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8/8/2019 A Typical Finance Module Training Presentation
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Centre for Functional ExcellenceExecutive Development / Training
Focused on the needs of Indian SMEs
Accounts Operations
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Target Audience
Indian SMEs employees who needs to be
trained in Accounts Operations
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Organization
Master Data
Transactions
Agenda
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Documents
Reports
Important Aspects
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Organization
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Organization Structure
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Controlling Area
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One or more company can be assigned to a controlling area
Enables to carry out cross-company code cost accounting between the
Companies.
This is possible only if the assigned company codes & the controlling areaall use the same chart of accounts
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Organization Structure
Organization's performance reporting - decides the reporting structure
Consolidation levels
Group level Client / Corporate
Legal unit / entity level Company / Plant Line level Production unit
Costs and Profitability Analysis levels CO/PA
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Product / Product Group / Segment Customer group/ Customer / Customer order
Region level
Line level Production unit/Cost center/Profit Center
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Consolidation Level
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Master data
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Master Data
Chart of Accounts G/L accounts Budgets
Fixed assets Vendor Customer Cost Center Profit Center
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Multi Currency Bank Master Items Master Accounting and costing view Statutory Tax masters VAT, Excise duty,
Service tax, Income tax, FBT, TDS
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Master Data
Chart of Accounts G/L accounts
Budgets Fixed assets Vendor Customer
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Bank Master Items Master Accounting and costing view Tax masters VAT, Excise duty, Service tax, TDS,
Income tax, FBT,
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COA Links
CUSTOMER VENDOR
FIXED ASSET
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EMPLOYEE
ITEM
BANK
GL
CHART OF
ACCOUNTS
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The core of a company Accounts is the chart of accounts, that is, the list of
the G/L accounts to which all G/L entries are posted.
Use the Chart of Accounts to enter and view G/L accounts and accountbalances.
There are mainly four classifications in the chart of Accounts viz
Chart of Accounts
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Assets,Liabilities,
Income and
Expenses.
Create sub-classifications to this Major groups as per the requirement of the
organization.
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Assets:What the company owns is called an Asset. Eg.. Land,Buildings, Vehicles, Furniture, Cash in hand, Debtors etc..
Liabilities:What the Company owes is called a liability. Eg.. Capital,Loans, Creditors etc..
Income:
Chart of Accounts
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An income is the amount received or receivable as a resultof the normal business activities of an individual or a concern.Eg.. Sales revenue Domestic / Exports
Expenses:
Business expenses are the cost of carrying on a trade orBusiness. Eg.. Salary, Rent, Insurance
A typical COA is attached herewith for ready reference.
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Chart of Accounts
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Chart of Accounts
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Chart of accounts is assigned to the company code
Chart of accounts can be used by multiple company (diagram)
The General Ledgers of these companies have the identical structure.
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A/c Groups - GL Account
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G/L accounts can be grouped into account groups
The accounts of an account group normally have similar business
functions.
An account group for cash accounts, one for expense accounts / Revenue
accounts & one for other balance sheet accounts.
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Master Data
Chart of Accounts G/L accounts
Budgets Fixed assets Vendor Customer
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Bank Master Items Master Accounting and costing view Tax masters VAT, Excise duty, Service tax, TDS,
Income tax, FBT,
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Budget is a plan expressed in quantitative, usually monetary term, covering a
specific period of time, usually one year.
Budget is a systematic plan for the utilization of resources.
In a business organization, a budget represents an estimate of future costs
and revenues.
Budget
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Main characteristics of a budget are:
1. It is prepared in advance and is derived from the long-term strategy
of the organization.
2. It relates to future period for which objectives or goals have already
been laid down.
3. It is expressed in quantitative form, physical or monetary units,
or both.
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Budgeting Process
The exercise of preparing and controlling of budgets is known as budgeting.
The process of budgeting includes:
1. Estimation of Income and Expenditure under various heads of
expenditure for a given period.2. Continuous comparison of actual performances with budgetary
performance.
3. Revision of budgets in the light of changed circumstances
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Budgets may be divided into two basic classes:Capital Budgets and Revenue Budgets.
