Discussing the fundamental process that takes place in an accounts dept. The presentation clarifies: *what bookkeeping is and an overview of the bookkeeping process *Overview of Fin. Statements *How using Fin. Statements leads to different types of accounting

1. Title
ACCOUNTING
FUNDAMENTALS

2. BOOKKEEPING
FINANCIAL
STATEMENTS
FINANCIAL
ACCOUNTING
MANAGERIAL
ACCOUNTING
TAX
ACCOUNTING
The balance sheet
Income statement
Cashflow statement

3. BOOKKEEPING

4. THE PROCESS
Software
Manual
Software Software Software
Bookkeepers role
ends with adding
appropriate journal
entries.

5. Explanation:
Balance C/d 12,000
12,000 12,000
Machinery a/c 12,000
Bal c/d 8,000
20,000 20,000
Journal Entry
Ledgers

6. Trial Balance

7. FINANCIAL STATEMENTS

8. BALANCE SHEET
Shows what assets a company
owns at a given point and HOW it
was purchased.
ASSETS = LIABILITIES + EQUITY
Source of financing
Answers questions:
What do you own as of today?
What do you owe others as of
today?
THE INCOME STATEMENT
Shows how much profit a company made
during a given period of time.
REVENUE - EXPENSE = NET INCOME
(Sales) - (Cost of sales) = (profit)
Answers questions:
How much profit you made this week?
How much profit you made this month?
How much profit you made this year?
CASHFLOW STATEMENT
Shows how much CASH is going IN and
OUT of the business and for what
purpose for a given period.
OPERATING (every day activities)
INVESTING (occasional activities)
FINANCING (occasional activities)
Answers questions:
How much cash is coming in and going
out?
Where are we spending all our cash?

9. BALANCE SHEET
LIABILITIES AND EQUITY
ASSETS
900,000
84,000
12,00,000

10. INCOME STATEMENT
TOTAL
REVENUE
TOTAL EXPENSES
NET INCOME

11. CASH FLOW STATEMENT
OPERATING
ACTIVITIES
INVESTING ACTIVITIES
FINANCING ACTIVITIES

12. FINANCIAL ACCOUNTING

13. Daisy’s Toy Shop
Through reliable financial
statements!

14. WHO USES IT AND WHY DO THEY NEED IT?
USERS WANTS TO KNOW:
MONEY LENDERS
* Can this company pay back the loan?
* What is the companies net worth?
* What are the companies assets and liabilities?
INVESTORS
* How profitable is the company?
* What is the earning per share?
* Is the company majorly financed by debt or equity? What is the potential for future?
SUPPLIERS
* Will this company pay us on time?
* What is their market share?
CUSTOMERS * How long will this company be around?
COMPETITORS
* What is the company’s market share?
* What are the strength and weakness?
GOVERNMENT
* Is the company complying with the applicable rules and regulations?
* Are taxes files appropriately?
EMPLOYEES
* Is the financially viable enough to pay?
* Any global growth opportunities?

15. MANAGERIAL ACCOUNTING

16. What if you told the CEO of a company the total sales for the year was
$100 million?
A Managerial accountant brings answers to these questions!

17. THE TWO RESTAURANTS
JOHN’S RESTAURANT BILL’S RESTAURANT
Conservative and lack mindset
“We need to run this business so that our bills are
paid”
Optimistic and abundance mindset
“We need to run this business to generate income
and wealth”
Constantly asks:
“How much bills do we need to pay this month?”
“How much should we pay the employees?”
Constantly asks:
“How do we better know customer needs?”
“How much would it cost us to make the dish
customer wants?”
“How much discount can we give based on our
cost analysis?”
“How much do we need to sell in order to achieve
the target profit”
Plans to survive day by day. Plans to expand and acquire huge market share.
In the long run, Bill’s restaurant will not only survive but will expand rapidly due to the great
managerial accounting practice. They dissect their current financial position, acknowledging
and planning to create a better financial position In the future.

18. A managerial accountant performs detailed analysis of financial data. If
this is performed well, it can be a major competitive tool.
USES OF MANAGERIAL ACCOUNTING REPORTS
PRODUCT COSTING
It’s easy to allocate direct cost such as material costs and direct labour but overhead
costs requires careful computation by the managerial accountant which is essential
in product costing and pricing.
BREAK-EVEN ANALYSIS
Helps the company know how much sales it should make to break-even. This is
critical information for a company that aspires to grow.
BUDEGETING
A managerial accountant helps foresee the limitations and prepares a systematic plan
which helps the organization move forward even with such limitations.
PERFORMANCE
EVALUATION
Managerial accounting reports helps compare results with budgeted data or goals
which helps the organization evaluate performance of the entity.

19. TAX ACCOUNTING

20. Tax accountant should not only be aware of the tax laws but should also
be well versed in tax exemptions and possible tax deductions.

21. Thank you.