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GNZ Business Alliances
GNZ Business Alliances
BUSINESS IS A SEPARATE ENTITY
BUSINESS
Owners
Directors Mgmt/ Staff Others
Grow your business by better financial management and accounting - - PowerPoint PPT Presentation
Grow your business by better financial management and accounting - - PowerPoint PPT Presentation
Grow your business by better financial management and accounting for SME 4 October 2016 GNZ Business Alliances BUSINESS IS A SEPARATE ENTITY Owners Others BUSINESS Directors Mgmt/ Staff GNZ Business Alliances BUSINESS CYCLE Customer
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SLIDE 3
GNZ Business Alliances
BUSINESS CYCLE
Customer
Cash
Supplier
Product
Sales
Dividend/ Drawings Owners Funds
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GNZ Business Alliances
PARTS OF A BUSINESS
FRONT-END
- Sales/Marketing
- End Products
- Services
- Customers
finance and accounting need to integrate all processes in a business
MIDDLE PART
- Operations
- Raw Materials
- Suppliers
- Inventory
BACK-END
- Data entry
- Accounting
- Finance
- Reports
SLIDE 5
GNZ Business Alliances
BUSINESS CONTINUITY/SURVIVAL
BUSINESS CONTINUITY/ SURVIVAL BUSINESS CONTINUITY/ SURVIVAL
- Satisfactory business
position
- and to pay obligation
as it falls due
- Satisfactory business
position
- and to pay obligation
as it falls due
- Able to generate
required business profit
- measured for a pre-
defined time period
- Able to generate
required business profit
- measured for a pre-
defined time period
Balance Sheet provides information on the first condition Profit & Loss provides information on the second condition
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GNZ Business Alliances
BALANCE SHEET : business position
- snapshot at a point in time
- business control over resources
- assets, liabilities & equity
DEFINITION: DETAILS:
- Assets : items of value owned/controlled
- Liabilities : amounts owing to external parties
- Equity : claims of business owners on the resources
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GNZ Business Alliances
BALANCE SHEET EQUATION ASSETS = LIABILITES + EQUITY
Provides basis for information on business position Information to determine satisfactory financial position and ability to pay its obligation as it falls due
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GNZ Business Alliances
PROFIT & LOSS : profit position
DEFINITION:
- pre-defined time period
- resources flow
- “matching” process
CATEGORIES:
- Revenue : resource inflow
- Expense : resource consumed/outflow
- Cost : unconsumed or unexpired cost considered asset
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GNZ Business Alliances
PROFIT & LOSS : Accrual Accounting
Revenue recognised and recorded at a date earlier than when the associated cash is received means profit measured using “accrual accounting” Similarly for Expense
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GNZ Business Alliances
PROFIT MEASUREMENT PROFIT = REVENUE - EXPENSE
Provides basis for information on profit position (P&L) Survival of business dependent on its ability to generate satisfactory business profit measured for a particular period
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GNZ Business Alliances
EQUATION & CHART OF ACCOUNTS
Asset + Expense = Liability + Equity + Revenue
Represents groups of items under Chart of Accounts Provides basis for Debit or Credit entry in Accounting System Asset or Expense (on LHS) normally Debit entry Liability or Equity or Revenue (on RHS) normally Credit entry
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GNZ Business Alliances
ACCOUNTING EQUATION ILLUSTRATION
Asset + Expense = Liability + Equity + Revenue
Business receives RM20,000 as equity from Business Owners Cash (under Asset) increase : Debit Cash Share Capital (under Equity) increase : Credit Equity LHS = RHS; equation balanced Entry affecting one item to be matched with entry affecting another to keep accounting equation in balance Gives meaning to double-entry book-keeping
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GNZ Business Alliances
SUMMARY
Business require a structured framework for better financial management and accounting to survive and grow
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GNZ Business Alliances