Professional Presentations - SAWF Educational Academy : Accounting and Finance

Showing posts with label Accounting and Finance. Show all posts

Monday, 24 August 2015

Basic Accounting terms for Beginners - Presentation and Explanation

Understanding the basic concepts and the terminology in any subject that you want to study is of great value and importance. It will not only help you develop the required skills, but it also enable you to deepen your knowledge or understanding of the subject. It is appropriate to mention that acquiring the basic knowledge and skills of a subject can lead you to gain thorough understanding of a subject.

Accounting is regarded as a Business Language. It is of great essence for a business to establish a good accounting system in order to keep track of every single business transaction or a business event and determine the profitability by dint of income statement and the status of a business with the help of balance sheet.

Accounting is also connected with our personal lives. It is easy to understand and implement for our day-to-day activities that involve money. It is therefore important to understand some of the accounting terms. Accounting term is a specific word that is related to the whole process of accounting. Some of the important accounting terms are mentioned herein.

Accounting – It’s a business language. The art of analyzing, recording, organizing or classifying and maintaining financial activities or the events that are of financial character which in turn leads to prepare financial statements.

Account – An individual record of specific items. It is a summary of all the business transactions relating to assets or liabilities or capital or revenues or expense etc. Every account has two sides, debit and credit showing accumulated balances.

Accounting Equation – It shows the relationship between the assets, liabilities and capital of a business entity. The accounting equation is: Assets = Liabilities + Capital. The accounting equation states Left hand side equals to Right hand side.

Accounting Period- It indicates the period of time which is no more than twelve months – from January 1 through 31 December. It’s generally a calendar year or a quarter taking the span of time covered by a set of financial statements, income statement, balance sheet and the cash flow statement.

Business Transaction – Any business activity or event that effects a business to show what it owns and what it owes as well as the ownership of the business. For example: A short term Loan amount from bank being debited to cash account and credited to bank account represents that a business house owns the amount and at the same time it owes to bank while making the balances in agreement as assets equals to liabilities.

Debtors – They are the customers or the clients whom a business provides goods or services on credit. They are the ones who owe money to the business.

Creditors – They are the persons whom a business owes the money.

Capital – Capital is the amount that has been invested by the owner or proprietor in the business.

Saturday, 22 August 2015

The Cost Concept in Accounting

The cost concept is one of the basic underlying guidelines in accounting and understanding which enables accountants to maintain the accuracy in the profession. Below article discusses the cost concept in brief.

In accounting, cost is defined as the cash amount or the cash equivalent which is given up for an asset. It includes all costs necessary to get an asset in place and ready for its intended use. To give an example, the cost of an item in inventory also includes the item’s freight-in cost. As regards the cost concept, it is one of the basic underlying guidelines in accounting. It is also known as the historical cost principle. The assertion made under the cost concept is that assets should be recorded at the cash amount or its equivalent at the time when they are acquired.

In accordance with this concept, it is important to note that regardless of whether the cost or acquisition price of an asset is greater or lesser than the fair market price, but the asset is to be recorded in the accounting books at the price which is actually paid. At this point, it is important to be aware of what the fair market price is. Fair market price is the price of something at which both a seller and a buyer are willing to make a deal. It may further be noted that it is the amount at which an asset would change hands between two parties where both have knowledge of the relevant facts.

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Thursday, 20 August 2015

The Purpose of using Accounting Worksheet

This article is about using the accounting worksheet in accounting process. It highlights the importance of using the accounting worksheet in all the functions of financial accounting.

There are several benefits that are to be extracted from using an accounting worksheet while performing the accounting tasks. Using accounting worksheet makes the tasks easier reducing your time and efforts. Besides, it’s a great way to maintain accuracy in the process. Using accounting worksheet, on the one hand, helps to accelerate the process, it aids you immensely in finding errors if any allowing to make adjustments on the other.

A worksheet or sheet is a single page in a file created with an electronic spreadsheet program, such as, Microsoft Excel. Without further ado, it is good to know some facts about an excel worksheet. Excel 2003 worksheet has as many as 1,048,576 rows per worksheet while there are 16,384 columns per worksheet. It’s also interesting to know that the number of worksheets per file depends on the amount of memory available by the computer. It’s unlike the earlier versions of excel, in which the number of worksheets in one file was just three. However, there are a number of benefits extracted from using accounting worksheets while performing accounting tasks. In this article, we would discuss about the purposes of using Microsoft Excel worksheets in accounting process.

Monday, 17 August 2015

Financial Analysis tools and techniques

Financial Analysis is defined as being the process of identifying financial strength and weakness of a business by establishing relationship between the elements of balance sheet and income statement. The information pertaining to the financial statements is of great importance through which interpretation and analysis is made. It is through the process of financial analysis that the key performance indicators, such as, liquidity solvency, profitability as well as the efficiency of operations of a business entity may be ascertained, while short term and long term prospects of a business may be evaluated. Thus, identifying the weakness, the intent is to arrive at recommendations as well as forecasts for the future of a business entity.

Financial analysis focuses on the financial statements, as they are a disclosure of a financial performance of a business entity. “A Financial Statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show assets position at amoment of time as in the case of balance sheet, or may reveal a series of activities over a given period of times, as in the case of an income statement.”

Since there is recurring need to evaluate the past performance, present financial position, the position of liquidity and to assist in forecasting the future prospects of the organization, various financial statements are to be examined in order that the forecast on the earnings may be made and the progress of the company be ascertained.

