accounting and financial statements

FINANCIAL ACCOUNTING

& MANAGEMENT ACCOUNTING

Presented by: TRẦN NGUYỄN QUỲNH NHƯStudent ID: 1301015343

2. Financial accounting and Management accounting

• Definition• Difference between Financial and Management accounting

Definition

FinancialAccounting

Interested in: • Stockholders• Suppliers• Banks• Employees• Government agencies• Business owners

Definition:

Management

accounting

Definition

Management accounting

Definition

- Focus on the financial statements

- Produces reports distributed to

stockholders, lenders, financial

analysts, and others outside of the

company.

- Details of statement of Cash flow,

Loss and profit,….

-Focus on providing information

within the company

-Generates reports for an

organization’s internal audiences

(managers, the CEO...)

- Include: company’s available cash

on hand, sales revenues,…


MANAGEMENT ACCOUNTING

Difference

-Based on historical data

-Publically reported

-Calculated based on generally accepted

accounting practices

-Primarily forward-looking

-Confidential, for internal use only

- Calculated based on management’s

informational needs


MANAGEMENT ACCOUNTING

Difference

ACCOUNTING & AUDITING

Phạm Hồng Phúc - 1301015367

Definition

• Accounting is the systematic process of recording, storing and presenting company financial data.

Clear and reliable informationeconomic activities

financial transactions

• Balance sheets• Income statement• Statement of changes in

equity• Statement of cash flow

Definition

Internal resources profitability Cash flow

Definition

Auditing is the process of reviewing and investigating any aspect of a business, whether financial or nonfinancial.

Auditor

analyze and compare accounting reports and confirmation documents

verify conformity of a company's accounting with established standards

and regulationspoint out areas of needed

improvement, potential dangers and incidents

Comparison Accounting Auditing

Meaning collecting, recording, analyzing and financial transactions

Examining books of accounts and point out the weakness to improve

Beginning of work

When the financial transactions take place

When finishing the work of accounting

Nature of work

Recording the financial transactions Verifying the books of accounts

Staff A staff of an organization who get the salary from the business

An independent person who is appointed for a specific period and gets a sum of remuneration

Responsibility To the management To the owners or shareholders

Conclusion

Accounting provides financial information to usersAuditing is to ensure such information is reliable and comforts with established rules and regulations.

ACCOUNTING PROCESS

Presented by: TRẦN LÊ MINH PHÚCStudent ID: 1301015369

1. DEFINITION

The accounting process is a series of activities that begins with a transaction and ends with the closing of the books. Because this process is repeated each reporting period, it is referred to as the accounting cycle and includes these major steps: Identify the transaction or other recognizable event.

2. PROCESS1. Identify the transaction from source documents, like

purchase orders, loan agreements, invoices, etc.2. Record the transaction as a journal entry3. Post the entry in the individual accounts in ledgers.

Traditionally, the accounts have been represented as Ts, or so-called T-accounts, with debits on the left and credits on the right.

2. PROCESS

4. At the end of the reporting period (usually the end of the month), create a preliminary trial balance of all the accounts by

a. Netting all the debits and credits in each account to calculate their balances and b. Totaling all the left-side (ie: debit) balances and right-side (i.e., credit) balances. The two columns should be equal.The two columns must be equal.

2. PROCESS

5. Make additional adjusting entries that are not generated through specific source documents.

For example, depreciation expense is periodically recorded for items like equipment to account for the use of the asset and the loss of its value over time.6. Create an adjusted trial balance of the accounts. Once again, the left-side and right-side entries – the debits and credits – must total to the same amount.

2. PROCESS

7. Combine the sums in the various accounts and present them in financial statements created for both internal and external use.

8. Close the books for the current month by recording the necessary reversing entries to start fresh in the new period (usually the next month).

Trial balance

Balance Sheets

Hà Khánh Phước - 1301015373

Definition:

• a snapshot of a business's financial condition at a specific moment in time.

