Accounting Elements (PDF)

Introduction to Accounting Accounting Elements ASSETS property or rights on property owned by the business and upon which the business has a vested equitable interest. Categories of Asset 1. Current Assets ⚬ Cash ￭ Cash on hand, Cash in bank ⚬ Accounts Receivable ￭ collectibles from c...

Introduction to Accounting Accounting Elements ASSETS property or rights on property owned by the business and upon which the business has a vested equitable interest. Categories of Asset 1. Current Assets ⚬ Cash ￭ Cash on hand, Cash in bank ⚬ Accounts Receivable ￭ collectibles from customers, clients ￭ has no added interest ⚬ Notes Receivable ￭ promissory notes as evidence of their obligation to pay ⚬ Interest Receivable ￭ added collectibles from notes receivables ⚬ Merchandise Inventory ￭ available stocks of goods to be sold to consumers ⚬ Prepaid Expenses ￭ advance payments LIABILITIES obligations resulting from past transactions/activities and whose settlement will cause an outflow from the resources of the business. 1. Current Liabilities debts that have an expected payment due within a regular operating cycle of a single year. ⚬ Accounts Payable ￭ debts to creditors that are not evidenced by a written promise to pay. ⚬ Notes Payable ￭ unpaid promissory notes ⚬ Salaries Payable ￭ owed to employees ⚬ Interest Payable ⚬ Taxes Payable ⚬ Utilities Payable 2. Long-term Liabilities or Non-current Liabilities ⚬ Notes Payable ⚬ Loans Payable decrease the assets and owner’s equity. 1. Salaries 2. Commission 3. Traveling 4. Postage and Communication 5. Taxes 6. Utilities 7. Insurance 8. Repair and Maintenance 9. Rent 10. Interest 11. Advertising 12. Depreciation 13. Miscellaneous St. John’s Hospital Pharmacy uses 10,000 vials of hydrocortisone per year. Hydrocortisone cost P50.00 per vial. The estimated carrying cost interest is 20% and the procurement cost is P25.00 DIRECTING Directing is the heart of the management process. aims to build an effective work environment anchored on motivating, supervising, and disciplining. all about “getting the job done”. Tips for Effective Management Review each position in the pharmacy periodically. Maintain good communication with employees to build positive work relationships. Reward quality work. Know your employees. Factors that influence motivation Attainment Power Belonging Independence Respect Equity Methods of Non-monetary Motivators Recognition Celebration anchored on the pharmacy’s ground rules for employment. Progressive Discipline Verbal warning and counseling § Formal oral reprimand Formal written warning § First formal step in progressive discipline Progressive Discipline Final written warning Suspension without pay Termination/Dismissal Movement of Personnel Transfer Promotion Separation Lay-off Discharge Resignation Retirement Theories of Leadership 1. Traits Model Physical Social background Theories of Leadership 3. Contingency Model Task orientation Relationship orientation Follower readiness or maturity Leadership Style 1. Affiliative style ⚬ creates harmony and emotional bonds 2. Authoritative style ⚬ display self-confidence and empathy, and ability to develop cooperation among team members. Leadership Style 3. Coaching style ⚬ delegates responsibilities to subordinates 4. Coercive style ⚬ Uses threats or punishments to control employees Leadership Style 5. Democratic style ⚬ observes collaboration and teamwork 6. Pacesetting style ⚬ set high standards of performance for themselves. CONTROLLING CONTROLLING is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devise to attain them are accomplished. -Harold Koontz EMPLOYEE PERFORMANCE APPRAISAL method of control that documents and evaluates the job performance of an employee. FACTORS THAT CAN BE EVALUATED IN APPRAISAL 1. Units of output 2. Quality of work ⚬ refers to the frequency of prescription errors, incorrect transactions, complaints that compromise the operations of the pharmacy. 