HIMANSHU ACCOUNT PPT 33 to 40 financial accounting

“The financial statements provide a summary of the accounts of a business enterprise . The balance sheet reflecting the assets, liabilities and capital as on a certain date and the income statement showing the results of operations during a certain period.” Internal control is process intended to assure that an organization works to achieve its goal efficiently, produce Reliable financial statement, complies with relevant laws and regulation and manges its major risk.
The boar of directors and management require good internal control system .
Shareholder, Regulators, and government benefit from internal controls.
An internal control system extend beyond matters that relate directly to the function of the accounting system.

1. SAURASTRA UNIVERSITY DEPARTMENT OF MANAGEMENT AND BUSINESS ADMINISTRATION SUBJECT : FINANCIAL ACCOUNTING SUBMITTED TO: MR KIRIT CHAUHAN

2. Sr No. Roll No. Name Topic Name 1 33 Himanshu S. Patel Classifie d Financial statement 2 34 Hiral P. Jadav Internal control system 3 35 Hiral kumari H. Prasad Income measurement 4 36 Hiren B. Vala Revenue for sale 5 37 Jaydeep A. Dangar Cost of goods sold 6 38 Khushali R. Vora Operating expenses 7 39 Khushi R. Gokani Internal control for cost 8 40 Khushi S. Vinchhi Debtors and bills receivable only theory aspects

3. Classified financial statement . Himanshu S .Patel Roll No-33

4. DEFINITION : “ The financial statements provide a summary of the accounts of a business enterprise . The balance sheet reflecting the assets, liabilities and capital as on a certain date and the income statement showing the results of operations during a certain period.”

5. Objective Of Preparing Financial Statements To present a true and fair view of the financial Performance. To present a true and fair view of the Financial Position.

6. Income statement Trading account : “ The trading account shows the results of buying and selling of goods in preparing this account , the general establishment charges are ignored and only the transactions in goods are included”

7. 2. Profit and loss Account : “ A profit and loss account is an account into which all gains and losses are collected , in order to ascertain the excess of gains over the losses or vice-versa.”

8. Statement of financial position Balance sheet : “ Balance sheet is a statement prepared with a view to measure the exact financial position of a business on a certain fixed data.”

9. Internal control system : Concept and features Hiral P . Jadav Roll No - 34

10. Meaning : I nternal control is process intended to assure that an organization works to achieve its goal efficiently, produce Reliable financial statement, complies with relevant laws and regulation and manges its major risk. The boar of directors and management require good internal control system . Shareholder, Regulators, and government benefit from internal controls. An internal control system extend beyond matters that relate directly to the function of the accounting system.

11. Feature of Good internal control system

12. Separation of duties : The organizational structure should provide for the segregation of functional responsibilities. No individual should be responsible for all phases of a transaction. Segregation of operations, custody and accounting significantly reduces the chances of frauds. Frauds would become more difficult if two or more individuals have to collude. Authorizing and Recording transaction : A competent official in the organization must authorize transactions, preferably by signing or initialling a document. Then the accounting department must record the transactions, by first classifying them on the basis of a carefully devised scheme and then summarizing then according to the classification. There are several mechanisms to verify the correctness of the recording process. Preparation of a trial balance is a check on the proper recording of debits and credits.

13. 3) Sound administrative practices : All major instructions and procedures should be in writing. They lay down the standard of work and specify the responsibilities of individual managers. They prepare budget and circulate them to key manager 4) Sound personnel policy : Reliable and competent personnel are fundamental to the success of a control system. The organization should verify past experience cited in job applications and investigate significant gaps in experience. Mass recruitment is risky because it does not allow for proper pre-employment screening. There should be periodical rotation of employees on different jobs and regular supervision of there work. Fidelity bonds insure the company against thefts.

14. 5) Internal audit : Human ingenuity is inexhaustible. Dishonest employees find out ways of defrauding the organization despite the existence of many controls. The organization should always be alert to possibilities of embezzlements, frauds and errors. Managers should regularly investigate the system they are working with. According to an ernst & young survey 41 per cent of respondents said that they employed internal audit to detect fraud.

15. Income measurement for a Merchandising organisation Name : Hiralkumari .H. Prasad Roll no : 35

16. Flow of merchandise through marketing channel Merchandising (or trading) organizations earn revenue by selling goods or merchandise.

17. The profit and loss account of a merchandising organization has three components Revenue from sales Cost of goods sold Operating expenses

18. Revenue for sales Hiren B. Vala ROLL NO: 36

19. Revenue for sales Management, investors and analysts closely monitor the amount as well as sales trends. Is An increasing trend in sales indicates not only an increase in sales, but also an upward trend in the potential for increased earnings. A decline in sales, on the other hand, can lead to a downturn in the company’s sales fortunes for comparison amounts. Therefore, each period is compared with the sales of the previous period as well as the sales of competitors on a regular basis. These comparisons help to detect key trends in sales.

