7/29/2019 Accounting for Managers - Introduction

1/26

ACCOUNTING FOR

MANAGERS

KIRAN KUMAR, Asst. Professor, VVCE

Module 1 : Introduction to Business and Acc

7/29/2019 Accounting for Managers - Introduction

2/26

Business

2/21/2013ACCOUNTING FOR MANAGERS

2

Manufacturing, Buying and Selling of Goods and Services For Monetary Benefits

Forms of Business Organizations

Sole Proprietorship

Partnership

Company

Private Limited

Public Limited Listed

Unlisted

7/29/2019 Accounting for Managers - Introduction

3/26

Business as a Cash Cycle

2/21/2013ACCOUNTING FOR MANAGERS

3

Cash received

from sales

KIRAN

Company

Cashto

CasC

7/29/2019 Accounting for Managers - Introduction

4/26

Business as a Credit Cycle

2/21/2013ACCOUNTING FOR MANAGERS

4

Cashreceived

fromcurrent

sales,futuresales,

past sales

KIRAN

Company

Borrowingfor Inputs

Lendingto

Customers

CashCollection

fromCustomer

s

Paymentfor Input

Providers

7/29/2019 Accounting for Managers - Introduction

5/26

Business Activities

2/21/2013ACCOUNTING FOR MANAGERS

5

Financing Activities Capital and Liabilities

Investing Activities Assets

Operating Activities Incomes and Expenses

7/29/2019 Accounting for Managers - Introduction

6/26

Accounting

2/21/2013

6

ACCOUNTING FOR MANAGERS

7/29/2019 Accounting for Managers - Introduction

7/26

Daily Transaction Record

Profit or Loss

Assets and Debt Positions

Movement of Funds

Investment and W

Purchase and Sales

Income and Expen

Any other transact

can be monetarily

2/21/2013

7

ACCOUNTING FOR MANAGERS

Account or Explanation Transactio

Stakeholders Owners

Financiers

Suppliers

Employees

Government

Society

7/29/2019 Accounting for Managers - Introduction

8/26

2/21/2013ACCOUNTING FOR MANAGERS

8

Monetary Transactions

7/29/2019 Accounting for Managers - Introduction

9/26

2/21/2013ACCOUNTING FOR MANAGERS

9

Inputs :

Business Transactions (e.g., Purchases,Sales, Cash receipts, cash payments

External Events Change in Law

Proc

Accounti

Accountin

Managem

Laws and

Account

Outp

P & L AcBalance

Cash Flow

Notes, ManComme

Repo

Users:

Shareholders

Analysts, Banks

Rating Agencies

Managers, Employees

Suppliers, Customers

Government

Regulators, Media

7/29/2019 Accounting for Managers - Introduction

10/26

Users of Accounting

2/21/2013ACCOUNTING FOR MANAGERS

10

Owners

Managers

Lenders

Employees

Security Analysts

Banks

Rating Agencies

Suppliers

Customers

Government

Regulators

Media

Public

7/29/2019 Accounting for Managers - Introduction

11/26

History..