3. Dependability ⚬ unquantifiable factor 4. Job Knowledge 5. Ability and willingness to work with others 6. Initiative and ability to handle ambiguity ⚬ employees evaluate their own performance 5. Trait approach ⚬ based on observable dimensions of personality 6. Results approach ⚬ based on work achievements METHODS IN CONDUCTING APPRAISALS Essay appraisal Ranking method Critical incident appraisal  Management by objectives Graphic rating scale INVENTORY refers to the stocks of products held to meet future demand/s. It is the least liquid current asset, given that it generally cannot be turned into cash until it is sold to a consumer. METHODS OF INVENTORY CONTROL 1. INTUITIVE METHOD Aided by the “wantbook” Least efficient, most common method 2. SYSTEMATIC WANTBOOK There is a wantbook for each direct account and each major wholesaler. METHODS OF INVENTORY CONTROL 3. OPEN-TO-BUY BUDGET SYSTEM Simpliest and easiest inventory control system Adjusting each month’s purchases based on the increase or decrease in sales from the previous month. 4. STOCK RECORD SYSTEM Stock record card must be utilized (ideally, should have at least 12 columns to record data for each month. METHODS OF INVENTORY CONTROL 5. ECONOMIC ORDER QUANTITY (EOQ) Deals with both how much to purchase and appropriate reorder point. Is the amount to buy that will keep total costs at a minimum. ⚬ Trading Securities￭ investments in stocks of other companies2. Non-current Assets, Plant Assets, or Fixed Assets⚬ needed to support the operation of the business over a long period of time. ⚬ they are classified as plant assets if they meet this set of requirements￭ more or less permanent in nature￭ not for sale￭ intended for use in the business￭ have physical existence⚬ Land⚬ Building⚬ Equipment⚬ Furniture and fixtures⚬ Motor vehicle⚬ Allowance for depreciation⚬ Intangible assets Mortgage Payable⚬ Bonds PayableOWNER’S EQUITY owner’s capital, net asset, net worth Owner’s Capital or Capital⚬ used to record the investment or share of the owner in a business Drawing or Owner’s Personal⚬ used in recording the withdrawals of capital by the owner for personal useREVENUES or INCOME represents the inflow of cash or other assets from clients or customers for services performed or for goods sold by the business. increases the assets and owner’s equity.⚬ Sales or Merchandise sales￭ total sales price of the merchandise sold⚬ Revenue from fees⚬ Rent income⚬ Service income⚬ Interest income￭ amount earned for the lending of moneyEXPENSES represents the consumption of assets or utilization of services of other businesses. Compelling mission Balance of achievement and challenge Increased responsibilityCommunication Four Principles for effective communication Managers should always be impartial and consistent. Managers should show sincere interest in issues that are important to employees. Managers and employees should have good upward and downward communication. Communication is fifty percent active listening.Progressive Discipline and Dismissal Progressive discipline-refers to a series of acts taken by the management to address unacceptable actions committed by employees. Disciplining or dismissing an employee has to be anchored on the pharmacy’s ground rules for employment.Progressive Discipline Verbal warning and counseling§ Formal oral reprimand Formal written warning§ First formal step in progressive disciplineProgressive Discipline Final written warning Suspension without pay Termination/DismissalMovement of Personnel Transfer Promotion Separation Lay-off Discharge Resignation RetirementTheories of Leadership1. Traits Model Physical Social background Personality Social characteristic Task- related characteristic2. Behavioral Model/Leadership Style a. Autocratic style Personality Social characteristic Task-related characteristic2. Behavioral Model/Leadership Style a. Autocratic style 2. Behavioral Model/Leadership Style b. Democratic style 2. Behavioral Model/Leadership Style c. Free rein style degree to which employees can work on their own and perform relatively unstructured tasks.THE APPRAISAL PROCESS1. Establishing standards and measures⚬ identification of measures 2. Communicating job expectations3. Planning⚬ specifies the required resources4. Monitoring Performance⚬ key part of the performance appraisal process5. Appraising⚬ involves documenting performance6. Giving feedback7. Decision-making 8. Developing performanceAPPROACHES TO THE PERFORMANCE APPRAISAL1. Traditional appraisal2. Upward feedback⚬ aka feedback on manager performance3. 360° feedback⚬ multi-rater feedback4. Self-appraisal approach Total cost is minimized at the order size at which the carrying cost is equal to procurement cost. 6. PERPETUAL INVENTORY METHOD Most efficient inventory control method provided the business has computer.