIN MBA
making generically, instead of case based;
designed and intended for use by managers within the
organization, instead of being intended for use by shareholders,
creditors, and public regulators;
usually confidential and used by management, instead of
publicly reported;
computed by reference to the needs of managers, often using
management information systems, instead of by reference to
general financial accounting standards.
Definition
IFAC Definition of Managerial Accounting showing Cost Measurement
embracing three broad areas: Cost Accounting; Performance
Evaluation & Analysis; Planning & Decision Support. Copyright July
2009 Professional Accountants in Business Committee. International
Good Practice Guidance: Evaluating and Improving Costing in
Organizations [1] p.7
According to the Chartered Institute of Management Accountants
(CIMA), Management Accounting is "the process of identification,
measurement, accumulation, analysis, preparation, interpretation and
communication of information used by management to plan, evaluate
and control within an entity and to assure appropriate use of and
accountability for its resources. Management accounting also
comprises the preparation of financial reports for non-management
groups such as shareholders, creditors, regulatory agencies and tax
authorities"(CIMA Official Terminology).
SAAB MARFIN MBA
14. SAAB MARFIN MBA
The Institute of Management Accountants (IMA)[2] recently updated its
definition as follows: "management accounting is a profession that
involves partnering in management decision making, devising
planning and performance management systems,and providing
expertise in financial reporting and control to assist management in
the formulation and implementation of an organization’s strategy".
The American Institute of Certified Public Accountants(AICPA) states
that management accounting as practice extends to the following
three areas:
Strategic Management—Advancing the role of the management
accountant as a strategic partner in the organization.
Performance Management—Developing the practice of business
decision-making and managing the performance of the
organization.
Risk Management—Contributing to frameworks and practices for
identifying, measuring, managing and reporting risks to the
achievement of the objectives of the organization.
The Institute of Certified Management Accountants(ICMA), states "A
management accountant applies his or her professional knowledge
and skill in the preparation and presentation of financial and other
decision oriented information in such a way as to assist management
in the formulation of policies and in the planning and control of the
operation of the undertaking". Management Accountants therefore are
seen as the "value-creators" amongst the accountants. They are much
more interested in forward looking and taking decisions that will affect
the future of the organization, than in the historical recording and
compliance (score keeping) aspects of the profession. Management
accounting knowledge and experience can therefore be obtained from
varied fields and functions within an organization, such as information
management, treasury, efficiency auditing, marketing, valuation,
pricing, logistics, etc.
Traditional vs. innovative practices
SAAB MARFIN MBA
15. SAAB MARFIN MBA
Managerial Costing Timeline presented at IMA's Annual Conference -
Managerial Costing Conceptual Framework Session Sep 7, 2011
(Orlando, FL). Used with permission by the author A.van der Merwe
Copyright 2011 All Rights Reserved.
Within the area of Management Accounting there are almost an infinite
number of tools, methods, techniques and approaches floating
around.[1]
The distinction between ‘traditional’ and ‘innovative’ accounting
practices is perhaps best illustrated with the visual timeline (see
sidebar) of managerial costing approaches presented at the Institute of
Management Accountants 2011 Annual Conference.
Traditional Standard Costing (TSC), used in Cost Accounting dates
back to the 1920’s and is a central method in management accounting
practiced today because it is used for financial statement reporting for
the valuation of Income Statement and Balance Sheet line items such
as Cost of Goods Sold (COGS) and Inventory valuation. Traditional
Standard Costing must comply with generally accepted accounting
principles (GAAP US) and actually aligns itself more with answering
Financial Accounting requirements rather than providing solutions for
management accountants. Traditional approaches limit themselves by
defining cost behavior only in terms of production or sales volume.
In the late 1980s, accounting practitioners and educators were heavily
criticized on the grounds that management accounting practices (and,
even more so, the curriculum taught to accounting students) had
changed little over the preceding 60 years, despite radical changes in
the business environment. In 1993, the Accounting Education Change
Commission Statement Number 4[2]calls for faculty members to come
down from their ivory towers and expand their knowledge about the
actual practice of accounting in the workplace.[3]Professional
SAAB MARFIN MBA
16. SAAB MARFIN MBA
accounting institutes, perhaps fearing that management accountants
would increasingly be seen as superfluous in business organizations,
subsequently devoted considerable resources to the development of a
more innovative skills set for management accountants.
