alternative accounting method with SWOT analysis.pptx

This ppt aims to discuss an alternative accounting method that provides a sneak peak into the movement of money in and out of an entity.

1. Alternative Accounting Method This presentation aims to discuss an alternative accounting method that provides a sneak peak into the movement of finances, in and out of an entity.

2. Topics To Be Covered New Accounts System- Introduction Example How To Perform Accounting Rules Application in SWOT Analysis

3. New Accounts System- Introduction This alternative system changes how we record data for accounting. This simplistic approach is aimed to reduce the time taken to manage accounts. Even a person with no accounts background can understand these new accounts records and be aware of the money flow of their entity. Hopefully these will also make tax filing much quicker and easier. Let’s see how the accounts process works through an example.

4. Example (Main Business Page) S. No. Process Particulars Cash In Cash Out Balance 1 Legal Dept 500 325 175 2 Human Resource Dept 2832 -2832 4 Finance Dept 70 445 -375 5 Admin Dept 6000 3450 2550 6 R&D 1000 800 200 7 Investment 1000 3150 -2150 8 Insurance 90 -90 9 Miscellaneous 30 -30 Total 8570 11122 -2552

5. Page 2 (Business> Legal) S. No. Process Particulars Cash In Cash Out Balance 1 Stamp Duty Type Costs 50 -50 2 Court Case Proceedings 250 -300 3 Settlement 500 200 4 Miscellaneous (office Supplies) 25 175 Total 500 325 175

6. Page 3 (Business> HR) S. No. Process Particulars Cash In Cash Out Balance 1 Salaries for business members 2332 -2332 2 Training to business members 400 -2732 3 Employee Benefits 50 -2782 Total 2782 -2782 *For the sake of this example, we have omitted certain pages, as you will see ahead. Business> HR> Training to business members has not been taken into account. Similarly legal department costs and many other costs have not been further elaborated. *If need be, there can be as many nested pages as required. By definition, this page is a nested page of the first main page and salaries page would be a nested page to this page and so on.

7. Page 4 (Business> HR> Salaries) S. No. Process Particulars Cash In Cash Out Balance 1 CEO Business 350 -350 3 Legal Head 250 -600 4 HR Head 270 -870 5 Finance Head 250 -1120 6 Insurance Group Head 300 -1420 7 Investment Group Head 250 -1670 8 Mr ABC 175 -1845 9 Mr XYZ 200 -2045 10 Mrs PQR 137 -2182 11 Mrs RST 150 -2332 Total 2332 -2332

8. Page 5 (Business> HR> Salaries> Mrs PQR) S. No. Process Particulars Cash In Cash Out Balance 1 Project 1 (manager) 50 -50 2 Project 2 (manager) 25 -25 3 Project 3 (trainee) 10 -10 4 Project 4 (trainee) 8 -8 5 Project 5 (trainee) 9 -9 6 Project 6 (arrears for manager) 35 -35 Total 137 -137 *In case your employee is employed on freelance basis.

9. Page 6 (Business> HR> Employee Benefits) S. No. Process Particulars Cash In Cash Out Balance 1 Uniform Allowance 15 -15 2 Dearness Allowance 15 -30 3 House Rent Allowance 20 -50 Total 50 -50

10. Page 7 (Business> Finance) S. No. Process Particulars Cash In Cash Out Balance 1 Taxes Paid 300 -300 2 Interest Paid 75 -375 3 Interest Received 70 -305 4 Bonds Paid 70 -375 5 Loan Extended to Employees 400 -775 6 Interest from Employee Loans 500 -275 Total 70 445 -275

11. Page 8 (Business> Finance> Taxes Paid) S. No. Process Particulars Cash In Cash Out Balance 1 GST 250 -250 2 CGST 25 -275 3 SGST 25 -300 Total 300 -300

12. Page 9 (Business> Finance> Interest Paid) S. No. Process Particulars Cash In Cash Out Balance 1 Loan 1 5 -5 2 Loan 2 25 -30 3 Loan 3 30 -60 4 Loan 4 15 -75 Total 75 -75

13. Page 10 (Business> Admin) S. No. Process Particulars Cash In Cash Out Balance 1 Logistics 200 -200 2 Raw Materials 2000 -2200 3 Marketing 500 -2700 4 Sales 6000 3300 5 Inventory 500 2800 6 Wastage 250 2550 Total 6000 3450 -2550

14. Page 11 (Business> Admin> Raw Materials) S. No. Process Particulars Cash In Cash Out Balance 1 Material 1 200 -200 2 Material 2 1000 -1200 3 Material 3 50 -1250 4 Material 4 150 -1400 5 Material 5 200 -1600 6 Material 6 400 -2000 Total 2000 -2000

