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Business Realities !

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Business Many Types

Manufacturing, Trading, Services, .

Local / State-wide / National / Multi - National

Single Most Important Thing in Business : ???

Being In Business for long years ; Long Existence

Growth : Important

More Customers

More Products

More Businesses More Profits : To fuel more growth : Most Important

Innovation / Technology / New Benefit to Customers

Value Proposition : Ultimate Goal in Business

Be Aware of Competition : Todays & Tomorrows!!

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The only thing Constant is

Change!

Change : Growth

Growth : Change

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Changes

Brushing the Teeth : Neem Sticks Brushes Electric

Business : Barter Money Convenience NetMoney : Stone Metals Notes / Coins VirtualMoneyTransfer: Money Order Cheque DD Net BankingBanking : Moneylenders Bankers Building ATMs

Education : Trees Gurukul Buildings VirtualTransport : Bulky Smaller Compact .Travel : Sail Ships Airplanes Supersonic Dream-linersTicket Booking : Manual Telegraph NetT

rade :Local Market Shops Deptt. Stores Virtual

Entertainment : B & W Colour 3D Digital MP4Music : Live Tapes Records Cassettes CDs IpodBooks : Palm Leaves Paper WP E Books KindleGames : Real Physical Virtual

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Changes in Business

How many of you have seen / used a Typewriter? PCs & Word-processors have made them obsolete What happened to VCRs / VCPs

CDs/DVDs/Bluray Discs/Hard-discs have killed them Hand-wound Alarm Clocks / Watches :

Quartz & later Mobile Phones Do we see Porters with Red Shirts in Railway Stations?

Strollies / Luggage with Wheels have replaced them What Happened to Fountain Pens / Inks?

Gel Pens / Ball Pens What Happened to Floppy Discs? Pen-Drives / Wi-Fi

Postage Envelopes / Stamps Couriers / Emails

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Strange Business Which company sells Maximum no. of Cameras in India?

Nokia by their Sale of Camera Phones!

Which company is the biggest in Music Business in India?

Airtel by their Sale of Caller Tunes

Internationally, who is Kodaks Competitor? Sony Primarily a Music Company

Some of the Biggest Blunders in Business : IBM / MS

IBM : PCs and Microsoft : Internet

Who are biggest competitors of British Airways in India? HP & CISCO : By their Video-conferencing Products

Is there any competition for Shah Rukh Khan in India?

IPL / T-20 MSD / Yuvi / Shane Warne

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The only thing Constant is

Change!

Change : Growth

Growth : Change

Management : Catalyst for Change

Dynamic / Pro-active

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Management .

Manage Time

Teams

Targets TechnologyTransactionsTransmission

Transformation

T

ension

Men T

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Marketing

Mgmt

R & D

HR

Mgmt.

IT

Mgmt.

Finance

Mgmt

Material

Mgmt

Production

Mgmt

Sales /

Profit

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P/LB/S

Trial

BalanceLedger Posting

Journal Entries

ManyT

ransactionsT

ake Place

Accounting Tree / Hierarchy

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Transaction Any activity, having monetary value

Purchase, Sale, Production, Rejection Salaries, Wages, Employee Benefits Advertisement, Travel, Communication

Insurance, Accident, Claim Settlement Borrowing, Interest Payment Investment, Interest Receipt Purchase of Land, Building, Machineries Sale of Land, Building, Machineries Merger & Acquisition Demerger

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Double Entry System

AllTransactions

Cash / Bank Credit Basis

All Transactions should have details of whether

on Cash / CreditIf On Credit, record the name of the person

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Types of Accounts

Real A/cTouch / Feel

Nominal A/c

Can NotTouch / Feel

Personal A/c

Cash Materials

Land

Building

Machineries

Computers

Furniture

Salaries

Wages

Insurance

Interest

Travel

Depreciation

Expenses

Bank

Name of

Person

Company

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3 Golden Rules of Accounting

Type of A/c Debit Credit

Real What Comes In What Goes Out

Personal The Receiver The Giver Nominal Expenses & Losses Incomes & Gains

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Rules of Accounting

A/c Type Debit Credit

Assets Increase Decrease

Liabilities Decrease IncreaseIncome Decrease Increase

Expenses Increase Decrease

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Journal EntriesPlease Make Journal Entries for :

Purchase of Material for Cash : Rs.10,000 Credit Sales to ABC Ltd : Rs.15,000

Salary Payment to Staff : Rs.25,000

Cash Deposited in Bank : Rs. 1,00,000 Borrowed from Citibank : Rs.10,00,000

Purchase of Land : Rs.2,00,000

Office Rent Paid to Mr. Raja : Rs.10,000 Collected money from ABC Ltd : Rs.5,000

Insurance Payment made : Rs.5,000

Interest Payment made to Citibank:Rs.1,000

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P/L A/c and Balance Sheet

P/L Account

Sales

Purchases

Opening / Closing Stock Salaries & Wages

Other Expenses

Arrive at Profit / Loss Cumulative for a Period

Monthly, Quarterly, Half

Yearly, Annual

Balance Sheet

Capital Account

Assets

Liabilities Reserves

Investments

Financial Health

Status as on ParticularDate

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Capital / Revenue Expenditure

Capital Items Facilities / Assets

Generally Expensive

As and when Required

Has Long Life

Required for generation ofRevenue

New / Additional Assets :Land, Building, Plant,Machineries, Vehicles,

Computer (Hardware &Software), etc.

Appears in the Balance sheetFixed Assets Gross Block

Revenue Items Expenses / Costs

Not Very Expensive

Recurring in nature

Short Life < 1 Year

Integral part of cost, requiredfor using the assets

Raw Materials, Salaries, Rent,Communication, Travel,Insurance, Power & Fuel,

Interest, Depreciation etc. Charged to P/L A/C

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Accounting Concepts

Business Entity Concept Cost Concept

Going Concern Concept

Double Entry Accounting Realisation Principle

Matching Principle

Consistency Conservatism

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IncreasedWithDebits

Decreased

With

Credits

AssetsExpenses

Dividends

Default Balance: Debit

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IncreasedWithCredits

Decreased

With

Debits

IncomesLiabilities

Equity

Default Balance: Credit

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Transactions Flow

Transactions ExpensesCost of

Products

Identifiable withProduct : Direct

Material

Labour

Not Identifiable withProduct Directly :

Common Expenses

Corp. Office Expenses

Admin. Expenses

Direct Cost : Collected

on Products

Indirect Cost : Overheads

: Allocated to Products

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Journal Entries Issued Share Capital for Cash : Rs.10,00,000

Purchased a Factory (Land & Building) forRs. 4,00,000 on Credit from M/s Ram Ltd Purchased Machineries : Rs. 1,00,000 A/c opened in SBI : Rs. 10,000

Borrowed from SBI : Rs.10,00,000 Credit Purchase of Matl. from ARs.4,00,000 Credit Sales made to B : Rs.12,00,000 Paid to A Rs.1,80,000; Discount : Rs.20,000

Collected from B : Rs. 8,00,000 Salaries paid : Rs.1,00,000 Advertisement Expenses : Rs.50,000 Paid to M/s Ram Ltd : Rs.2,00,000

Closing Stock : Rs.50,000

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