Accounting practices started in Italy

Luca Pacioli first wrote a book

Accounting Terms from Latin

Industrial Revolution of 18th

Century

Separation of Ownership

2/21/2013

11

ACCOUNTING FOR MANAGERS

7/29/2019 Accounting for Managers - Introduction

12/26

Accounting - Types

2/21/2013ACCOUNTING FOR MANAGERS

12

Financial Accounting

Cost Accounting

Management Accountin

7/29/2019 Accounting for Managers - Introduction

13/26

Accounting Systems

2/21/2013ACCOUNTING FOR MANAGERS

13

Systems of Book-Keeping Single-Entry

Double Entry

Systems of Accounting

Cash System of Accounting

Mercantile System of Accounting

7/29/2019 Accounting for Managers - Introduction

14/26

Accounting Principles

2/21/2013ACCOUNTING FOR MANAGERS

14

Uniform Scientifically laid down Practices

Adopted universally by Accountants across Globe

Three Categories

Accounting ConceptsBASIC ASSUMPTIONS

Accounting Conventions

Accounting Standards

7/29/2019 Accounting for Managers - Introduction

15/26

Accounting Concepts

Separate Entity

Going Concern

Money Measurement

Cost

Dual Aspec

Periodicity

Matching

Realization

2/21/2013

15

ACCOUNTING FOR MANAGERS

7/29/2019 Accounting for Managers - Introduction

16/26

Accounting Conventions

2/21/2013ACCOUNTING FOR MANAGERS

16

Conservatism

Full Disclosure

Consistency

Materiality

7/29/2019 Accounting for Managers - Introduction

17/26

Accounting Standards

2/21/2013ACCOUNTING FOR MANAGERS

17

IFRS International Financial Reporting Standards 8

IFRS3Business Combinations

IFRS4Insurance Contracts

International Accounting Standards 41

IAS1Presentation of Financial Statements

IAS7Cash Flow Statements

ICAI Accounting Standards 32

AS6Depreciation

AS14Accounting for Amalgamations

7/29/2019 Accounting for Managers - Introduction

18/26

Accounting Systems

2/21/2013ACCOUNTING FOR MANAGERS

18

Systems of Book-Keeping Single-Entry

Double Entry

Systems of Accounting

Cash System of Accounting

Mercantile System of Accounting

7/29/2019 Accounting for Managers - Introduction

19/26

Accounting Equation

2/21/2013ACCOUNTING FOR MANAGERS

19

7/29/2019 Accounting for Managers - Introduction

20/26

SOLVE.!!!?

2/21/2013ACCOUNTING FOR MANAGERS

20

Anna Bond Ltd has assets of Rs. 87000 and liabilit53000. How much is its Capital?

7/29/2019 Accounting for Managers - Introduction

21/26

SOLVE.!!!?

2/21/2013ACCOUNTING FOR MANAGERS

21

James Bond Ltds Balance Sheet contains the following

Loan Payable12000

Owners Capital 77300

Cash5000

Debtors17000

Stock of RM9000 Equipment19000

Building21800

Land21000

What is the amount of other liabilities?

7/29/2019 Accounting for Managers - Introduction

22/26

SOLVE.!!!?

2/21/2013ACCOUNTING FOR MANAGERS

22

Nityananda Ltds Capital is twice its Liabilities. ItsRs. 81000. how much are its liabilities?

7/29/2019 Accounting for Managers - Introduction

23/26

SOLVE.!!!?

2/21/2013ACCOUNTING FOR MANAGERS

23

Give an example of a transaction for the below:

Increase in an Asset and Increase in a Liability

Increase in an Asset and a Decrease in Another Asset

Increase in an Asset and Increase in Capital

Decrease in an Asset and Decrease in a Liability Decrease in an Asset and Decrease in Capital

SOLVE !!!? ff i

On Jan 2012, Katariveera started Surasundarangi Photo Studio Ltd. The follo

7/29/2019 Accounting for Managers - Introduction

24/26

SOLVE.!!!? Effect on AccountingEquation

2/21/2013ACCOUNTING FOR MANAGERS

24

J g

transactions took place during the first month:

Katariveera invested Rs. 30000 cash in the company in exchange for 3000

each in the share capital of the company

Bought supplies of photographic materials on credit Rs. 9000

Bought photographic equipment for cash Rs. 12000

Received fees for photographic services Rs. 15000

Paid creditor for supplies, Rs. 5000 Took a loan Rs. 12000

Billed customers for services Rs. 19000

Paid office rent Rs. 2500; Electricity Rs. 1200

Paid Dividends Rs. 4000

7/29/2019 Accounting for Managers - Introduction

25/26

SOLVE.!!!? Effect on Accounting E

2/21/2013ACCOUNTING FOR MANAGERS

25

The transactions of Yamaloka Travels Ltd during this month are as follows:

Bought a computer for cash

Invoiced customers for services provided

Bought office supplies on credit

Owner invested in the business

Collected amount due from a customer

Received a Bank loanPaid amount due to a creditor

Provided services for cash

Repaid a part of the bank loan

Paid salaries for the month

Owner withdrew Cash for personal use

7/29/2019 Accounting for Managers - Introduction

26/26

END OF MODULE 1: INSERT DISC-2

26