KalingaSoIt

M2T4-1 Functional Process Financial Accounting

LduLech SoluLlons rlvaLe LlmlLed
KalingaSoIt
% oncepLs of llnanclal AccounLlng
% llow of lnformaLlon ln Lhe llnanclal AccounLlng process
% esponslblllLles of Lhe llnanclal AccounLlng process
% uLpuLs of llnanclal AccounLlng
% npuLs Lo llnanclal AccounLlng
% rocesslng ln llnanclal AccounLlng
% Summary
M2T4-2 Topics
KalingaSoIt
AccounLlng means keeplng Lrack of Money and MaLerlal
llnanclal AccounLlng keeps Lrack of Lhe followlng
M2T4-3 Concepts of Financial Accounting
MaLerlal AccounLlng keeps Lrack of MaLerlals recelved senL Lo be
recelved Lo be senL produced and consumed MaLerlal AccounLlng wlll
be dlscussed ln Lhe nvenLory Module
% Money recelved
% Money pald
% Money Lo be recelved
% Money Lo be pald
% Money earned
% Money spenL
Topics
Concepts
nformation flow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-4 Concepts of Financial Accounting
% Money ln hand money ln bank slmllar accounLlng
% @ransacLlons blgger Lhan a speclflc value musL be Lhrough bank
uoubleLnLry 8ookkeeplng SysLem
% Lvery LransacLlon has 2 parLs ueblL (ur) and redlL (r)
% Dsed by all compuLerlsed accounLlng sysLem lncludlng L
Topics
Concepts
nformation flow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-5 Concepts of Financial Accounting
ecords malnLalned
@erms AccounL Croups
% 8ooks of rlglnal LnLry
% Ledgers
% roflL Loss SLaLemenL (L)
% 8alance SheeL (8/S)
% Schedules
% LlablllLy
% AsseL
% LxpendlLure
% ncome
Topics
Concepts
nformation flow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-6 Concepts of Financial Accounting
ecordlng
Lvery LransacLlon ls flrsL enLered ln one of Lhe 8ooks of rlglnal LnLry
osLlng
LnLrles are posLed ln Lhe Ledgers from Lhe 8ooks of rlglnal LnLrles
Ledgers represenL enLlLles for whlch separaLe lnformaLlon ls requlred
Lo be malnLalned Lxample
1 ash 8ook
2 8ank 8ook
3 !ournal
4 Sales eglsLer
3 urchase eglsLer
6 Lhers
1 ncome from Sales
2 ncome from nLeresL
3 Salary Lxpense
4 vehlcle Lxpense
Topics
Concepts
nformation flow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-7 Concepts of Financial Accounting
Maln Ledger and Subsldlary Ledgers
Lxample
llnal AccounLs
% roflL Loss SLaLemenL ncome and expendlLure relaLed
LransacLlons are reflecLed here
% 8alance SheeL AsseL LlablllLy relaLed LransacLlons are reflecLed
here
% Salary
% Sundry uebLors
% vehlcle
% Sundry redlLors
Topics
Concepts
nformation flow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-8 Flow of information in Financial Accounting
ow enLrles flow
% @ransacLlon cash pald Lo employee for Laxl fare for offlclal work
% @ransacLlon goes Lhrough several sLeps
% CeLs reflecLed ln Lhe flnal reporLs
% @he sLeps go from Lhe voucher Lo Lhe 8alance SheeL
x?Z ompany ash aymenL voucher
vr no231 uaLe 23 / 02 / 2011
ald Lo Shrl 8haraL kumar
lor Laxl fare for offlce duLy from offlce Lo cllenL's offlce and back
n accounL of Local onveyance
s240/
