Finance Manual Final

8/8/2019 Finance Manual Final

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Finance Manual

For

KALCO ALU-SYSTEMS (P) LTD.


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Purchase

1. Indent - In Quotation Approval P.O. - Purchase

Purchase may involve buying materials used to manufacture goods. These purchases are

initiated by the factory personnels, who inform the supervisor of the shortfalls. Thesupervisor enter the details of the required materials in the Indent application.

In Quotation stage shows the total number of quotations offered by different vendors forthe required purchase. Most of the time, the quotations come by email or paper. Thus, theyhave to be entered by a company resource on the application. In future, quotations may bedirectly entered by the vendors.

Approval stage where the quotations are meant to be either Approved, Not Approved orRejected. Not Approved signifies some ongoing negotiations between the two parties whichmay result in change in quotation later.

P.O. is the final Purchase Order. It depicts the vendor details and no. of days in whichpurchase is supposed to be completed. Materials which need to be bought from thatvendor are listed with the price. The form can be printed with all the details mentioned.

When the purchased goods are delivered at the company s doorsteps (F.O.B.), the purchaseentry is made at the Purchase application. Vendor details, invoice details, quantity bought &total expenses are entered. The expenses are entered in the Purchase A/C under a suitableheading which will reflect later in financial entries. Other informations regarding Sales Tax,excise, due days to payment are also entered.

Note: It s not necessary that the Step 1 is followed everytime for raw materials andintermediate goods. If the quotation is not received by any vendors, purchase applicationmay be directly used and entries be made to avoid the delay.

Sales

1. Enquiry Quotation S.O. - Sales

Enquiry application contains the details of the prospective customer, his estimated budgetfor buying desired goods, the list of items and their quantities demanded. Other details likedate of enquiry, mode of enquiry, contact person (customer) and concerned person(KALCO) is also mentioned.


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Quotation application contains the responses of KALCO to the customer enquiries with therate offered. Every form created in different applications is identified by it s unique ID. Forsame application the ID has a common prefix. In this application, the enquiry no. ismentioned for reference.

S.O. is the step after the Customer has agreed to the quotation offered. The order is filled inthe application having reference numbers to enquiry and quotation. Other details like Orderfor (City and State) are also mentioned.

Sales is the realization after the sales bill is generated and accepted by the customer. It hastax related details like VAT, CST and other Sales tax.

For different equipments, different sales related applications exist. E.g. Ladder salesapplication. Again, there is not a hard and fast rule that every sales go through this salescycle and cannot be sold directly, with entry into Sales application only.

Finance

1. N ew Group

A new group signifies any heading to be displayed as a part of Asset, Liability, Revenues orExpenses. It may or may not be visible as a separate heading in the Trial Balance or Balancesheet. If not visible, the balance under the group would be shown in the parent group.

Parent trace shows the immediate hierarchy of the group.

2 . N ew Ledger

Any new customer/vendor accounts are created in the New Ledger application. Normallytrade is done on the credit sales and credit purchases not exceeding one month. Thuscustomers are entered in the group Sundry Debtors and vendors in Sundry Creditors .Other details like their PAN no., TIN no. are also mentioned. Opening balance is updatedevery start of Financial Year. So any due payments/ receipts closing the last FY become theopening balance of present FY. Credit limit associated with a particular Ledger is alsomentioned.

3 . Journal Voucher

Contrary to what I believed initially, Journal voucher does not have all the transactionsentries. Here, all the transactions which are not covered under Purchase and Sales


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applications; are entered for record. Example can be: expenditure on fuels for car, plantrepair and maintenance, etc.

It involves double entry bookkeeping.

4 . Receipt PaymentAll the receipts from customers in the form of Cash/Bank Cash are recorded under theReceipts.

All payments made by KALCO to it s creditors in the form of Cash/Bank Cash are recordedunder the payments.

5 . Contra Voucher

Contra voucher entries typically depict conversion between cash and bank cash of two bankaccounts, namely Union Bank and ICICI Bank.

So using contra voucher, the present cash-in-hand can be determined.

Reporter

It is the lifeline of ERP. It can generate reports related to various categories in multipledepartments. In Finance, there are options to view balances in different ledger accounts.

The trial balance from the last accounting period till the present can also be checked.

In the trial balance, one can see entries made in different heads like Purchase, Sales,Payment/Receipts, Journal Voucher affecting the balance.

Reporter also provides the facility of viewing graphs for better analysis, though thisfunctionality is not used so often. Graph can be useful in viewing employee s performancereport, also available in Reporter.


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Linking of transactions with Reporter

Reports

Sales

Journal

Receipt/Payment

Purchase


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The Purchase Cycle

IndentRaise purchase requisition

In QuotationQuotes offered by Vendors

Approval Approve the requisition

GenerateGenerate the Purchase Order


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The Sales Cycle

Enquiry

Customer detailsEnquiry details

Quotation

Customer detailsPrice offered

Sales Order

Ordering details & discounts offeredChanges if required

Documents

Finance Manual Final