Jun 17, 2016

KNOW YOUR COMPANIE'S ACCOUNTANT


The transactions of raising funds and expending have to be recorded systematically. Here comes the role of Accountant to record these transactions in various books and registers (now software is being used to maintain records) and prepare of statement of affairs at regular intervals for its submission to the management. Salesperson must have thorough knowledge on Accounts Department.

VARIOUS BOOKS/REGISTERS OF ACCOUNTS

Cash Book: Record of receipts and payments made in cash

Bank Book: Record of receipts and payments made by Cheque, Demand Drafts, E Payment or bank advice.

Purchase Bill Register: Record of purchase bills.

Sales Bill Register: Record of Sales Bills.

Ledger: Accumulations of records from above referred four registers under various heads i.e. Capital, plant and machinery, purchases, sales etc., customer’s and suppliers’ position.

On the basis of above referred to books and registers, the accountant will prepare the statement of affairs as under:

RECEIPT AND PAYMENT STATEMENT

This statement gives the detailed showing inflow of funds from various sources i.e. capital loan, fixed deposits, sales recovery etc., and outflow of funds to purchase of funds to purchase of assets, payment to suppliers, repayment of loans and deposits etc.

PROFIT AND LOSS ACCOUNT

This statement gives the information regarding sales achieved and expenses incurred during the given period. Profitability is ascertained from this statement.

Balance Sheet

This statement shows the worth of the company. On receiving this statement, company can able to ascertain the following positions about the organization.

Soundness of the company

The borrowings are commensurate with the assets.

Wealth of the Company

Building, plant and machinery, vehicles, advances, stocks, dues from customers – giving break up as to how much are secured or can be recovered and how much are non recoverable.

In normal conversation, finance and accounts is one and the same thing. But finance means rising of funds and its disbursements. Accounting function is recording of financial transactions.

THE BALANCE SHEET

The balance sheet of a company is a statement of what it owns (assets) and what it owes (liabilities) at a particular time, usually the last day of the company’s financial year. It is composed of three major classes of items; assets, liabilities and owners equity.

ASSETS

Assets are the resources of the company that have the potential for providing it with future economic services or benefits. An asset is a future benefit which has been invested in the past.

Monetary assets such as cash and debtors are shown in the balance sheet at their cash equivalent values. Non –monetary assets (stocks of raw materials, land, buildings and equipment) are stated at an acquisition cost.

Assets are usually split into fixed assets (such as land, building, plant, vehicles and intangible such as goodwill) and current assets (such as stocks of raw materials, work in progress and finished goods, debtors, short term investments, prepaid expenses and cash).

LIABILITIES

Liabilities represent obligations of a company to make payments in the foreseeable future for goods or services already received. Other liabilities include long term debt, company loans and obligations under long term leases, deferred taxes etc.

















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