This document provides an overview and outline of a finance course for non-finance professionals. The summary includes: - The course is aimed at professionals without financial backgrounds like doctors, engineers, and managers to teach them basic finance concepts. - The outline covers why financial education is important, definitions of accounting, the accounting equation, examples of accounting transactions, financial statements, and the three main financial decisions around investments, financing, and dividends. - Key concepts defined include assets, liabilities, revenues, expenses, accounting, the accounting equation, double-entry accounting, balance sheets, income statements, and the three main types of business entities.

1. Finance for non-finance professionals
NITI Finance unit
Prepared & Presented by: Islam Ragab, CMA, CIA

2. Who need to attend this course.
• All professionals ( Doctors, Engineers, etc.)
• All managers and executives with non-financial
background.
Outlines.
• Why we need to understand Finance.
• What’s the meaning of Accounting.
• Meaning of assets, Liabilities, Revenues,
Expenses & owner’s equity.
• Examples of Accounting recording (case study).
• External Auditor report (Financial statements).
• Accounting information users.
• Types of business entities.
• Financial Management main three decisions.

3. Why is Financial Education
Necessary?
• Climbing up the corporate ladder
requires solid financial knowledge –
even for non-financial managers.
• Financial education gives managers
the tools to make better decisions:
when choosing between projects,
planning a budget, making large
purchases and so on.

4. What’s the meaning of
Accounting?
• Accounting: Is recording Historical events that
contain monetary values Then summarizing and
reporting them to provide useful information to
Accounting information’s users.

5. What’s the meaning of the following?
• Asset.
• Liability.
• Owner’s Equity.
* All of the above are Balance sheet
items.

6. What’s the meaning of the following?
• Revenues.
• Expense.
* These tow items are Income
statement items.

7. Economic
Resources
Claims to
Economic
Resources
The Accounting Equation
Assets = Liabilities + Owner’s Equity

8. Accounting Transactions
Examples of events to be recorded :
1- Islam Ragab and Mohamed established ABC Retail company with a capital
SAR1 MM shared equally between them on 01 Jan 2017.
2-ABC company purchased goods from XYZ company by SAR50,000 on account
on 03 Jan 2017.
3- ABC paid SAR20,000 to XYZ on 10 Jan 2017.
4- ABC made credit sales to Successful Comp. by SAR80,000 on 15 Jan 2017.
5- ABC collected SAR60,000 from Successful comp. on 21 Feb 2017.

9. Double-Entry Accounting
“ Double-entry accounting is based on a
simple concept: each party in a business
transaction will receive something and give
something in return. In bookkeeping terms,
what is received is a debit and what is given
is a credit.
Scale or Balance
Receive
DEBIT
Give
CREDIT
Left Side Right Side

10. Accounting Transactions
Examples of events to be recorded :
1- Islam Ragab and Mohamed established ABC Retail company with a capital
SAR1 MM shared equally between them on 01 Jan 2017.
2-ABC company purchased goods from XYZ company by SAR50,000 on account
on 03 Jan 2017.
3- ABC paid SAR20,000 to XYZ on 10 Jan 2017.
4- ABC made credit sales to Successful Comp. by SAR80,000 on 05 Jan 2017.
5- ABC collected SAR60,000 from Successful comp. on 21 Feb 2017.

11. Double Entry System
Debit Credit
Cash 1,000,000
Capital Islam 500,000
Capital Mohamed 500,000
Total 1,000,000 1,000,000
Debit Credit
Inventory 50,000
Payable to XYZ 50,000
Total 50,000 50,000
Debit Credit
Payable to XYZ 20,000
Cash 20,000
Total 20,000 20,000
Debit Credit
Cost of sales 50,000
Inventory 50,000
Total 50,000 50,000
Debit Credit
A/R Successful 80,000
sales revenue 80,000
Total 80,000 80,000
Debit Credit
Cash 60,000
A/R Successful 60,000
Total 60,000 60,000

12. Cash
Accounts
Payable
Inventory
Ledger
Cash transactions
liability accounts
Inventory or purchases
Subsidiary Books

13. Balance sheet
(Statement of Financial position)
• A balance sheet is a financial statement
that summarizes a company's assets,
liabilities and shareholders' equity at a
specific point in time. These three balance
sheet segments give investors an idea as
to what the company owns and owes, as
well as the amount invested by
shareholders.