Capital budgets are directed towards proposed expenditures for new
projects and often require special financing.
Revenue budgets are directed towards achieving short-term
operational goals of the organization, for instance, production or
profit goals in a business firm.
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Budget Classification
Capital
Budgeting
Revenue
Budgeting
Master
Budget
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New AssetsAdditional
CapacityRevenue Expenditure
Annual
Monthly
Annual
Monthly
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Revenue budget can be assigned for Sales, Purchase, Administration etc.,with further break down into territory / Area wise.
Revenue Budget
Master Sales
Budget
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Territory (A) Territory(B)
Area (A1) Area (A2) Area (B1) Area (B2)
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Master Data
Chart of Accounts G/L accounts
Budgets Fixed assets Vendor Customer
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Bank Master Items Master Accounting and costing view Tax masters VAT, Excise duty, Service tax, TDS,
Income tax, FBT,
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Vendor
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Vendor accounts can be combined in various account groups, so that they can be
Organized and managed more easily.
Accounts in an account group usually have similar characteristics (domestic, import,
Sub-contractors, service providers, transporters, one-time vendors etc.,)
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Master Data
Chart of Accounts G/L accounts
Budgets Fixed assets Vendor Customer
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Bank Master Items Master Accounting and costing view Tax masters VAT, Excise duty, Service tax, TDS,
Income tax, FBT,
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Customer
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Customers can be combined in various account groups, so that they can beOrganized and managed more easily.
Accounts in an account group usually have similar characteristics (domestic, import,
Affiliated customers & one-time customers etc.,)
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Customer Credit Management
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Credit department sets up a separate Credit Management Master Record which is an
extension of the customer master record, so that data relevant credit management can be
maintained & monitored.
Credit management master record consists :
General data : which is relevant for all credit control areas. This could be the
Customers address & communication data, or the maximum total limit that can be
permitted for the sum of all granted credit limits.
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Credit Control Process
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Master Data
Chart of Accounts G/L accounts Budgets Fixed assets Vendor Customer
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Bank Master Items Master Accounting and costing view Tax masters VAT, Excise duty, Service tax, TDS,
Income tax, FBT,
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Multi Currency
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Every currency which will be used has to be identified by a currency code.
Each currency code can have a validity date. Every combination of two currencies, different exchange rates can be
maintained which are distinguished by an exchange rate type.
These different exchange rates can be used for various purposes valuation,
translation, conversion, planning etc
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Translation Factors
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Translation Factors
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Translation Factors
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Translation Factors
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Exchange rate spreads between the bank buying/selling rate & average rate usually
remains constant. If the exchange rate spread of an exchange rate type is entered into the
system, only the average rate has to be maintained since the buying and the selling rate
can be derived by adding/subtracting the exchange rate spread to/from the average rate.
Combination of base currency and exchange rate spreads :
A very efficient combination of the exchange rate tools is
Using a base currency for the average rate
Using the exchange rate spreads to calculate the buying & selling rates
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Translation Factors
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A base currency can be assigned to an exchange rate type. It is then onlynecessary
to maintain exchange rates for all other currencies into this base currency.
An exchange rate between two foreign currencies is calculated by combining thetwo rates between each currency and the base currency.
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Translation Factors
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A base currency can be assigned to an exchange rate type. It is then only
necessary to maintain exchange rates for all other currencies into this base currency.
Exchange rate between two foreign currencies is calculated by combining the two
rates between each currency & the base currency.
Note : A base currency can only be used for an average rate.
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Bank Master
Bank Name & Address
Account Type
Account No
Currency
Bank Account Group
Minimum Balance
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Branch DetailsSWIFT No
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Introduction to Financial Accounting
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Accounting Process
Step - 1 Identification of Transactions
Step - 2 Preparation of Business Documents
Step - 3 Recording of Transactions in Journal
Step - 4 Posting to Ledger
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ep - repara on o ra a ance- e ore year c os ng en r es
Step - 6 Passing of year closing entries
Step - 7 Preparation of Final Trial Balance
a. Profit & Loss Accountb. Balance Sheet