_________________ ***************** *****************
voucher repared by Approved ecelved
@he voucher has a loL of lnformaLlon on lL
Step 1 repare a voucher for Lhe LransacLlon
Topics
Concepts
nfo' fIow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-9 Flow of information in Financial Accounting
@e Voucer
x?Z ompany ash aymenL voucher
vr no 231 uaLe 23 / 02 / 2011
ald Lo 8haraL kumar __
lor Laxl offlce duLy from offlce Lo cllenL's offlce and back
n accounL of Local onveyance __
s240/
_________ ____________ ___________
repared by Approved by ecelved by
lolJ to Shrl 8haraL kumar e has Lo slgn Lo recelve Lhe money
vt No 231 Lhls ls a runnlng serlal number for each Lype of voucher
uote 23/02/2011 Lhe daLe pf paymenL
Nottotloo lor back" Lhls ls Lhe descrlpLlon of Lhe expense
ueblt Accooot Nome Local onveyance ls Lhe name of an Lxpense
Ledger head
Amooot s240/ ls Lhe amounL pald
SlgnaLures by Lhree persons (l) who prepared Lhe voucher (ll) who
approved Lhe expense and (lll) who recelved Lhe money
Nome of tbe compooy
x?Z ompany
1ype of voocbet
ash aymenL oLher
Lypes could be ash
ecelpL 8ank ecelpL
8ank aymenL and
!ournal
Topics
Concepts
nfo' fIow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-10 Flow of information in Financial Accounting
Step 2 @e Cas 8ook
Slnce Lhls ls a cash paymenL Lhe LransacLlon ls flrsL enLered ln Lhe
relevanL 8ook of rlglnal LnLry Lhe ash 8ook
uaLe vr
Lype
vr
no
AccounL narraLlon ecelpL aymenL 8alance
23022011 231 Local
onveyance
ald Lo Shrl 8haraL
kumar as Laxl fare for
offlce duLy from offlce
Lo cllenL's offlce and
back
24000 2343600
vr @ype Lhls ls a shorL form of ash aymenL
ecelpL Any cash recelved ls enLered ln Lhls column
aymenL @hls column ls for amounLs pald
Lher columns are common for recelpL and paymenL
8alance @hls ls Lhe cash balance afLer maklng Lhls paymenL lor Lhe
nexL paymenL s23436/ ls avallable
Topics
Concepts
nfo' fIow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-11 Flow of information in Financial Accounting
Step 3 Ledgers
Lvery LransacLlon ls enLered ln Lwo ledger accounLs n Lhls case Lhe
accounLs are 'ash' and 'Local onveyance'
edger account ocaI Conveyance
Rule: "Debit all expenses, Credit all income.
uaLe vr
Lype
vr
no
narraLlon ur r
23022011 231 ald Lo Shrl 8haraL kumar as Laxl
fare for offlce duLy from offlce Lo
cllenL's offlce and back
24000
edger account Cash
Rule: "Debit what comes in, Credit what goes out.
uaLe vr
Lype
vr
no
narraLlon ur r
23022011 231 ald Lo Shrl 8haraL kumar as Laxl
fare for offlce duLy from offlce Lo
cllenL's offlce and back
24000
Topics
Concepts
nfo' fIow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-12 Flow of information in Financial Accounting
Step 4 rof|t Loss Statement
Lxpenses and lncomes geL reflecLed ln Lhe roflL Loss SLaLemenL
@he speclflc enLry ls noL reflecLed
nly LoLal expense ln Lhe accounL head during a period ls reflecLed
!7ofit & oss Statement fo7 the pe7iod 1 Feb 2011 to 28 Feb 20011
ur r
ncome
ncome from Sales 96323943