14. 2017 Journal entries
Debit Credit
Cash 1,000,000
Capital Islam 500,000
Capital Mohamed 500,000
Total 1,000,000 1,000,000
Debit Credit
Inventory 50,000
Payable to XYZ 50,000
Total 50,000 50,000
Debit Credit
Payable to XYZ 20,000
Cash 20,000
Total 20,000 20,000
Debit Credit
Cost of sales 50,000
Inventory 50,000
Total 50,000 50,000
Debit Credit
A/R Successful 80,000
sales revenue 80,000
Total 80,000 80,000
Debit Credit
Cash 60,000
A/R Successful 60,000
Total 60,000 60,000

15. ABC Company
Statement of financial position ( Balance Sheet)
As of 31 of December 2017
• Assets
• Current Assets
Cash 1,040,000
A/R 20,000
Inventory 0
• Non-current assets
Land 0
Building 0
Total Assets 1,060,000
• Liabilities and Owner’s Equity
• Liabilities
Payable to XYZ 30,000
• Owner’s Equity
Capital 1,000,000
Income of the year 30,000
Total Liabilities and Owner’s Equity 1,060,000

16. What is an Income
Statement?
• An income statement is a financial
statement that reports a company's
financial performance over a specific
accounting period. Financial performance
is assessed by giving a summary of how
the business incurs its revenues and
expenses through both operating and non-
operating activities. It also shows the net
profit or loss incurred over a specific
accounting period.

17. ABC Company
Statement of Profit or loss
As of 31 of December 2017
• Revenues.
Sales 80,000
• Expenses
Cost of sales (50,000)
• Net income 30,000

18. 2017 Journal entries
Debit Credit
Cash 1,000,000
Capital Islam 500,000
Capital Mohamed 500,000
Total 1,000,000 1,000,000
Debit Credit
Inventory 50,000
Payable to XYZ 50,000
Total 50,000 50,000
Debit Credit
Payable to XYZ 20,000
Cash 20,000
Total 20,000 20,000
Debit Credit
Cost of sales 50,000
Inventory 50,000
Total 50,000 50,000
Debit Credit
A/R Successful 80,000
sales revenue 80,000
Total 80,000 80,000
Debit Credit
Cash 60,000
A/R Successful 60,000
Total 60,000 60,000

19. • Cash from operating activities
Cash inflows 60,000
Cash outflows (20,000)
Net cash flows from operations 40,000
• Cash flows from investing activities 0
• Cash flows from financing Activities 1,000,000
• Net increase in cash and cash equivalents 1,040,000
• Cash and cash equivalents at the beginning of the year/period 0
• Cash and cash equivalents at the end of the year/period 1,040,000
ABC Company
Statement of cash flows
For the year ended December 31, 2017

20. EXTERNAL USERS
Financial Accounting
• investors
• creditors
• regulators
• customers
• competitors
• owners
• managers
• employees
INTERNAL USERS
Financial Accounting
Users of Accounting Information

21. Types of business entities
• Sole proprietorship.
• Partnership.
• Corporations.
- Holding ( Consolidated and stand alone FS ),
subsidiaries ( stand alone FS only).
Difference between Holding & subsidiary
companies.

22. What is a Sole
Proprietorship?
• A sole proprietorship, also known as a sole trader
or a proprietorship, is an unincorporated business
with a single owner.
• Easy to establish
• Owned and operated by one individual
• Owner faces unlimited liability with respect to
his/her business

23. What is a Partnership?
• Involves two or more owners
• Details of each partners responsibilities
are outlined in a partnership agreement
Two Types of Partnerships
• General Partnerships
- partners face unlimited
liability
- partners are involved in the
day-to-day operation of the
business
- partners are jointly liable
for all the obligations of the
partnership
• Limited Partnerships
- must have at least one general
partner involved in business
- limited partners cannot be
involved in business
operations
- liability is limited to the amount
invested in the partnership

24. What is a Corporation?
• Corporations are owned by their stockholders
(shareholders) who share in profits and losses generated
through the firm's operations, a firm and its owners are
limited in their liability to the creditors and other obligors only
up to the resources of the firm, unless the owners give
personal-guaranties.
• Recognized as separate entities
• Transfer of ownership is relatively easy
• Shareholders exert influence over the corporation by
electing board of directors

25. Financial Management
Financial Management Mainly concerned
with three major decisions as functions
of finance. These are :
The investment decision
The financing decision
The dividend decision

26. The Investment Decision
The investment decision relates to the selection of
assets in which funds will be invested by a firm.
The assets which can be acquired fall into two
broad categories
Long term assets (which yield return over a
period of time in future.) –Capital Budgeting.
Short term or current assets (convertible into
cash usually within one year.) –Working
Capital Management.

27. The Financing Decision
• These decisions seek Optimal Capital
Structure.
a capital structure with a reasonable
proportion of debt and equity capital.

28. The Dividend
Decision
The dividend should be analyzed in relation to the
financing decision of the firm. Two alternatives are
available in dealing with the profits of a firm:
 They can be distributed to the shareholders in
the form of the dividends
They can be retained in the business itself (
Retained earnings).

29. Questions?

30. Thank you