Tag - how to implement

THE WEBSITE IS ABOUT MANAGERIAL ACCOUNTING. EXPLAINED IN PLAIN LANGUAGE. ABOUT ACCOUNTING WITH LOVE

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 proper. Your accountant can explain you in simple terms...

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 we get the gross profit (line 3). I insist on using the gross profit rate (line 4), as this is an indicator of your profit share...

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; Investing; Financing. The operating section includes the cash flows in terms of basic company’s activity. The investing section shows the...

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 or management accounting, aimed at reaching the top level of transparency in...

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 of attention (i.e. the goods have been shipped, but the debt has not been increased). So, the given balance...