The financial statements are: Income statement, balance sheet, statement of earnings, statement of changes in financial position and the cash flow statement. The income statement, having been termed as profit and loss account is the most useful financial statement to enlighten what has happened to the business between the specified time intervals while showing, revenues, expenses gains and losses. Balance sheet is a statement which shows the financial position of a business at certain point of time. The distinction between income statement and the balance sheet is that the former is for a period and the latter indicates the financial position on a particular date. However, on the basis of financial statements, the objective of financial analysis is to draw information to facilitate decision making, to evaluate the strength and the weakness of a business, to determine the earning capacity, to provide insights on liquidity, solvency and profitability and to decide the future prospects of a business entity.

There are various types of Financial analysis. They are briefly mentioned herein:

External analysis: The external analysis is done on the basis of published financial statements by those who do not have access to the accounting information, such as, stock holders, banks, creditors, and the general public.

Sunday, 16 August 2015

Payroll – The Importance of Payroll Accounting System

Payrolls are said to be the lifeline of any organization. It is defined as a list of a company's employees and the amount of money they are to be paid for the services they provide during a particular period of time. One of the most important tasks in running or managing a business is completing the payrolls in a timely manner and yet maintaining accuracy and reliability.

Payroll accounting, having its own value and importance, is a particular accounting discipline which is concerned with recording the compensations: salaries, gross wages, commissions and bonuses of the employees. In this way, payroll accounting is one of the most essential functions of the accounting department within an organization.

It must be noted that this specific accounting discipline is not as easy as it may seem, but a complex one, as it significantly affects the net income of the company. Since it is the sum of all financial records pertaining to the employees’ salaries, wages, deductions and bonuses, it is of course very important for the employees as well. Any issues with regard to the payrolls can lead to create dissatisfaction among the employees - which in turn may result in to affecting a company’s reputation. Hence, there is a need for having a particular payroll accounting system through which all the process may be done effectively and efficiently.

Not all systems may be incorporated with the payroll process that is done automatically. However, in general, the payrolls are processed and formulated in the following ways:

Adding new employees
Collecting timecard information or processing attendance of the employees
Making adjustments or Entering changes including deductions
Calculating taxes or other payments
Processing wages or dues accordingly
Generating Financial Entries according to the cost centers
The final task is to distribute each employee’s net pay which can be done in different ways such as, mailing checks, making deposits, making prepaid debit cards or distributing cash personally to the employees.

Though, to all appearances, the payroll processing task seems to be easy or mundane, but in reality, it is not. There are several aspects and complexities involved in it, unless the whole process is done by the concerned staff carefully and efficiently. It requires plenty of time and patience of the employee who is assigned to perform the payroll task. Payrolls should be processed, reviewed and validated in a careful manner, otherwise, a little negligence on an accountant part, can cause a company to reap harsh consequences.

As there has been a revolution in most areas of business management, so it goes with payroll processing and its accounting system as well. The need and importance of payroll accounting system cannot be ignored. Payroll processing software makes the whole task easier and less time consuming. It would thus be a wise decision to implement payroll accounting system, so that the basic tasks may be done in a way as needed, while the accuracy and reliability in the process may be maintained in a way as needed.

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Thursday, 2 July 2015

Types of power in leadership

Types of power in leadership from Fareed Siddiqui, BBA, MBA-Fin, MPhil-Fin, (PhD)

Exercising Effective and Ethical leadership has its own importance and value in an organization. Every business is in need of people who have strong leadership skills. Those who are capable enough to demonstrate effective leadership roles that are needed in a business organization have bright chances for growth and development in terms of their career. Besides being capable of performing the entrusted tasks efficiently, possessing a quality of dealing with people effectively and managing them in a way as wanted is regarded to be one of the important qualities leading a person towards the attainment of a position that requires leadership role in a business organization.

Leadership is not something that’s to be regarded as just an innate quality, but being one of those qualities that contribute greatly to personality development, it can be acquired and developed provided that one gives a thought of doing so and motivates oneself toward its attainment. Acquiring or developing effective leadership skills demands related knowledge, patience and practice. However, there are some ways that might help in gaining or developing effective leadership skills.

Having been associated with a particular position and given a legitimate power, an employee gets entitled with various powers to practice in a business organization. At this stage, it depends upon him how he makes use of his powers in accordance with various situations. This involves exercising different power at different occasions, but not .holding fast a particular power at all times. A situational approach is of great importance to deal with matters effectively. In this way, using the same strategy at all times is not appropriate.

Effective leadership skills require good listening skills as well. A good leader is a good listener. He shows unreserved interest to hear the people and demonstrates his body language in such a way that attracts others to share their feelings and suggestions with him. The quality of good listening not only creates positive feelings in the employees, but it also helps in taking various measures for effective functioning of a business based on their suggestions.

One of the best powers that a leader or a manager needs to posses is the expert power which helps him greatly in convincing and motivating others. They are convinced, because it appeals to people’s mind and their reasoning power, while it motivates on the basis of his acquired qualities in terms of education, knowledge and experience, they are attracted and try to follow his footsteps.

Written by:
K. A. Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Blogger, Software Developer
BBA, MBA-Finance, MPhil-Financial Management, (MSc-Software Engineering)
(PhD-Management)
MA-English, MPhil-English
Post Graduate Diploma in Computer Applications and Programming
Certificate course in English language proficiency
Level 1 – Leadership and Management ILM – UK
Pursuing CMA-USA
Individual Member of Institute of Management Consultants of India

About me

I am an Individual Member of Institute of Management Consultants of India. I am a Professional with a high creative capability based on Business, Management, Financial Accounting, Management Accounting, Finance, Management Consulting and Computer programming background. I impart part time training and development programs. I write professional articles on the aforementioned subjects including Software Engineering. My writings have appeared in various Journals, magazines, news papers and news letters. I have also written books/eBooks on business and management subjects including business English.

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