How to recognize the proper management accounting

So, if your management accounting is right: You can get Balance sheet and Profit and loss account at the beginning of the month following the reporting one. If you have an ordinary commercial or industrial enterprise without any extraordinary features, you are able to have the statements for the previous month ready within the first 10 days (or even 5 days) of the following one provided your management accounting is

How to Implement Management Accounting

Firstly, let’s clarify: What does Management Accounting mean? This is the type of accounting, the data  of which  serves as a basis for enterprise managers of different levels to make their managerial decisions. How to implement management accounting at an enterprise. Actually, you do not have to do something extraordinary. Stage I.  Determine a person who will perform management accounting. Stage II. Determine the chart of accounts to be used

How to prepare a profit and loss account

This statements is the most interesting for the company management, as it shows the performance of the enterprise for the accounting period.   Let’s examine the simplest form of the statement:       The report is divided into two parts:  Profit;  Loss.   In Profit part we should deduct the cost of the goods sold (line 2) from the sales volume for the accounting period (line 1). This way

How to prepare a cash flow statement.

This statement shows the flow of funds through the bank accounts and cash office of the enterprise. There are two ways how to construct it: Direct method. Indirect method. I will not describe the second method as I have never used it. If you are interested in it, you can visit this page and this one Let’s turn to the direct method. The statement is divided into three sections: Operating;

How to construct the managerial balance sheet

Main financial statement showing the management accounting system and financial position of the enterprise for the accounting period Balance sheet has three functions: Verifying. Informative. Analytical.   Now, let’s have a closer look:   1. Verifying.   If your accounts are balanced (that is assets equal to liabilities), it means that all the operations had been posted correctly and there are no mistakes in calculations or those made through lack

How to verify the managerial statement for the accounting period

Well, your accountant is presenting balance sheet, profit and loss account as well as cash flow statement prepared for the previous month. Even if you trust your employee and find him/her reliable, you should be able to make the express check anyway. First of all, it is necessary to:         1.       Compare the closing balance figures in at the end of the accounting period with the opening balance

How to draw up a corporate budget in terms of the subdivisions

Someday any large enterprise with the managerial accounting will need to draw up an expenditure budget for the subdivisions.   There are few ways of expenses planning if considering the work of the subdivisions, but I would like to mention one of them which I find the most effective and quite simple:   Economic Department distributes the form of the expenses plan for the period (month, quarter, year) to the heads of structural subdivisions. This form is

How to develop an account policy

It is the most contradictory document in management accounting system. It is said to be an integral part of enterprise documentation, but in most cases hardly can we find it (remember, we are talking about the account policy in management accounting system), and if we succeed in finding it, it is rarely used at the enterprise. Let’s try another way. So, «Account policy» is a set of rules concerning accounting

Planning and budgeting

These terms had been confusing me for a long period of time, but then I realized that the budgeting is a type of planning. So many businesses doing what-they-call budgeting are actually involved in planning. It is a good idea as many enterprises do not consider planning at all. What is the difference between planning and budgeting? Actually, the difference lies in the centers of financial liabilities if we consider

Financial performance

First of all you need to consider whether you need them or not. To make it cleat financial performance is a ratio of one line from Balance sheet to another one or to the line from Profit and loss account. For those who blindly believe that the figures of financial performance will throw light on the real state of affairs, I will claim once again: Financial performance is not the