Variance analysis, which is a systematic approach to the comparison of
the actual and budgeted costs of the raw materials and labor used
during a production period. While some form of variance analysis is
still used by most manufacturing firms, it nowadays tends to be used
in conjunction with innovative techniques such as life cycle cost
analysis and activity-based costing, which are designed with specific
aspects of the modern business environment in mind. Life-cycle
costing recognizes that managers’ ability to influence the cost of
manufacturing a product is at its greatest when the product is still at
the design stage of its product life-cycle (i.e., before the design has
been finalized and production commenced), since small changes to the
product design may lead to significant savings in the cost of
manufacturing the products.
Activity-based costing (ABC) recognizes that, in modern factories,
most manufacturing costs are determined by the amount of ‘activities’
(e.g., the number of production runs per month, and the amount of
production equipment idle time) and that the key to effective cost
control is therefore optimizing the efficiency of these activities. Both
lifecycle costing and activity-based costing recognize that, in the
typical modern factory, the avoidance of disruptive events (such as
machine breakdowns and quality control failures) is of far greater
importance than (for example) reducing the costs of raw materials.
Activity-based costing also deemphasizes direct labor as a cost driver
and concentrates instead on activities that drive costs, As the provision
of a service or the production of a product component.
Other approaches that can be viewed as innovative to the U.S. is the
German approach, Grenzplankostenrechnung (GPK). Although it has
been in practiced in Europe for more than 50 years, neither GPK nor
the proper treatment of 'unused capacity’ is widely practiced here in
the U.S. Thus GPK and the concept of unused capacity is slowing
become more recognized in America, and "could easily be considered
'advanced' by U.S. standards".[1]
One of the more innovative accounting practices available today is
Resource consumption accounting (RCA). RCA has been recognized by
the International Federation of Accountants (IFAC) as a “sophisticated
approach at the upper levels of the continuum of costing techniques”
[4]
because it provides the ability to derive costs directly from
operational resource data or to isolate and measure unused capacity
costs. RCA was derived by taking the best costing characteristics of
the German management accounting approach
Grenzplankostenrechnung (GPK), and combining the use of
activity-based drivers when needed, such as those used in
Activity-based costing. With the RCA approach, resources and their
SAAB MARFIN MBA
17. SAAB MARFIN MBA
costs are considered as “foundational to robust cost modeling and
managerial decision support, because an organization’s costs and
revenues are all a function of the resources and the individual
capacities that produce them”.[4]
Role within a corporation
Consistent with other roles in today's corporation, management
accountants have a dual reporting relationship. As a strategic partner
and provider of decision based financial and operational information,
management accountants are responsible for managing the business
team and at the same time having to report relationships and
responsibilities to the corporation's finance organization.
The activities management accountants provide inclusive of
forecasting and planning, performing variance analysis, reviewing and
monitoring costs inherent in the business are ones that have dual
accountability to both finance and the business team. Examples of
tasks where accountability may be more meaningful to the business
management team vs. the corporate finance department are the
development of new product costing, operations research, business
driver metrics, sales management scorecarding, and client profitability
analysis. See Financial modeling. Conversely, the preparation of certain
financial reports, reconciliations of the financial data to source
systems, risk and regulatory reporting will be more useful to the
corporate finance team as they are charged with aggregating certain
financial information from all segments of the corporation.
In corporations that derive much of their profits from the information
economy, such as banks, publishing houses, telecommunications
companies and defence contractors, IT costs are a significant source of
uncontrollable spending, which in size is often the greatest corporate
cost after total compensation costs and property related costs. A
function of management accounting in such organizations is to work
closely with the IT department to provide IT Cost Transparency.[5]
Given the above, one widely held view of the progression of the
accounting and finance career path is that financial accounting is a
stepping stone to management accounting. Consistent with the notion
of value creation, management accountants help drive the success of
the business while strict financial accounting is more of a compliance
and historical endeavor.
An alternative view
A very rarely expressed alternative view of management accounting is
that it is neither a neutral or benign influence in organizations, rather
a mechanism for management control through surveillance. This view
locates management accounting specifically in the context of
management control theory. Stated differently, Management
Accounting information is the mechanism which can be used by
managers as a vehicle for the overview of the whole internal structure
SAAB MARFIN MBA
18. SAAB MARFIN MBA
of the organization to facilitate their control functions within an
organization.
Specific concepts
Cost accounting
Cost accounting is a central element of managerial accounting.
