R12 Session 2

FC 21
Financial Control 21
➢ Once upon a time, there was a small business owner named Dilip who was struggling to
keep track of his financial transactions.

➢ He had a hard time understanding where his money was coming from and where it was
going.
➢ Dilip Kumar knew he needed to organize his finances better, so he hired an accountant
to help him set up a chart of accounts.
➢ The chart of accounts is a list of all the accounts used by a company to record
financial transactions. It includes categories such as assets, liabilities, equity,
revenue, and expenses. The chart of accounts is used to help businesses track
their finances and generate accurate financial statements.
➢ Dilip Kumar’s accountant explained the importance of having a well-organized chart of accounts.

➢ He showed Dilip Kumar how it could help him better understand his business's financial health and make
informed decisions.

➢ The accountant suggested creating a chart of accounts that was specific to Dilip's business needs.

➢ Together, Dilip Kumar and his accountant worked on creating a chart of accounts that made sense for his
business.

➢ They identified the accounts that Dilip Kumar’s business would need to keep track of, such as sales
revenue, rent expense, and advertising expense.

➢ They also created subcategories within those accounts to make tracking expenses even more specific.
➢ As they worked on the chart of accounts, Dilip Kumar began to understand how it would benefit his
business.

➢ He realized that by tracking his finances using the chart of accounts, he could identify areas where he was
overspending and make adjustments.
➢ He could also track his revenue and see which products or services were most profitable.

Over time, Dilip Kumar’s business grew, and he continued to use the chart of accounts to track his finances.

➢ He found that it was much easier to manage his finances when he had a clear understanding of where his
money was going.

➢ He was able to make better-informed decisions and grow his business even more.

In the end, Dilip Kumar learned that having a well-organized chart of accounts was essential to his business's
success. He continued to work with his accountant to refine and update the chart of accounts as his business
evolved. And he was grateful for the financial clarity that it provided him with.
Let’s implement
FC21…..
Chart of Account
 How to Setup Your Chart of Account
1. Don’t let your Tax Consultant to set up Chart of Account for
the Business

2. Segment wise Revenue Ledger Accounts under the group

SALES / REVENUE (Not just one Ledger in the name of Sales)

3. Create a Logical Hierarchy of Cost

Chart of Accounts
Significance
of Chart of Accounts
 1.
Standard System across the
Company

(Right Posting in Correct Account)

 2.
Financial Control

(RACI and Budgetary Control)

 RACI
What is R A C I Chart
A RACI chart

—also known as a responsibility assignment matrix —

is a simple diagram used in project management to map task roles

and responsibilities
 RACI

Repair & Maint. P&M

 Let’s understand in detail :
● Responsible: This team member does the work to complete the task. Every task needs
at least one Responsible party, but it’s okay to assign more.

● Accountable: This person delegates work and is the last one to review the task or
deliverable before it’s deemed complete. On some tasks, the Responsible party may
also serve as the Accountable one. Just be sure you only have one Accountable person
assigned to each task or deliverable.

● Consulted: Every deliverable is strengthened by review and consultation from more

than one team member. Consulted parties are typically the people who provide input
based on either how it will impact their future project work or their domain of expertise
on the deliverable itself.

● Informed: These team members simply need to be kept in the loop on project progress,
rather than roped into the details of every deliverable.
Understanding RESPONSIBLE Vs. ACCOUNTABLE

● Responsible is a task-oriented designation that applies to the person (or people)

actually completing the work. A whole team can be responsible for the execution of one

task.

● Accountable is an outcome-oriented designation that applies to a single person who

reports on the work, whether in status updates or upon delivery. Being Accountable

means you must answer for and/or sign off on the deliverable and deal with the

consequences if it falls short of goals.

RACI
Chart of Accounts
HOW TO USE INDIAN RUPEE SYMBOL AND
LAKH + CRORE COMMAS IN GOOGLE SHEETS

PLEASE DO THE FOLLOWING STEPS:

FOR :
*Google Sheets* : Click on ----- Format ->
Number -> More Formats -> Custom Number
Format
*Excel* : Click on ------ Format -> Cells -> Custom
-> [Custom text box]

*COPY AND PASTE THE FOLLOWING FORMAT*:

[$₹ ][>9999999]##\ ,##\ ,##\ ,##0;[$₹

][>99999]##\ ,##\ ,##0;[$₹ ]##,##0

Thanks to Mr. Sameer Manglani, Meena

Bazaar
 3.
Financial Reports
(Ease in Developing any report from Accounting Software)
Correct Opening Balance
Correct Opening Balance
Monthly Balance Sheet Closure
➢ Once upon a time, there was a business owner named Radha who was in charge of managing her
company's finances.
➢ She had a hard time keeping up with all the tasks required to close out the monthly balance sheet.
➢ Radha knew she needed to streamline the process and create a checklist to make sure nothing was
overlooked.

Radha began by consulting with Coach and researching best practices for monthly balance sheet closure. She
learned that a thorough checklist would help her stay organized and ensure that all necessary tasks were
completed.

She decided to create a detailed checklist that she could follow each month.

Radha's monthly balance sheet closure checklist included tasks such as:
➢ Verify the accuracy of the ending balances of all accounts.
➢ Check that all transactions are properly recorded and categorized.
➢ Reconcile bank and credit card statements.
➢ Review and update inventory levels.
➢ Check that all depreciation and amortization schedules are up to date.
➢ Review all outstanding receivables and payables.
➢ Verify that all payroll and tax liabilities have been paid.
➢ Check that all prepaid expenses and accruals are properly recorded.
➢ Review any intercompany transactions and reconcile balances.
➢ Ensure that all financial statements and reports are generated and distributed to relevant parties.
➢ Radha found that her monthly balance sheet closure checklist helped her stay organized and ensured that
she didn't miss any important tasks.
➢ She was able to close out the monthly balance sheet on time each month and provide accurate financial
statements to her company's stakeholders.

Over time, Radha continued to refine and update her checklist to make sure it remained relevant and effective.

➢ She shared her checklist with her team and encouraged them to use it as well.
➢ She found that having a standardized checklist helped streamline the process and ensure consistency in her
company's financial reporting.

In the end, Radha learned that creating a monthly balance sheet closure checklist was an essential part of
managing her company's finances.
It helped her stay organized, ensure accuracy in financial reporting, and provide valuable insights to her
company's stakeholders.

She was grateful for the clarity and efficiency that her checklist provided her with.
Monthly Balance Sheet Closure
Monthly Balance Sheet Closure

1. Monthly Balance Sheet Closure Checklist

MONTHLY BALANCE SHEET
CLOSURE
 Recap

1. Chart of Account
2. Correct Opening Balances
3. Monthly Balance Sheet Closure
Thanks