Assignment on financial accounting

Submitted By: AMIT ARORAEnrolment No: M090700005Dated: 16 Sep,2009

Submitted To:Dr. ASHOK BHANSALI

ASSIGNMENT

Information management has become a powerful resource and a large expense for many organizations.

Helps in decision making at various levels.

o Environmental management o Creation of slack resources o Optimum utilization of resources

1.NEED FOR INFORMATION

Facility information modelPlant information modelBuilding information model

Flow of information in an ORGANIZATIONVERTICALLYHORIZONTALLY

INFORMATION MODEL

Computer Age or Information EraUse of INTERNET - Digital Revolution

INFORMATION AGE

Information management (IM) To control the structure & functioning of Org.understanding of the technologyinformation management entails organizing,

retrieving, acquiring and maintaining information

practice of Data Management

NEED

vast need for decision making prevent individuals from acting strictly

rationalaccess, collect and evaluate all environmental

informationdecision at a reasonable price, i.e., time and

effort design strategies for organization

INFORMATION PROCESSING

Reduction of information processing needs Environmental management Creation of slack resources Creation of self-contained tasks

Increasing the organizational information processing capacity Creation of lateral relations Vertical information systems

Five main organization design strategies

formal records of the financial activities of a business, person, or other entity

financial statements are often referred to as accounts

an overview of a business or person's financial condition in both short and long term.

2.FINANCIAL STATEMENTS

Balance sheet: reports on a company's assets, liabilities, and Ownership equity as of a given point in time.

Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time.

Statement of retained earnings : explains the changes in a company's retained earnings over the reporting period.

Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

Four basic financial statements

Owners and managers require financial statements to make important business decisions

Employees also need these reports in making collective bargaining agreements (CBA)

Investors make use of financial statements to assess the viability of investing in a business.

PURPOSE

Financial institutions use them to decide whether to grant a company with fresh working capital or extend debt securities

Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes

Vendors require financial statements to assess the creditworthiness of the business.

PURPOSE

An Annual report is a comprehensive report on a company's activities throughout the preceding year.

Gives shareholders and other interested persons information about the company's activities and financial performance.

3.ANNUAL REPORT

Balance statement of financial position

summary of a organization's balancesIncludes Assets, Liabilities & Ownership EquityEquity = Assets - Liabilities

FIRST REPORT

Cash flow statement

provide information on a firm's liquidity and solvency

information for evaluating changes in assets, liabilities and equity

indicate the amount, timing and probability of future cash flows

SECOND REPORT

Income statement [(P&L) and Statement of Operations]

The purpose of the P&L is to show managers and investors whether the company made or lost money

Operating sectionRevenue Expenses

THIRD REPORT

field of accountancy concerned with the preparation of financial statements

fundamental need for financial accounting is to reduce principal-agent problem

used to prepare accounting information for people outside the organization

help managers make decisions to manage the business.

4.FINANCIAL ACCOUNTING

Financial analysis is performed on statements to provide management with a more detailed understanding of the figures.

statements are also used as part of management's annual report to the stockholders.

Employees or labor union need these reports in discussing their compensation, promotion and rankings.

ROLE

Financial analyses are often used by Investors and are prepared by financial analysts, thus providing them with the basis for making investment decisions.

Project stakeholders a) Sponsor a project b) Have an interest in a project.

Examples : customers, the user group, the project manager, the testers, etc.

ROLE

MANAGERSAims

Formulating strategies Planning and constructing business activities Helps in making decision Optimal use of Resource (economics) Supporting financial reports preparation Safeguarding asset

ROLE

CREDITORSIt is a person or institution to whom money is

owedAccounting classification

Long-term liabilities 'Long-term creditors'

Current liabilities 'Current creditors'

ROLE

objective of financial statements is to provide information about the financial position

useful to a wide range of users in making economic decisions

Financial statements should be understandable, relevant, reliable and comparable

ROLE

Media and the general public are also interested in financial statements for a variety of reasons

describe management's performance and the company's financial highlights.

effective way for corporations to communicate with individual shareholders.

ROLE

1. How important is financial reporting to a technology company?

To understand the strategy of performance Single window for our investors to look into

our operations and aspirations.To understand financial values of the

company

INTERVIEW WITH Mr. MURTHY (Infosys)

2. Philosophy of InfosysUnder promise, Over Delivery

3.Financial reporting as a part of business strategy.

To assess the viabilityHelps customer to understand the strategy

INTERVIEW WITH Mr. MURTHY

4. Financial disclosure results in competitive disadvantage

It should not create asymmetry of benefitsWe believe to disclose, when in doubt

5. Summary of annual report to retail investorsIt is worthwhile for the company as well as

for customers .

INTERVIEW WITH Mr. MURTHY

INTERVIEW WITH Mr. MURTHY6. PRESSURE ON MANAGERS• Globalization & competition• Sharing with the investors

7.EXPENSING STOCK OPTIONS• Do not dilute more than a certain %age• Benefit to investors

8. Independent Directors• Corporate governance – minimization cost• Risk mitigation – to protect shareholders

9. Quarterly reporting discourage risk• Profits in Long term investment• Investment will indeed bear fruit

INTERVIEW WITH Mr. MURTHY

10. Globalization / corporate governance in INDIA

• Maximizing shareholder value• Transparency, fairness and accountability to

stakeholders• Pressure to Benchmark• Market capitalization

INTERVIEW WITH Mr. MURTHY

THANK YOU