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Yamuna Managerial Accounts
Yamuna Managerial Accounts
Yamuna Managerial Accounts
INTRODUCTION
The accounting process is three separate types of transactions used to record business
transactions in the accounting records. This information is then aggregated into financial
statements. The transaction types are:
The first transaction type is to ensure that reversing entries from the previous
period have, in fact, been reversed.
The second group is comprised of the steps needed to record individual business
transactions in the accounting records.
The third group is the period-end processing required to close the books and
produce financial statements.
To set up your accounting function for your pre-funded startup, consider the
following:
1. Set up a simple accounting system. In the beginning, you just need a simple, low-
cost accrual-based accounting structure. There are many light-weight options available, such
as Mint or InDinero. While these arent true accounting systems, they are great for tracking
expenses. More substantial are low-cost, easy-to-use systems such as Quickbooks, which
80% of our clients use. There are also high-end options available, of course. While these are
great in many ways, honestly they are just too much effort and cost for an early-stage startup.
2. Set up your Chart of Accounts. Ive addressed this in detail in a previous post,
Creating Your Chart of Accounts for Your Startup. Suffice to say that at the core of whatever
accounting system you use will be your chart of accounts (COA). Its essentially an
accounting system, designed specifically for your company, that aligns with your financial
structure and helps you to track and report your income and expenses.
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3. Open a business banking account. A business banking account with online
component will help you to eliminate unnecessary manual processes and better manage your
cash flow. Your bank account should automatically invoice your customers and help you to
avoid cash shortfalls, by pulling in receivables and stretching out payables. Also, your
account should seamlessly integrate with your accounting software.
4. Separate personal and business expenses. It seems obvious that youd want to
keep your business expenses distinct from your personal ones, but, as I wrote about in a
previous article (7 Biggest Tax Mistakes Startups Make), its surprising how many
entrepreneurs conflate the two. At best, this leads to confusion. At worst, you could be sued
and forced to pay additional taxes. Your company could even be stripped of its corporate
status. Avoid this by establishing corporate checking and savings accounts and maintaining a
separate income statement and balance sheet. Use checks from your business banking
account, or separate business credit/debit cards to pay for all of your business transactions.
5. Keep records of receipts and invoices. While the IRS regulation requires you to
keep records for all receipts over $50, I always recommend recording all receipts, period.
You can keep physical copies or in the cloud, but be sure to keep track of your records so
youre not trying to dig them out come tax time.
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Contact Early Growth Financial Services for help with accounts payable/accounts
receivable.
9. Select a payroll provider. If you have employees in these early stages, youll need
a payroll provider. Depending on your needs, you may choose a provider who offers
piecemeal services or one that provides a full-service HR solution, including employee
benefits. Whichever solution you go with, make sure you cover workers compensation and
payroll taxes as well.
10. Forecast expenses. Record all of your anticipated expenses to help you to manage
your cash burn. (If youre looking for ways to reduce your cash burn, check out my previous
post: Reducing Your Burn Rate.) If you can see that you will run out of cash, thats when
youll need to start raising fundsand move on to the next level of financial management
and planning.
11. Open a bank account for the business. The bank account will be necessary for
accepting payments and paying your creditors. If you will have employees, a separate payroll
account should be set up as well. When you accept a payment in cash, credit card transactions
clear the credit card company and you need to pay your employees, this account is where the
money will be deposited and withdrawn.
12. Choose a computerized accounting system and enter the data. A business can
choose from various accounting systems, including Peachtree, Quicken and QuickBooks.
Choose the accounting system that works best for your business. Keep in mind that each
computerized accounting system requires a certain level of experience. Peachtree is for users
with at least a familiarity with accounting, and QuickBooks can be used by someone with
limited or no accounting experience.
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13. Make a list of creditors. This list will become your liability accounts in your
accounting system. Include everyone to whom you owe money, such as vendors, credit card
companies, mortgage companies, banks and finance companies. Make sure to include the
amounts owed to each of your creditors.
14. Create a list of items and materials the company owns. This list will become
your assets in the accounting system. Examples include cash, office equipment, buildings,
vehicles and office supplies. Include the value of the assets when you make your list.
15. Determine the amount of discounts you will offer. If you are going to extend
credit to your customers, determine if you will offer a discount to customers who pay
promptly. For example you could offer your customers a 3 percent discount if they pay off
their accounts within 10 days of purchase.