20. Topic: Cost of goods sold Jaydeep . A. Dangar Roll No: 37

21. What is COGS? COGS represents all costs associated with making the products that were sold during the period covered by an income statement. Formula of COGS: COGS=Begging inventory +p-Ending Inventory Where; p= purchase during period

22. Limitations of COGS: 1) Allocating to inventory higher manufacturing 2) Overstating discounts 3) Overstating returns to suppliers 4) Overvaluing inventory on hand 5) Failing to write off obsolete inventory

23. Methods of COGS 1) LIFO 2) FIFO 3) Weighted average cost 4) Special Identification Method

24. 1) LIFO: LIFO  is where the latest goods added to the inventory are sold first. The LIFO method is only legal in the United States. Example:

25. 2) FIFO: The FIFO (“First-In, First-Out”) method means that the cost of a company’s oldest inventory is used in the COGS (Cost of Goods Sold) calculation. The FIFO method goes on the assumption that the older units in a company’s inventory have been sold first. To calculate COGS (Cost of Goods Sold) using the FIFO method, determine the cost of your oldest inventory.

26. Example:

27. 3) Weighted average cost: average cost per item is calculated by giving a weighted value to items in the data set. The weighted average cost method divides the cost of goods available for sale by the number of units available for sale. Example :

28. 4) Special Identification Method: The special identification method uses the specific cost of each unit of merchandise (also called inventory or goods) to calculate the ending inventory and COGS for each period. In this method, a business knows precisely which item was sold and the exact cost. Further, this method is typically used in industries that sell unique items like cars, real estate, and rare and precious jewels. Example :

29. OPERATING EXPENSES KHUSHALI R. VORA ROLL NO:- 38

30. DEFINATION “An expense a business incurs through its normal business operations.” MEANING The third most important part of a P&L a/c of a merchandising organization is operating expenses. These are expenses other than cogs, interest & income tax. Operating expenses also known as OPEX, refer to the ongoing costs incurred by a business to maintain its day- to-day operations.

31. TYPES OF OPERATING EXPENSES Selling expenses include expenses of storing & preparing goods for sale, promoting sales, actually making sales & delivering goods to customers. Administrative expenses are incurred in the overall management of a business .

32. MANAGEMENT OF OPERATING EXPENSES Here, it is responsibility to determining how to reduce operating expenses without affecting a firm’s ability to compete with its competitors. Finding the right balance can be difficult but can yield significant reward. FORMULA OF OPERATING EXPENSE Operating expenses=Revenue-operating income-Cogs EXAMPLE :- 5,00,000-1,50,000-3,00,000 =50,000

33. Topic : Internal control for cash Khushi R. Gokani Roll no. 39

34. Internal control for cash In accounting, internal cash control refers to the set of procedures and policies that an organization implements to manage and protect its cash-related transactions. These controls are essential for ensuring the accuracy, reliability, and security of financial information. Internal cash controls in accounting often include:

35. 1) Segregation of Duties: Assigning different responsibilities to different individuals to reduce the risk of fraud or errors. For example, the person responsible for receiving cash should not be the same person responsible for recording it in the accounting system. 2) Documentation and Recordkeeping: Maintaining proper documentation for all cash transactions, including receipts, deposit slips, and other supporting records. This documentation serves as evidence and aids in reconciling cash balances. 3) Authorization Procedures: Clearly defining who has the authority to approve cash transactions. This helps prevent unauthorized or fraudulent activities.

36. 4) Reconciliation: Regularly reconciling cash records with bank statements to identify and resolve discrepancies. This process helps ensure that the recorded cash balances in the accounting system match the actual cash held by the organization. 5) Physical Safeguards: Implementing measures to physically secure cash, such as locked safes, restricted access to cash handling areas, and surveillance systems.

37. Name : Khushi S. Vinchhi Roll no. 40 Topic : Debtors and bills recievable only theory aspects.

38. Who is Debtors ? A debtors is a company or individual who owes money. If the debts is in the form of a loan from a financial institution. The debtors is reffered to as a borrowers, and if the dept is in the form of securities such as bonds the debtors is reffered to as on issuer.

39. What is Bills Recievable? A bills receivable is a document that your customer formally agrees to pay at some future date. The bills recievable document effectively replaces for the related amount the open debt exchanged for the bill. Business use this bills in credit sales to facilitate smooth flow of money. Bills can transfer easily and the law provides simpler rules of evidence for bills.

40. A bills involves following transactions : Drawing : The drawer (seller) draws up the bill, signs it, and addresses it to the drawee (buyer) for acceptance interest may or may not be payable. Acceptance : The drawee conveys his assent to the bills and becomes the acceptor. He should pay the holder of the bill.

41. Presentation for payment by drawer : It involves the drawer presenting the bill to the drawee for payment on the specified. maturity date Discounting : Before the due date the drawer can transfer the bill to another person. Before the date an endorsee can further endorse the bill. Presentation for payment by endorsee : On the due date, the last endorsee – The holder presents the bill to the acceptor for payment. If the acceptor does not pay. The holder get a certificate from a notary public noting and protesting the dishonour. The endorsee collects the amount due from its endorser.

42. Thank you