MSMEs Accounting Talk with UP JPIA

Kwentahan Tayo: Pinadaling Accounting Para Sa’yong Negosyo
MSMEs Accounting Talk with UP ISSI and UP JPIA

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Held last October 6, 2018 at the Enrique Virata Hall or UP ISSI Building. “Kwentahan Tayo: Pinadaling Accounting Para Sa’yong Negosyo,” is a free half-day workshop on basic accounting theory, bookkeeping, and internal control addresses for non-accountants, including start-ups or small business owners, and aspiring entrepreneurs. Organized by the UP Junior Philippine Institute of Accountants (JPIA) in partnership with the UP Institute for Small-Scale Industries (UP ISSI).

msmes accounting talk
participants and members of UP JPIA

A rundown of the seminar is listed below, for full course details there are short programs given like that of Accounting for Non-Accountants. This type pf business course combines sub-topics with: Introduction to Accounting, Accounting Cycle, Business Taxation, Spreadsheet accounting, Financial Statement Analysis, Cash Flow, Case studies and workshops, and Preparation and presentation of Case output. The program targets the accounting personnel and professional, entrepreneurs/owners, finance personnel, and students.

Basic Accounting Process.

BIR Business Registration (simplified)

msmes accounting talk

 

msmes accounting talk

 

Books of Accounts

Journals
• General Journal
• Cash Receipt Journal
• Cash Disbursement Journal
• Sales Journal
• Purchase Journal

Ledger
• General Ledger

Accounts
• Category/classification titles
• Has different purposes and meanings
• To keep track of the balances and transactions
• Balance sheet accounts –AS OF a certain period
• Profit and loss accounts –FOR a certain period

Asset accounts
Cash
• Whether petty cash, cash in hand or deposited in the bank
Accounts and other receivable
• Money due to the business by customers and other debtors
Inventory
• Cost of goods/items to be held for sale, including raw materials and those in progress
Prepaid expenses
• Future expenses incurred for normal business operations paid in ADVANCE
Land
• Cost of raw land, excluding any building or improvements, with no depreciation
Building and other land improvements
• Cost of constructing the building and other land improvements, less any depreciation
Equipment
• Cost of computer, transportation and other equipment, less any depreciation
Other investments
• Investments held by the business, and does not include any personal investment

Liability accounts
Accounts payable
• Money due to the suppliers and other creditors by the company for purchases
Salaries payable and accrued liabilities
• Expenses incurred in the normal business operations but NOT YET paid, such as salaries, rent and utilities
Notes/loans/interest payable
• Borrowings and loans from banks and other creditors, and does not include any personal loans
Taxes payable
• Taxes due to be paid to the government, such as income tax, VAT and withholding tax
Security deposits
• Money paid by the customers to the business for security purposes
Customer advances/deposits
• Money received from customers before good/service is actually being delivered

Equity accounts
Owner’s equity/drawings
• Invested capital from the owners, net of any drawings/withdrawals by the owners, but does not exclude any personal loan taken by the owners from the business

Profit and loss accounts
Sales/service revenue
• Selling price of good/service already provided to the customers, whether paid in cash or in credit/account
Cost of sales/services
• Cost of inventory already sold or expenses incurred directly related to the service provided
Sales discount
• Amount of discount/deduction taken from the selling price by the customer
Sales returns and allowances
• Selling price of good/s returned by the customer, whether because of defect or preference

Journal
• To record daily transactions in chronological order
• Book of original entry
• Shows effects of transactions in specific accounts

Accounting and Internal Control for Micro and Small Enterprises. With Internal Control there are rules and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability and prevent fraud. These are categorize into two: Preventive and Detective and Corrective. Preventive deter the errors or fraud from happening in the first place; it’s the first line of defense. Detective and Corrective backup procedures that are designed to catch items or events that have been missed by the first line of defense.

Cash Management. Importance of cash budgeting:

• Provides awareness of the cash flow through your business
• Helps avoid cash shortage and maximize surplus
• Acts as a detective control (through variance analysis)

Inventory Controls. Mandate ending inventory count everyday and must do random inventory count check.

Cash Fraud. Lapping means concealing theft of cash by covering up the initial cash shortage with the next cash receipt. Prevent this from happening by doing timely deposit of cash random cash count. Skimming means taking cash “off the top” of the daily receipts of a business and officially reporting a lower total. Ways to prevent this is by applying sales and inventory reconciliation.

Financial Analysis. Must be knowledgeable with the basic accounting equations:

FINANCIAL POSITION
ASSETS = LIABILITIES + EQUITY

FINANCIAL PERFORMANCE
NET INCOME = REVENUES -EXPENSES

Basic Financial Statements.
1. Income Statement
• Summarizes revenues and expenses over a period of time to present operating results
2. Balance Sheet
• Lists all assets, liabilities and equity to present the financial condition of an entity at a given point in time
3. Cash Flow Statement
• Reports the amount of cash receipts and disbursements during a period

Segregation of Duties. Basic building block of internal control and risk management. These are:
Authorization – the process of reviewing and approving transactions
Custody – Having access to or control over any physical asset
Recording – creating and maintaining records
Reconciliation – verifying the processing or recording of transactions to ensure that all transactions are valid, properly authorized and properly recorded on a timely basis

You may also read my article Kwentahan Tayo: Accounting Talk for MSMEs with UP ISSI and UP JPIA . Published October 19, 2018.  [http://beta.entrepreneurship.org.ph/2018/10/19/kwentahan-tayo-accounting-talk-for-msmes-with-up-issi-and-up-jpia/]

 

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