Accounting: Financial Planning for Business Transitions

• Accounting and financial planning are vital for business transitions.
• Business transitions include mergers, acquisitions, and consolidations.

Real vs. Nominal Accounts

• Real accounts are permanent, relating to assets, liabilities, and equity.
• Nominal accounts are temporary, relating to revenues and expenses, and are closed at the end of each accounting period.

Accounting Platforms

• Familiar accounting platforms include QuickBooks, Xero, and SAP.
• Each platform possesses unique strengths and weaknesses.

Double-Entry Bookkeeping

• Accuracy and balance are ensured in double-entry bookkeeping.
• Each transaction affects two accounts: one is debited, and the other is credited.

Working Capital

• Working capital is calculated by subtracting current liabilities from current assets.
• Working capital provides a snapshot of a company's liquidity.
• Working capital indicates a company's ability to meet its short-term obligations.

Maintaining Accounting Accuracy

• Accuracy is maintained by verifying transactions, reconciling accounts, and reviewing financial statements.
• Keeping up with accounting standards and regulations ensures compliance.

Tax Deducted at Source (TDS)

• TDS is a tax deducted from payments to suppliers or employees, deposited with the government.
• The supplier or employee can claim a credit for the tax.

Accounts Payable vs. Accounts Receivable

• Accounts payable is what is owed to suppliers.
• Accounts receivable is what customers owe.
• Both are critical for managing cash flow and liquidity.

Trial Balance vs. Balance Sheet

• A trial balance is a list of accounts and their balances.
• A balance sheet presents a company's financial position with assets, liabilities, and equity at a specific point in time.

Bank Reconciliation

• Bank reconciliation compares internal financial records with bank statements to ensure accuracy.
• Bank reconciliation is intended to identify any discrepancies.

Estimating Bad Debts

• Bad debts are estimated via historical data, industry benchmarks, and aging schedules.
• This estimation involves analyzing past experience with bad debts, industry trends, and benchmarks.

Deferred Tax Liability

• Deferred tax liability arises when taxes are payable in the future due to temporary differences between financial and tax accounting.
• This liability is recognized on the balance sheet and paid when the temporary difference reverses.

Asset Test Ratio

• The asset test ratio measures a company's ability to meet short-term obligations using its liquid assets.
• The asset test ratio provides insight into a company's liquidity and financial health.

Basic Accounting Equation

• Assets = Liabilities + Equity
• Its the basis of the balance sheet
• Provides a financial position at a specific point in time.

Accounting Applications

• Some popular accounting applications include QuickBooks, Xero, SAP, and Zoho Books.
• Each has its strengths, its chosen based on the needs of the business.

Goods and Services Tax (GST)

• GST replaces multiple indirect taxes.
• It is a consumption-based tax on the value added to goods and services at each stage of production and distribution.

Bank Reconciliation Statement

• A bank reconciliation statement compares a company’s internal financial records with its bank statements.
• The statement ensures accuracy and identifies discrepancies.

Daily Accounting

• Daily accounting includes recording and classifying financial transactions like income, expenses, and cash flows.
• Ensures compliance with regulations.

Fictitious Assets

• Fictitious assets are intangible with no physical existence, for instance trademarks.
• They are amortized over their useful life.

Branches of Accounting

• Financial, management, and cost accounting are all branches of the field.
• Branches have specific focus and objectives.

Purchase Return

• A purchase return involves returning purchased goods, which reduces the purchase cost.
• This ensures that accounting records remain accurate.

Retail Banking

• Retail banking provides financial services to individuals and small businesses.
• These services include checking/savings accounts, credit cards, and loans.

Offset Accounting

• Offset accounting involves offsetting one account against another to reduce the net balance.
• The accounts technique is used to increase clarity on financial statements.

Trade Bills

• Trade bills are short-term debt instruments used in international trade.
• They commonly finance exports and imports.

Fair Value Accounting

• Fair value accounting measures assets and liabilities at their current market value rather than their historical cost.
• It provides reflection of a company's financial position.

Unrecorded Revenue

• Unrecorded revenue is revenue earned but not yet recorded.
• It can occur due to delays in invoicing or receipt of payment.

Management Information System (MIS) Report:

• This provides essential financial and operational data.
• MIS reports are leveraged in order to help managers analyze performance, identify trends, and support well-informed decisions.

Payable Cycle:

• A company's payable cycle refers to the duration it takes to pay suppliers.
• It is a critical cycle in managing cash flows effectively and maintaining good relationships with suppliers.

Scrap Value:

• Scrap value represents the residual value of an asset at the end of its useful life.
• This value is recognized as a loss on the income statement.

Interest Payable Account:

• The interest payable account serves as a liability account for tracking interest owed on loans or other debt instruments.
• Payments accounts are typically paid when due.

QuickBooks:

• QuickBooks is a comprehensive accounting software designed to help small to medium-sized businesses manage financial transactions, like invoicing, expenses, and payroll.
• Intended to provide businesses an easy-to-use platform for performance tracking, decision-making, and accounting streamlining.

Types of QuickBooks Products:

• They include QuickBooks Online, QuickBooks Desktop, QuickBooks Pro, QuickBooks Premier, and QuickBooks Enterprise.
• Each is designed to meet specific business requirements.