• A balance sheet comprises assets, liabilities, and owners' or stockholders' equity.


Usage:

• Balance sheets can identify and analyze trends, particularly in the area of receivables and payables


1.Assets:

• subdivided into current and long-term • Cash is considered the most liquid of all assets. • Long-term assets are less likely to sell overnight

or have the capability of being quickly converted into a current asset such as cash.


2.Current Assets:

• Current assets: are any assets that can be easily converted into cash within one calendar year.

• Cash• Accounts receivables• Notes receivables


3.Fixed Assets:

• Fixed assets: Fixed assets include land, buildings, machinery, and vehicles that are used in connection with the business.

• Land• Buildings• Office equipment• Machinery• Vehicles• Total fixed assets


4.Total Assets:

• Total assets: represents the total money value of both the short-term and long-term assets of your business.


5.Liabilities and owners' equity

• Includes all debts and obligations owed by the business to outside creditors, vendors, or banks that are payable within one year, plus the owners' equity.

• Accounts payableNotes payableAccrued payroll and withholdingTotal current liabilitiesLong-term liabilitiesMortgage note payable

• Owners' equityCommon stockRetained earnings


6.Total liabilities and owners' equity:

• all debts and monies that are owed to outside creditors, vendors, or banks and the remaining monies that are owed to shareholders, including retained earnings reinvested in the business.


Structure of Balance Sheets:


INCOME STATEMENTPresented by: Hồ Thi Mai PhươngStudent ID: 1301015376

OVERVIEW

1.DEFINITION

2. PURPOSE &

USE

3. STRUCTURE & EXAMPLE

1. DEFINITION• The income statement presents the

financial results of a business for a stated period of time

• The basic equation on which an income statement is based:

Revenues

Expenses

Net Income

2. PURPOSE & USE

Performance can be assessed from the income statement:

• Change in sales revenue over the period • Change in gross profit margin, operating profit margin

and net profit margin over the period• Increase or decrease in net profit, operating profit and

gross profit over the period• Comparison of the company's profitability with other

organizations

3. STRUCTURE & EXAMPLE• Total

Revenue • Cost of Goods

Sold • Gross Profit

• Operating expenses • Operating Profit

(EBIT) • Interest Expense• Earnings before tax (

EBT) • Taxes • Net Income ……

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/earnings-tax-ebt-753

Example

CASH FLOWSTATEMENT

Presented by: Nguyễn Thuỳ Minh PhươngStudent ID: 1301015383

OVERVIEW

1.DEFINITION

2. PURPOSE

3. STRUCTURE

& ELEMENTS

1. DEFINITION

A cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.

https://en.wikipedia.org/wiki/Financial_statements

https://en.wikipedia.org/wiki/Balance_sheet

https://en.wikipedia.org/wiki/Cash_and_cash_equivalents

2. PURPOSE

• provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances

• provide additional information for evaluating changes in assets, liabilities and equity

• improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods

• indicate the amount, timing and probability of future cash flows

Statement of Cash Flow - Simple Examplefor the period 1 Jan 2006 to 31 Dec 2006

Cash flow from operations $4,000

Cash flow from investing ($1,000)

Cash flow from financing ($2,000)

Net cash flow $1,000

Parentheses indicate negative values

3. STRUCTURE & ELEMENTS

Cash flows from operating activities Cash flows from investing activitiesCash flows from financing activities

Presented by: Bui Nhu QuynhStudent ID: 1301015403

ANNUAL REPORT

ANNUAL REPORT

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

The content of annual report

The directors’ report

The corporate governance report

The financial report

The audit report

The purpose of annual report

Provide financial

information

Highlight achieveme

ntsPromote company

Other information

.

Presented by: Pham Nguyen Nam PhongStudent ID: 1301015359

ENRONCASE STUDY

• Enron, the 7th largest U.S. company in 2001,filed for bankruptcy in December 2001.

• Enron investors and retirees were left withworthless stock.