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2. Increases the bar of Profitability: Management accounting includes budgetary
control and capital budgeting. The use of this method makes it easier for the company to cut
short the extra expenditure for performing vital operations. This indirectly increases the bars
of profits for the company, as the company is able to reduce its pricing on the products. Using
of management accounting's budgetary control and capital budgeting tool, company can
easily succeed to reduce both operating and capital expenditures. After this, company can
reduce its price and then company will receive super profits.
3. Cost transparency: In the corporate world, majority of the costs comes from the
Information Technology (IT). The work of management accounting in the firm is to work
with the IT department closely. This action ensures a within budget actions and provides cost
transparency to the company.
5. Enables the fluctuation of business monetary fund: One of the essential factors
in business is the monetary fund. Management accounting enables a control over the
fluctuation of this monetary fund. Management accounting studies the flow of the funds in
detail. Moreover, it helps in maintaining the emergency fund in case of any urgency. Further,
it also helps in eliminating any source within the company that misuses the fund. After all,
emergency preparation should always be kept aside before setting up any business.
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7. Flexibility and freedom: Management accounting system is of flexible nature.
These reports do not require to be made yearly, monthly, or weekly. Therefore, the
accountant gets enough time to prepare a perfect report.
8. Future prediction from past result: Every new system that evolves for the
corporate world has a single motive. It is to attain success in the competitive market. With
similar intend, management accounting system also strives for betterment in performance.
Thus, with the help of given data of the past (of the company), it provides a chance to prepare
for better future results.
10. Marginal costing: Marginal costing is possible with the aid of management
accountant. It fixes the selling price of the products created in the organization. Further, it
also suggests several ways to use the scarce materials and resources. It also recommends
actions based on fixed cost, contribution and other extras. Although management accounting
does not promise perfect decisions, they do increase the chances of taking effective and
efficient decisions.
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FUNCTIONS OF COST & MANAGEMENT ACCOUNTING
Functions and objectives of cost and management accounting include the following:
Planning
Decision Making
Monitoring & Control
Accountability
1. Planning
Budgeting process often begins with the preparation of a master budget which is then
used as a basis for the preparation of departmental and operational budgets. Budgeting helps
in the effective allocation of resources of an organization between competing needs (e.g.
departments, products, etc) in order to achieve the financial goals of a business. Budgets and
forecasts help businesses to deal with potential problems proactively and avoid foreseeable
bottlenecks in business resources.
2. Decision Making
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3. Monitoring & Control
4. Accountability
The management accountant analyses the data and presents it before the management
in non-technical manner along with his comments and suggestions so that the owners and the
top personnels in the management may understand it and take decisions without any
difficulty.
6. Communication
7. Special Studies
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He tries to determine the needs of long-term and short-term capital, recommend
appropriate capitalisation for the enterprise, evaluation of alternative capital expenditure
proposals and their impact on the return and profits of the concern.
The management accountant will be responsible for the protection of business assets.
He is to see that sufficient funds are available for repairs, maintenance and replacement of
fixed assets so that production capacity of the enterprise may not be badly affected. He is also
to see that business assets are properly insured.
9. Tax Policies
The management accountant is responsible for tax policies and procedures. He will
make available the reports required by various authorities. He will make proper provision for
taxation and he is to ensure that quarterly payments of taxes paid in advance as required by
the Income Tax Act are made in time to avoid penal interest payment on delayed payment of
tax.
Besides the above functions, the management accountant supplies useful information
to different functional authorities, provides necessary accounting information and advice for
price determination and pricing decisions and helps to make strategic decisions as seasonal or
temporary suspension of production, make or buy decisions, replacement decisions and
expansion or closure of particular division or department, etc.
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CONCLUSION
REFERENCES
http://www.wikihow.com/Become-a-Certified-Management-Accountant-
%28CMA%29
http://earlygrowthfinancialservices.com/10-essentials-for-setting-up-your-
accounting-function/
http://smallbusiness.chron.com/start-accounting-system-new-business-3765.html
http://www.accountingtools.com/questions-and-answers/what-are-the-steps-in-
the-accounting-process.html
http://accounting-simplified.com/management/introduction/functions.html
http://www.svtuition.org/2011/03/advantages-of-management-accounting.html
http://content.wisestep.com/management-accounting-process-advantages-
disadvantages/
http://www.managementguru.net/advantages-and-limitations-of-management-
accounting/
http://www.accountingnotes.net/management-accounting/top-10-functions-of-
management-accounting/5864
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