Setting up a New Company in QuickBooks:

• Setting up a company entails creating a new company file and entering basic details, such as name, address, and tax ID.
• Then you set up the chart of accounts, define the fiscal year and accounting method, and establish user roles and permissions.

Recording Transactions in QuickBooks:

• To record transactions, you need to create a new transaction, such as an invoice or bill, and enter the transaction date and amount.
• Select the relevant account and class, add any additional details, such as customer/vendor information and save the transaction.

Reconciling Accounts in QuickBooks:

• To reconcile accounts, select the account, enter the statement date and the ending balance, then mark the transactions that have cleared the bank.
• Identify any discrepancies/errors, make any necessary adjustments, and verify that the account is balanced.

Generating Financial Reports in QuickBooks:

• To generate financial reports, select the report type, like a balance sheet or income statement, and chose a reporting period.
• Select accounts to include in the report, customize report as needed, and print/export it to analyze the data.

Managing Inventory in QuickBooks:

• Managing inventory involves setting up inventory items, tracking quantities, recording inventory purchases/sales, and track inventory costs and values.
• Then, inventory is run/monitored to optimize inventory and identify trends.

Handling Payroll in QuickBooks:

• Handling payroll involves setting up payroll items, track employee info.
• Payroll transactions, such as salaries and wages, and calculate payroll taxes and deductions.
• Print payroll/direct deposit to comply with regulations.

Troubleshooting QuickBooks Errors:

• This may involve identifying the error message, research possible causes, and check for software updates.
• One may also need to verify data integrity, run the QuickBooks File Doctor, and finally consult QuickBooks support resources, such as online forums.

Staying Up-to-Date with QuickBooks Updates:

• Regularly check the QuickBooks website and or, subscribe to QuickBooks newsletters/blogs.
• Also, attend QuickBooks training and participate in online QuickBooks communities/forums.

Xero:

• Xero is a cloud-based accounting software aimed at helping small to medium-sized businesses manage their financial transactions (invoicing, expenses, and payroll).
• Xero serves to provide a simple means of keeping up with one’s financial performance, make well-informed decisions, and streamline processes.

Setting up a New Company in Xero:

• Setting up a new company, make a new organization and enter the company's basic information (name, address, and tax ID number).
• Set up a chart of accounts, define the fiscal year and accounting method, and establish user roles/permissions.

Recording Transactions in Xero:

• Recording transactions needs creating a new transaction invoice or bill, and enter the transaction date/amount.
• Select the relevant account and tracking category and add any additional details.

Reconciling Accounts in Xero:

• Account reconciliation entails selecting the given account, enter the statement date, the ending balance, and mark the transactions that have cleared the bank.
• Identify any discrepancies or errors, make any necessary adjustments, and verify that the account is balanced.

SAP:

• SAP is a software that intends to help businesses streamline their operations, improve efficiency, and make informed decisions.

Setting up a New Company in SAP:

• Needs creating a company code and inputting the company's basic information, such as name, address, and tax ID number.
• Chart of accounts setup, fiscal year and accounting method defining and, establishing user roles and permissions.

Recording Transactions in SAP:

• Involves creating a new transaction, such as a journal entry/ invoice, and enter the transaction date/amount.
• Select the relevant account and cost center, add details, such as customer/vendor information, and save the transaction.

Reconciling Accounts in SAP:

• Account reconciliation requires selecting an account to reconcile, entering the statement date, and reconcile the balance.
• Identify discrepancies, make adjustments, and verify the account is balanced.

Zoho Books:

• Zoho books provides smaller businesses with platform to track their financial performance, to make well-informed informed decisions.

Setting up a new company in Zoho Books:

• Needs creating a new organization and entering basic information, such as name, address, etc.
• Then you should set up the chart of accounts and the accounting method and user permissions.

Recording Transactions in Zoho Books:

• Create/enter new transaction details.

Xero Automation:

• Automate tasks, invoicing, bill payments, and reconciliation.
• Use the dashboard to have an overview of business financial performance.
• Establish the tracking of categories: categorizing transactions to gain better insight on business performance.
• Integrate with other apps with your payment and payment gateways.

SAP GUI

• The SAP's interface is easier for users to use to look at the modules/transactions.
• You can set up workflows to automate business processes in SAP.
• Integrated modules give a comprehensive operating view.
• SAP provides mobile apps for convenient accessing.

Zoho Books tips

• The dashboard will give an overview of financial performance.
• You can set up automated workflows and payment reminders.
• There are many inventory management features
• Connect other apps from the zoho suite.
• Zoho books offers a mobile app to perform tasks, such as invoicing and reconciliation.

QuickBooks tips

• Use the dashboard to view financials
• Automate tasks, such as payment reminders
• They have inventory management features such as stock tracking and low stock alerts
• Connect all the apps together
• Access the mobile app on the go

General tutorial structure

• Introduction that briefly introduces the function and its purpose
• Step-by-step instructions on how to complete the function.
• Include images to illustrate the steps
• Offer tips and variations on how to use the function.
• Summarize the key points.