A Typical Finance Module Training Presentation

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



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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

2020

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



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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



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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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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

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