Financial Accounting (FI) - Overview - Unit 3
Jul 07, 2015
Financial Accounting(FI)
- Overview -
Unit 3
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
2
SAP Enterprise System
R/3
FIFinancialAccounting
COControlling
PSProjectSystemWF
WorkflowISIndustrySolutions
MMMaterials Mgmt.
HRHumanResources
SDSales and Distribution
PPProductionPlanning
QMQualityMgmt.PM
Plant Maintenance
SMServiceMgmt.
Client / ServerIntegrated BusinessSolution
ECEnterpriseControlling
AMFixed AssetsMgmt.
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
3
Unit 3, Part 1 – Overview
• Financial Accounting (FI)– Goals and Objectives
– Target Audience
– Components
• Managerial Accounting (CO)– Goals and Objectives
– Target Audience
– Components
• Comparisons and Relationships
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
4
R/3
FIFinancialAccounting
COControlling
PSProjectSystemWF
WorkflowISIndustrySolutions
MMMaterials Mgmt.
HRHumanResources
SDSales and Distribution
PPProductionPlanning
QMQualityMgmt.PM
Plant Maintenance
SMServiceMgmt.
Client / ServerIntegrated BusinessSolution
ECEnterpriseControlling
AMFixed AssetsMgmt.
Financial Accounting (FI)
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
5
Goals and Objectives
• Financial accounting is designed to collect all of the data needed to support the preparation of financial statements for external users
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
6
Target Audience
Internal
• Executives
• Senior Management
• Accounts
• Administration Staff
• Employees
External
• Legal Authorities
• Banks
• Auditors
• Shareholders
• Insurance
• Taxing Authorities
• Media
• Financial Analysts
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
7
Components of Financial Accounting
Financial Accounting
(FI)
AccountsReceivable
AccountsPayable
SpecialPurposeLedger
FixedAssets
Banks
GeneralLedger
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
8
R/3
FIFinancialAccounting
COControlling
PSProjectSystemWF
WorkflowISIndustrySolutions
MMMaterials Mgmt.
HRHumanResources
SDSales and Distribution
PPProductionPlanning
QMQualityMgmt.PM
Plant Maintenance
SMServiceMgmt.
Client / ServerIntegrated BusinessSolution
ECEnterpriseControlling
AMFixed AssetsMgmt.
Controlling (CO)
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
9
Goals and Objectives
• Managerial accounting is designed to collect data for the preparation and analysis of reports for use by internal users
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
10
Target Audience
• Executives
• Senior Management
• Department Managers
• Controllers
• Cost Accountants
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
11
Components of Managerial Accounting
Controlling(CO)
CostElementAcct
CostCenterAcct
ProductCostControlling
InternalOrders
ActivityBasedCosting
ProfitCenterAcct
ProfitabilityAnalysis
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
12
Comparison
Managerial Accounting
• Cost Center Accounting
• Profit Center Accounting
• Product Costing
• Profitability Analysis
• Different Valuations
• Flexibility
Financial Accounting
• External Accounting
– Balance Sheet
– Profit & Loss Statement
• Legal Requirements
• Standards
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
13
Comparative Reporting
Financial Accounting (FI)
External Reporting
Managerial Accounting (CO)ProductCostsReports
Internal Reporting
CostCenterReports
ProfitCenterReports
ProfitMargin
RetainedEarningsReport
LiquidityCalculation
Income Statement
BalanceSheet
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Income Statement Bal. Sheet
Financial Accounting
(FI) TransactionDocumentAmountG/L Account #Cost Center1900012432
(CO) Transaction DocumentCost Center Cost Element20000657 Controlling
100100
BankSupplies Exp.
Cost Center
100
Interrelated and Closely Connected
Financial Accounting (FI)
- The Basics -
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Unit 3, Part 2 – Overview
• General Ledger
• Chart of Accounts
• Balance Sheet– Assets
– Liabilities
– Equity
• Income Statement– Revenues
– Expenses
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
17
General Ledger
• The General Ledger provides a complete record of all "acceptable" business transactions from the viewpoint of an accountant
• An acceptable business transaction has the following traits– Affects the financial position of the entity– Measurable in a currency– Affects at least two accounts– Assets = Liabilities + Equity– Debits = Credits
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Chart of Accounts
• The foundation for the General Ledger is the Chart of Accounts
• A Chart of Accounts contains a complete list of all of the accounts utilized in the General Ledger for a given company
• Financial accounting reports are prepared from the balances contained in the General Ledger’s Chart of Accounts
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Chart of Accounts (continued)
• There are five types of accounts contained in a Chart of Accounts– Assets– Liabilities– Equity– Revenues– Expenses
• There are two primary accounting reports prepared from the General Ledger Chart of Accounts– Balance Sheet– Income Statement
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Balance Sheet – Assets
• Things of value that a company owns or controls that accountants have agreed to measure in monetary terms.
• Examples of these accounts include:
– Cash
– Accounts receivables
– Plant and equipment
– Inventory
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Balance Sheet – Liabilities
• Things that a company owes or must provide services in order to settle that accountants have agreed to measure in monetary terms.
• Examples of these accounts include:
– Accounts payable
– Notes payable
– Bonds payable
– Unearned revenue
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
22
Balance Sheet – Equity
• Equity is simply the mathematical difference between assets and liabilities.
• Includes the monetary amounts collected with respect to all preferred and common stock transactions, the aggregate net income reported since organization of the company, and a reduction for dividends that have been paid to stockholders.
• Owner’s share of the company’s assets
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
23
Balance Sheet
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
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Income Statement – Revenues
• The monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year.
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
25
Income Statement – Expenses
• The monetary amounts paid to vendors in settlement for goods purchased by our company or services rendered to our firm by other companies during the current fiscal year.
January 2008© SAP AG - University Alliances and The
Rushmore Group, LLC 2008. All rights reserved.
26
Income Statement