• Enron was charged with securities fraud (fraudulent manipulation of publicly reported financial results)

The Enron Scandal

• Enron was a Houston-based natural gas pipeline company formed by merger in 1985.

• By early 2001, Enron had morphed into the 7th

largest U.S. company, and the largest U.S. buyer/seller of natural gas and electricity.

• Enron was heavily involved in energy brokering, electronic energy trading, global commodity and options trading, etc.

Introduction

• On October 16, 2001, in the first major public sign of trouble, Enron announces a huge third-quarter loss of $618 million.

• On October 22, 2001, the Securities and Exchange Commission (SEC) begins an inquiry into Enron’s accounting practices.

• On December 2, 2001, Enron files forbankruptcy.

Timeline

Auditing Process

Auditors Arthur Anderson

Audit Committee (Directors) Enron Board

of Directors

EnronShareholders

SEC

Company Report

1993-2001: Enron also used complex & dubious accounting schemes

• to reduce Enron’s tax payments;• to inflate Enron’s income and profits;• to inflate Enron’s stock price and credit rating;• to hide losses in off-balance-sheet subsidiaries;• to engineer off-balance-sheet schemes to funnel

money to themselves, friends, and family;• to fraudulently misrepresent Enron’s financial

condition in public reports.

Investigative Findings …

•Enron’s rapid growth in late 1990s involved large capital investments NOT expected to generate significant cash flow in short term.

•Maintaining Enron’s credit ratings at an investment grade (e.g., BBB- or higher by S&P) was VITAL to Enron’s energy trading business.

Case Study of One Accounting Scheme

•Enron received $10 million in guarantee fee + fee based on loan balance to JEDI.

•Enron received a total of $25.7 mil revenues from this source.

•In first quarter of 2000, the increase in price of Enron stock resulted in $126 million in profits to Enron.

Profits?

• Lax accounting by Arthur Anderson (AA) Co?•“Rogue” AA auditor David Duncan (fired 1/15/02)?•Enron’s senior management for hiding losses in dubious off-balance-sheet partnerships?•CFO Andrew Fastow for setting up these partnerships (6 year prison sentence 9/26/2004)?• Timothy

Belden(trading schemes, 2yrs probation 2007)

• CEO Jeff Skilling (24 year prison sentence 10/23/06)?• CEO Kenneth Lay (died 7/23/06 with charges pending)?• Media exaggeration and frenzy?• Stock analysts who kept pushing Enron stock?

Responsibility?

Profitable?

Sustainable? LEGAL?

Lessons from Enron Scandal

FINANCE & ACCOUNTINGCareer ProspectsNguyễn Hồng Phúc-1301015365

WHY SHOULD YOU FOLLOW FINANCE & ACCOUNTING?

Stability

Diversity

STABILITY

"If you can't count it, you can't manage it.“ – John Nessel, president of the Restaurant Resource Group -

DIVERSITY

F&A is on the top 10 out of 60 occupations taking up 46% the recruitment online needs.

F&A has the highest rate of competitiveness (1: 2,44)

F&A has the highest proportion (21,4%)

in labor supply

A wide selection of fields and areas in

accounting- 1,5 million jobs

offered on Google.com

HOWEVER,

WHAT WILL YOU DO AS AN ACCOUNTANT ?

RECORDING MANAGINGANALYZING

Job description of Junior Accountant in Deloitte’s Finance Department

Recording payable invoices & expenses claims Control of expense claims Support to the filing of Payables and General Ledger teams Administrative support to Accounts Payable and General Ledger

managers for miscellaneous tasks in the context of SAP implementation

REQUIRED EDUCATION & CERTIFICATES

A bachelor's degree in accounting or finance

Certificates from ACCA, AAT or CPA – financial & accounting organisations

English certificates

What Skills and Competencies should you have ?

Organisation

Tasks & Time Management

Communication

Openness

Leadership

THANK YOU

accounting and financial statements

Economy & Finance