Lxpend|ture

Local onveyance 8432700

Topics
Concepts
nfo' fIow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-13 Flow of information in Financial Accounting
Step S 8a|ance Seet
AsseLs and LlablllLles geL reflecLed ln Lhe 8alance SheeL
@he speclflc enLry ls noL reflecLed
nly Lhe balance ln Lhe accounL as aL end of Lhe lasL day of a perlod ls
reflecLed
8a|ance Seet as on 28 Ieb 2011
ur r
ncome
ncome from Sales 96323943

Lxpend|ture

Local onveyance 8432700

Topics
Concepts
nfo' fIow
Responsibilities
Output
nput
Process
Summary
KalingaSoIt
M2T4-14 Responsibilities of Financial Accounting
espons|b|||t|es of te I|nanc|a| Account|ng Department
% MalnLaln books
% roduce reporLs
% SaLlsfy sLaLuLory requlremenLs
% SaLlsfy managemenL requlremenLs
% eflecL Lhe real flnanclal poslLlon correcLly and compleLely
Topics
Concepts
nfo' flow
#esponsibiIity
Output
nput
Process
Summary
KalingaSoIt
M2T4-15 Outputs from Financial Accounting
@p|ca| outputs expected from te I|nanc|a| Account|ng Department
1 ash 8ook
2 8ank 8ooks
3 Lmployee Salary Ledger
4 Sales eglsLer
3 urchase eglsLer
6 Sundry uebLors' Ledger
7 Sundry redlLors' Ledger
8 llxed AsseLs eglsLer
9 Ceneral Ledger
10 @rlal 8alance
11 roflL Loss SLaLemenL (L)
12 8alance SheeL (8/S)
Topics
Concepts
nfo' flow
Responsibility
:tp:t
nput
Process
Summary
KalingaSoIt
M2T4-28 nputs to Financial Accounting
nputs to I|nanc|a| Account|ng
@hree Lypes of lnpuLs
1 lannlng
2 MasLer
3 @ransacLlon
Topics
Concepts
nfo' flow
Responsibility
Output
np:t
Process
Summary
KalingaSoIt
M2T4-29 nput to Financial Accounting
ncome
Sales nLeresL
Maln
roducL
8yproducL Scrap
8ank
deposlL
ompany
deposlL
lannlng
1 AccounL groups and subgroups
2 ash books correspondlng accounL head
3 8ank books correspondlng accounL head
4 Lher books wlLh correspondlng accounLlng heads
Topics
Concepts
nfo' flow
Responsibility
Output
np:t
Process
Summary
KalingaSoIt
M2T4-30 nputs to Financial Accounting
nputs to I|nanc|a| Account|ng
MasLer
1 Ledger accounL heads wlLh grouplng lnformaLlon
2 penlng balance for each ledger accounL head
3 ash and 8ank openlng balances
Topics
Concepts
nfo' flow
Responsibility
Output
np:t
Process
Summary
KalingaSoIt
M2T4-31 nputs to Financial Accounting
nputs to I|nanc|a| Account|ng
@ransacLlon
1 ash and bank recelpL vouchers
2 ash and bank paymenL vouchers
3 !ournal vouchers
4 Sales lnvolces
3 urchase bllls
6 Salary sLaLemenL
7 ManagemenL declslons
8 Lhers
Topics
Concepts
nfo' flow
Responsibility
Output
np:t
Process
Summary
KalingaSoIt
M2T4-32 Processing in Financial Accounting
@he sLages of processlng ln Lhe llnanclal AccounLlng module of an L
are as follows
1 voucher preparaLlon
2 voucher approval
3 voucher enLry and valldaLlon
4 voucher sLorage
3 voucher posLlng ln 8ooks of rlglnal LnLry
6 voucher posLlng ln ledger accounLs
7 loslng of a perlod
8 SLarLlng a new perlod
Topics
Concepts
nfo' flow
Responsibility
Output
nput
!7ocess
Summary
KalingaSoIt
M2T4-33 Processing in Financial Accounting
An overvlew of Lhe llnanclal AccounLlng process
SLarL
repare
voucher
LnLer
voucher
voucher
uaLa
MasLer
uaLa
rocess
8ooks
8ooks
rocess
Ledger
Ledger
DpdaLed
MasLer
rocess
llnal eporLs
L
8/S
Topics
Concepts
nfo' flow
Responsibility
Output
nput
!7ocess
Summary
KalingaSoIt
M2T4-34 Processing in Financial Accounting
erlod end processlng
SLarL
erlod
voucher
penlng
MasLer
1 uay end
2 MonLh end
3 ?ear end
erlod end
process
new perlod
voucher
loslng
MasLer
erlod end
reporLs
loslng masLer daLa of one perlod becomes Lhe openlng masLer daLa
for Lhe nexL perlod
new voucher daLa flles may be creaLed aL a perlodend Lo make flles
slzes smaller and manageable
Topics
Concepts
nfo' flow
Responsibility
Output
nput
!7ocess
Summary
KalingaSoIt
M2T4-35 Processing in Financial Accounting
@yplcal perlod end reporLs
er|od eports
uay end ash 8ook
8ank 8ook
MonLh end !ournal
Sales eglsLer
urchase eglsLer
Subsldlary ledgers
Ceneral ledger
@rlal 8alance
roflL Loss SLaLemenL
8alance SheeL
?ear end @rlal 8alance
roflL Loss SLaLemenL
8alance SheeL
Schedules Lo L and 8/S
Topics
Concepts
nfo' flow
Responsibility
Output
nput
!7ocess
Summary
KalingaSoIt
M2T4-35 Financial Accounting - Summary
llnanclal AccounLlng funcLlon has Lwo maln dlmenslons
1 uayLoday operaLlons lncludlng Lhe monLh and year end
processlng
2 Servlce requesLs from Lhe managemenL bankers sLaLuLory
auLhorlLles shareholders and oLher sLakeholders
llnanclal AccounLlng ls compuLerlsed ln mosL companles
llnanclal AccounLlng can be compuLerlsed lndependenLly or as parL of
an L
@here are many sLandard reporLs Lhe formaL and conLenL ls governed
by convenLlon convenlence and sLaLuLes
Topics
Concepts
nfo' flow
Responsibility
Output
nput
Process
S:mma7y