Grenzplankostenrechnung (GPK)
Main article: Grenzplankostenrechnung (GPK)
Grenzplankostenrechnung is a German costing methodology,
developed in the late 1940s and 1950s, designed to provide a
consistent and accurate application of how managerial costs are
calculated and assigned to a product or service. The term
Grenzplankostenrechnung, often referred to as GPK, has best been
translated as either Marginal Planned Cost Accounting[6]or Flexible
Analytic Cost Planning and Accounting.[7]
The origins of GPK are credited to Hans Georg Plaut, an automotive
engineer and Wolfgang Kilger, an academic, working towards the
mutual goal of identifying and delivering a sustained methodology
designed to correct and enhance cost accounting information. GPK is
published in cost accounting textbooks, notably Flexible
Plankostenrechnung und Deckungsbeitragsrechnung and taught at
[8]
German-speaking universities today.
Lean accounting (accounting for lean enterprise)
Main article: Lean accounting
In the mid- to late-1990s several books were written about accounting
in the lean enterprise (companies implementing elements of the
Toyota Production System). The term lean accounting was coined
during that period. These books contest that traditional accounting
methods are better suited for mass production and do not support or
measure good business practices in just-in-time manufacturing and
services. The movement reached a tipping point during the 2005 Lean
Accounting Summit in Dearborn, MI. 320 individuals attended and
discussed the merits of a new approach to accounting in the lean
enterprise. 520 individuals attended the 2nd annual conference in
2006.
Resource consumption accounting (RCA)
Main article: Resource Consumption Accounting
Resource Consumption Accounting (RCA) is formally defined as a
dynamic, fully integrated, principle-based, and comprehensive
management accounting approach that provides managers with
decision support information for enterprise optimization. RCA
emerged as a management accounting approach around 2000 and was
subsequently developed at CAM-I the Consortium for Advanced
Manufacturing–International, in a Cost Management Section RCA
interest group in December 2001.
Throughput accounting
Main article: Throughput accounting
SAAB MARFIN MBA
19. SAAB MARFIN MBA
The most significant recent direction in managerial accounting is
throughput accounting; which recognizes the interdependencies of
modern production processes. For any given product, customer or
supplier, it is a tool to measure the contribution per unit of
constrained resource.
Transfer pricing
Main article: Transfer pricing
Management accounting is an applied discipline used in various
industries. The specific functions and principles followed can vary
based on the industry. Management accounting principles in banking
are specialized but do have some common fundamental concepts used
whether the industry is manufacturing based or service oriented. For
example, transfer pricing is a concept used in manufacturing but is
also applied in banking. It is a fundamental principle used in assigning
value and revenue attribution to the various business units. Essentially,
transfer pricing in banking is the method of assigning the interest rate
risk of the bank to the various funding sources and uses of the
enterprise. Thus, the bank's corporate treasury department will assign
funding charges to the business units for their use of the bank's
resources when they make loans to clients. The treasury department
will also assign funding credit to business units who bring in deposits
(resources) to the bank. Although the funds transfer pricing process is
primarily applicable to the loans and deposits of the various banking
units, this proactive is applied to all assets and liabilities of the
business segment. Once transfer pricing is applied and any other
management accounting entries or adjustments are posted to the
ledger (which are usually memo accounts and are not included in the
legal entity results), the business units are able to produce segment
financial results which are used by both internal and external users to
evaluate performance.
Management accounting tasks/ services
provided
Listed below are the primary tasks/ services performed by
management accountants. The degree of complexity relative to these
activities are dependent on the experience level and abilities of any
one individual.
Rate and volume analysis
Business metrics development
Price modeling
Product profitability
Geographic vs. Industry or client segment reporting
Sales management scorecards
Cost analysis
Cost–benefit analysis
Cost-volume-profit analysis
Life cycle cost analysis
SAAB MARFIN MBA
20. SAAB MARFIN MBA
Client profitability analysis
IT cost transparency
Capital budgeting
Buy vs. lease analysis
Strategic planning
Strategic management advice
Internal financial presentation and communication
Sales forecasting
Financial forecasting
Annual budgeting
Cost allocation
Related qualifications
There are several related professional qualifications and certifications
in the field of accountancy including:
Management Accountancy Qualifications
o CIMA
o ICMA
o CMA
Other Professional Accountancy Qualifications
o Chartered Institute of Public Finance and Accountancy,
CIPFA
o Chartered Certified Accountant, (ACCA)
o Chartered Accountant, (CA)
o Certified Public Accountant, (CPA)
§ American Institute of Certified Public Accountants
o Certified Practicing Accountant (CPA Australia)
o Chartered Global Management Accountant
Methods
Activity-based costing
Grenzplankostenrechnung (GPK)
Lean accounting
Resource Consumption Accounting
Standard costing
Throughput accounting
Transfer pricing
SAAB MARFIN MBA