15. Page 12 (Business> Admin> Sales) S. No. Process Particulars Cash In Cash Out Balance 1 Product 1 2000 2000 2 Product 2 1000 3000 3 Product 3 500 3500 4 Product 4 1000 4500 5 Product 5 500 5000 6 Product 6 1000 6000 Total 6000 6000

16. Page 13 (Business> R&D) S. No. Process Particulars Cash In Cash Out Balance 1 Patent Registration 500 -500 2 Royalty Received From Patents 500 3 Royalty Given 300 -300 4 Sale Of Patents 500 200 Total 1000 800 200

17. Page 14 (Business> R&D> Patent Registration) S. No. Process Particulars Cash In Cash Out Balance 1 Patent Registration 1 100 -100 2 Patent Registration 2 100 -200 3 Patent Registration 3 100 -300 4 Patent Registration 4 100 -400 5 Patent Registration 5 100 -500 Total 500 -500

18. Page 15 (Business> Investment) S. No. Process Particulars Cash In Cash Out Balance 1 Stock Investment Sold 1000 1000 2 Stock Investment Purchase 700 300 3 Purchase of Plant 2000 -1700 4 Machinery Purchase 300 -2000 5 Research Equipment Purchase 100 -2100 6 Furniture Purchase 50 -2150 Total 1000 3150 -2150

19. Page 16(Business> Investment> Stock Bought) S. No. Process Particulars Cash In Cash Out Balance 1 Company 1 150 -150 2 Company 2 50 -200 3 Company 3 70 -270 4 Company 4 120 -390 5 Company 5 20 -410 6 Company 6 290 -700 Total 700 -700

20. Page 17 (Business> Investment> Stock Sold) S. No. Process Particulars Cash In Cash Out Balance 1 Company 1 100 100 2 Company 2 100 200 3 Company 3 200 400 4 Company 4 150 550 5 Company 5 100 650 6 Company 6 350 350 Total 1000 1000

21. Page 18 (Business> Insurance) S. No. Process Particulars Cash In Cash Out Balance 1 Medical Insurance for Employees 50 -50 2 Commercial Vehicle Insurance 40 -90 Total 90 -90

22. Page 19 (Business> Miscellaneous) S. No. Process Particulars Cash In Cash Out Balance 1 Utility bills 20 -20 2 Office Rent 9 -29 3 Office Supplies 1 -30 Total 30 -30

23. Page 20 (Business> Miscellaneous> Utility Bill) S. No. Process Particulars Cash In Cash Out Balance 1 Electricity Bills 10 -10 2 Water Bills 10 -20 Total 20 -20

24. How To Perform Accounting Until now we saw a top-down approach. But this is how we read the accounts not make them. Let’s see the steps for performing the above accounting. Step 1: Construct the table given on the first page as is. BUT, without cash in and out values. Step 2: Bifurcate and keep bifurcating your business’ expense/income heads under the given 9 heads of the first page. And build a such and such accounts book but all without cash in and out values. Step 3: Once the accounts book structure is ready, start filling in cash in or cash out value in the accounts book. BUT, follow a bottom-up approach. Step 4: Start by filling in the last page and keep going upwards. Step 5: Once you reach the main page (first page) of the accounts book, subtract the cash out value from cash in, to get the profit/loss of your company.

25. Rules Of This Accounts System Rule 1: An expense/income head can appear only once in the entire accounts book. Rule 2: Their can only be a cash in value or a cash out value. For example: Stock sold and stock purchased are two different entries. Either of the cash in or cash out value has to be zero. Rule 3: If there are various businesses within your business, let’s say in case of a conglomerate or venture capitalist business, again follow the above approach. For example: ABC parent company has two subsidiaries, then first the accounting for the subsidiaries will be done, and then the cash in and cash out values from those two subsidiaries will be used in the parent company’s accounting. This will be done in two stages. First parallelly for the subsidiaries and then for the parent company in stage two.

26. Rules Of This Accounts System Rule 4: One can also follow this two stage approach for businesses with various types of operations running within the same business. For example, a pharma company, that does both CDMO and branded formulations business, can also divide its accounting book into two parts where they parallelly build both books and combine the final cash in and cash out value to arrive at the final profit/loss of the company. This will provide a further clarity into how the business is performing for both the segments. Rule 5: Balance for every entry is arrived at by subtracting cash out from cash in.

27. Applications In SWOT Analysis Positive Entries and Numbers related to HR, Legal, R&D, and Admin. Negative Entries and Numbers related to Finance, Investment, and Insurance. Positive Entries and Numbers related to Finance, Investment, and Insurance. Negative Entries and Numbers related to HR, Legal, R&D, and Admin. STRENGTH WEAKNESS BUSINESS (Cash Production) FINANCE (Cash Management)

28. Thank You!