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Comprehensive Financial Planning Strategies for Senior Managers: Accounting Methods and Statement Formation

This guide provides senior managers with essential insights into financial planning, emphasizing the importance of adhering to Generally Accepted Accounting Principles (GAAP). It discusses fundamental accounting concepts such as the going concern, accruals, consistency, and prudence principles. The document also covers key accounting policies on income recognition, asset depreciation, and inventory management. Furthermore, it explains the double-entry bookkeeping system, ensuring a clear understanding of the traditional structure of accounts and the types of accounting entries required for effective financial reporting.

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Comprehensive Financial Planning Strategies for Senior Managers: Accounting Methods and Statement Formation

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  1. FINANCIAL PLANNING FOR SENIOR MANAGERS ACCOUNTING METHODS AND FORMATION OF FINANCIAL STATEMENTS

  2. FINANCIAL PLANNING FOR SENIOR MANAGERS • Fundamental requirement • Show “true and fair view”

  3. FINANCIAL PLANNING FOR SENIOR MANAGERS • Fundamental requirement • Show “true and fair view” • Prepared in accordance with: • Generally Accepted Accounting Principles (GAAP)

  4. FINANCIAL PLANNING FOR SENIOR MANAGERS • Fundamental requirement • Show “true and fair view” • Prepared in accordance with: • Generally Accepted Accounting Principles (GAAP) • Standard Statement of Accounting Practice (SSAP’s)

  5. FINANCIAL PLANNING FOR SENIOR MANAGERS • Fundamental requirement • Show “true and fair view” • Prepared in accordance with: • Generally Accepted Accounting Principles (GAAP) • Standard Statement of Accounting Practice (SSAP’s) • Financial Reporting Standards (FRS’s)

  6. FINANCIAL PLANNING FOR SENIOR MANAGERS • Four basic accounting concepts: • Going concern concept – assumes the business will continue

  7. FINANCIAL PLANNING FOR SENIOR MANAGERS • Four basic accounting concepts: • Going concern concept – assumes the business will continue • Accruals concept – income and costs matched

  8. FINANCIAL PLANNING FOR SENIOR MANAGERS • Four basic accounting concepts: • Going concern concept – assumes the business will continue • Accruals concept – income and costs matched • Consistency concept – same treatment one period to next

  9. FINANCIAL PLANNING FOR SENIOR MANAGERS • Four basic accounting concepts: • Going concern concept – assumes the business will continue • Accruals concept – income and costs matched • Consistency concept – same treatment one period to next • Prudence concept – full provision for all costs and losses

  10. FINANCIAL PLANNING FOR SENIOR MANAGERS • Accounting policies: • Sales income recognition

  11. FINANCIAL PLANNING FOR SENIOR MANAGERS • Accounting policies: • Sales income recognition • Depreciation of fixed assets

  12. FINANCIAL PLANNING FOR SENIOR MANAGERS • Accounting policies: • Sales income recognition • Depreciation of fixed assets • Stocks and work in progress

  13. FINANCIAL PLANNING FOR SENIOR MANAGERS • Accounting policies: • Sales income recognition • Depreciation of fixed assets • Stocks and work in progress • Research and development

  14. FINANCIAL PLANNING FOR SENIOR MANAGERS • Double entry bookkeeping • Each transaction represented by two entries

  15. FINANCIAL PLANNING FOR SENIOR MANAGERS

  16. FINANCIAL PLANNING FOR SENIOR MANAGERS • Double entry bookkeeping • Each transaction represented by two entries • Two simple rules apply:

  17. FINANCIAL PLANNING FOR SENIOR MANAGERS • Double entry bookkeeping • Each transaction represented by two entries • Two simple rules apply: • DEBIT the account of the receiver of value

  18. FINANCIAL PLANNING FOR SENIOR MANAGERS • Double entry bookkeeping • Each transaction represented by two entries • Two simple rules apply: • DEBIT the account of the receiver of value • CREDIT the account of the giver of value

  19. FINANCIAL PLANNING FOR SENIOR MANAGERS • Traditional structure of accounts

  20. FINANCIAL PLANNING FOR SENIOR MANAGERS • The Mega Toy Company

  21. FINANCIAL PLANNING FOR SENIOR MANAGERS • Types of accounting entries made • Trading and non-trading

  22. FINANCIAL PLANNING FOR SENIOR MANAGERS • Types of accounting entries made • Trading and non-trading • Cash and non cash

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