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Presented By:Presented By:
Mrs. Lorna C. QuebrarMrs. Lorna C. Quebrar
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Business (Corp)
Data
ountin
Re ulation
Rules/Re ulation
ountin
(Bookkeepin )
Reports
Outside Inside
Mana ement
ountin
Finan ial
ountin
(FS)
Investors
Loan Offi ers
Banks
BIR (Govt)
Others (SEC)
Mana ers
(Hired or own the
ompany)
Employees
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These Managers design and monitor theThese Managers design and monitor theinformation control to ensureinformation control to ensure
confidentiality of information; so thatconfidentiality of information; so that
information will not leak which willinformation will not leak which will
give outsiders advantage.give outsiders advantage.
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AccountantsAccountants
Outside:Outside:
ExternalExternalAuditorsAuditors
ConsultantsConsultants
Inside:Inside:
InternalInternalAuditorsAuditors
ControllersControllers
TreasurerTreasurer
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External AuditorsExternal Auditors assures that reasonable representationassures that reasonable representation
of the status of the businessof the status of the businessConsultantsConsultants (usuallyAccountants also) who(usually Accountants also) who particitateparticitate inin
the information process.the information process.
Financial Statement - annual to outsiders
- monthly to insiders
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Employees/AccountantsEmployees/Accountantsworking in the Finance Section:working in the Finance Section:
AnalyticalAnalyticalWithWith
PersonalPersonalIntegrityIntegrity
WithWithEthicsEthics
ProfessioProfessio--nallynally
CompeCompe--tenttent
ProtectProtectthethe
confidenconfiden--tialitytiality ofofinformainforma--
tiontion
CanCancommucommu--nicatenicate
informainforma--tiontion fully.fully.
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FinancialFinancial
ResourcesResources
(Cash)(Cash)
Owners/Owners/
CreditorsCreditors
Assets andAssets and
OtherOther
InventoriesInventories
FINANCING OPERATING
BOTH INVOLVES COMPUTATIONBOTH INVOLVES COMPUTATION
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2 Kinds ofAccounting
AccrualAccrual
Proper matching of cost againstProper matching of cost againstrevenues.revenues.
Cash BasisCash Basis
Recognize income increase whenRecognize income increase whencash is received and incomecash is received and incomedecreases when cash is paid.decreases when cash is paid.
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Ex: Acquired asset on account to be paid
in Oct.
Accrual - Asset
Accounts Payable ToyotaCash Basis - No entry
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Basic Financial Statements
1. Income Statement
(Indicator of business growth)Indicator of business growth)
Users:
Managers/Employees Availability of resources
for additional compensation.Creditors/Stockholders Interests/dividends
Sales Expenses Income
2. Balance Sheet
(Provides information about assets, how they are(Provides information about assets, how they are
acquired and interest of the owner.)acquired and interest of the owner.)
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Assets = Liabilities and Capital (income)
Basic Financial Statements
3. Income Statement
(Assess the credit worthiness of the business,Assess the credit worthiness of the business,
whether the company can pay debts as they comewhether the company can pay debts as they comedue. )due. )
Net increase/decrease during the year /mo.Net increase/decrease during the year /mo. XXXX
Cash at the beginning of the mo./yearCash at the beginning of the mo./year XXXX
Cash at the end of the mo./yearCash at the end of the mo./year XXXX
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Procedures that transform the businessProcedures that transform the business
activities into a Financial Statementactivities into a Financial Statement
1. Gathering of documents (Purchase Order, Cash register tapes,
Invoices)2. Analysis (Accounts and Amounts)
Books : Disbursement Books (Payments)
Cash Receipts Book (Collections) Journal
Included here: General Ledger
Subsidiary Ledger (ControlAccount) AccountsReceivable/Payable
3. Journalizing/Posting4.Adjustments (Errors)
5. Preparation of FS
VERY IMPORTANT: ACCOUNTABILITYAND CONTROL SHOULD BE
OBSERVED.
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1. Managers, Officers and Employees operate within
their assigned responsibilities and accountabilities.
2. Act for the good of the business.
Internal ControlInternal Control(Policies &(Policies &
Procedures)Procedures)
a. AccountingAccountingsystemsystem
b. Controlb. ControlProceduresProcedures
c.c.EnvironmentEnvironment
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Documentation/ReportsPreparation
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1. Authority and responsibility (One assigned should1. Authority and responsibility (One assigned should
be held responsible; motivates one to perform well.)be held responsible; motivates one to perform well.)
2. Separation of duties ( Accounting from Asset2. Separation of duties ( Accounting from AssetCustody / Authorized individual from Asset Custody.)Custody / Authorized individual from Asset Custody.)
Accounting separate from administration (CashierAccounting separate from administration (Cashierfrom Bookkeeping)from Bookkeeping)
To avoid fraud, theft, misstatements, padding, etc.To avoid fraud, theft, misstatements, padding, etc.
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Early detectionEarly detection
Unintentional error will be discovered.Unintentional error will be discovered.
Accountability to the overage orAccountability to the overage or
shortage in relation to cash errorshortage in relation to cash error
or fraud.or fraud.
Expected Outcome:
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3. Adequate documents/records3. Adequate documents/records
PrePre--numbered vouchers/ serializednumbered vouchers/ serialized Filed cancelled checks/vouchers/invoices.Filed cancelled checks/vouchers/invoices.
4. Safe keeping of assets and records.4. Safe keeping of assets and records.
aultsaults ocked storage rooms.ocked storage rooms.
If computerized, backIf computerized, back--up for programs, accessup for programs, accesscontrol (personal code)control (personal code)
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55. Checks on recorded amounts. Checks on recorded amounts
Typographical errors, actual inspection vs. OnTypographical errors, actual inspection vs. Onrecordrecord
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Includes Managers,Personnel/Employees,Policies & the attitude of
everyone.
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