DFA (Diploma in Financial Accounting)

DFA (Diploma in Financial Accounting)

• Excel Overview
• Basic Accounting Concept
• Inventory Management
• Cash Book/Trail Balance/Profit & Loss A/c/ Balance Sheet
• Taxation : Service Tax/ TDS/ GST/ Vat/ Income Tax

Course Overview

MS Excel

Examine spreadsheet concepts and explore the Microsoft Office Excel environment, Create, open and view a workbook, Save and print workbooks, Enter and edit data, Modify a worksheet and workbook, Work with cell references, Learn to use functions and formulas, Create and edit charts and graphics, Filter and sort table data, Work with pivot tables and charts, Import and export data.

arithmetic calculation, Freeze pane , Auto completion of series , Sort and filter ,Charts ,Data validation, Conditional formatting , Importing data and text to columns , Functions o Mathematical- String ,IF, AND, OR ,NOT, Searching: match, search, vlookup , Dates , Pivot tables ,Recording and Editing Macros.

Basic Accounting Concept

• Business entity concept: A business and its owner should be treated separately as far as their financial transactions are concerned.
• Money measurement concept: Only business transactions that can be expressed in terms of money are recorded in accounting, though records of other types of transactions may be kept separately.
• Dual aspect concept: For every credit, a corresponding debit is made. The recording of a transaction is complete only with this dual aspect.
• Going concern concept: In accounting, a business is expected to continue for a fairly long time and carry out its commitments and obligations. This assumes that the business will not be forced to stop functioning and liquidate its assets at “fire-sale” prices.
• Cost concept: The fixed assets of a business are recorded on the basis of their original cost in the first year of accounting. Subsequently, these assets are recorded minus depreciation. No rise or fall in market price is taken into account. The concept applies only to fixed assets.
• Accounting year concept: Each business chooses a specific time period to complete a cycle of the accounting process—for example, monthly, quarterly, or annually—as per a fiscal or a calendar year.
• Matching concept: This principle dictates that for every entry of revenue recorded in a given accounting period, an equal expense entry has to be recorded for correctly calculating profit or loss in a given period.
• Realisation concept: According to this concept, profit is recognised only when it is earned. An advance or fee paid is not considered a profit until the goods or services have been delivered to the buyer.

Basic Accounting Terms

Here is a quick look at some important accounting terms.

Accounting equation: The accounting equation, the basis for the double-entry system (see below), is written as follows:

Assets = Liabilities + Stakeholders’ equity

This means that all the assets owned by a company have been financed from loans from creditors and from equity from investors. “Assets” here stands for cash, account receivables, inventory, etc., that a company possesses.

Accounting methods: Companies choose between two methods—cash accounting or accrual accounting. Under cash basis accounting, preferred by small businesses, all revenues and expenditures at the time when payments are actually received or sent are recorded. Under accrual basis accounting, income is recorded when earned and expenses are recorded when incurred.

Account receivable: The sum of money owed by your customers after goods or services have been delivered and/or used.

Account payable: The amount of money you owe creditors, suppliers, etc., in return for goods and/or services they have delivered.

Assets (fixed and current): Current assets are assets that will be used within one year.

For example, cash, inventory, and accounts receivable (see above). Fixed assets (non-current) may provide benefits to a company for more than one year—for example, land and machinery.

Balance sheet: A financial report that provides a gist of a company’s assets and liabilities and owner’s equity at a given time.

Capital: A financial asset and its value, such as cash and goods. Working capital is current assets minus current liabilities.

Cash flow statement: The cash flow statement of a business shows the balance between the amount of cash earned and the cash expenditure incurred.

Credit and debit: A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is entered on the right in an accounting entry. A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is entered on the left in an accounting entry.

Double-entry bookkeeping: Under double-entry bookkeeping, every transaction is recorded in at least two accounts—as a credit in one account and as a debit in another.

For example, an automobile repair shop that collects Rs. 10,000 in cash from a customer enters this amount in the revenue credit side and also in the cash debit side. If the customer had been given credit, “account receivable” (see above) would have been used instead of “cash.” (Also see “single-entry bookkeeping,” below.)

Financial statement: A financial statement is a document that reveals the financial transactions of a business or a person. The three most important financial statements for businesses are the balance sheet, cash flow statement, and profit and loss statement (all three listed here alphabetically).

General ledger: A complete record of financial transactions over the life of a company.

Journal entry: An entry in the journal that records financial transactions in the chronological order.

Profit and loss statement (income statement): A financial statement that summarises a company’s performance by reviewing revenues, costs and expenses during a specific period.

Single-entry bookkeeping: Under the single-entry bookkeeping, mainly used by small or businesses, incomes and expenses are recorded through daily and monthly summaries of cash receipts and disbursements. (Also see “double-entry bookkeeping,” above.)

Types of accounting: Financial accounting reports information about a company’s performance to investors and credits. Management accounting provides financial data to managers for business development.

Inventory Management

Inventory is an idle stock of physical goods that contain economic value, and are held in various forms by an organization in its custody awaiting packing, processing, transformation, use or sale in a future point of time. Any organization which is into production, trading, sale and service of a product will necessarily hold stock of various physical resources to aid in future consumption and sale. While inventory is a necessary evil of any such business, it may be noted that the organizations hold inventories for various reasons, which include speculative purposes, functional purposes, physical necessities etc.

From the above definition the following points stand out with reference to inventory:

• All organizations engaged in production or sale of products hold inventory in one form or other.
  
• Inventory can be in complete state or incomplete state.
• Inventory is held to facilitate future consumption, sale or further processing/value addition.
• All inventoried resources have economic value and can be considered as assets of the organization.

Different Types of Inventory

Inventory of materials occurs at various stages and departments of an organization. A manufacturing organization holds inventory of raw materials and consumables required for production. It also holds inventory of semi-finished goods at various stages in the plant with various departments. Finished goods inventory is held at plant, FG Stores, distribution centers etc. Further both raw materials and finished goods those that are in transit at various locations also form a part of inventory depending upon who owns the inventory at the particular juncture. Finished goods inventory is held by the organization at various stocking points or with dealers and stockiest until it reaches the market and end customers.

Besides Raw materials and finished goods, organizations also hold inventories of spare parts to service the products. Defective products, defective parts and scrap also forms a part of inventory as long as these items are inventoried in the books of the company and have economic value.

Types of Inventory by Function

Cash Book/Trail Balance/Profit & Loss A/c/ Balance Sheet

Cash Book & Bank Book :

• Cash book and bank book are part of general ledger.
• All entries including payables and receivables are recorded in the general ledger. Expenses, income,assets and liabilities are recorded in different head of accounts to analyze the expenses incurred indifferent head of accounts.
• Due to large volume of transactions, entries related to cash and bank are recorded in the separate books.

Cash Book :

• All cash transactions (receipts and payments) are recorded in the cash book.
• Cash book balance shows the amount of cash in hand at a particular time.

Trial Balance

• At the end of accounting period, a list of all ledger balances is prepared. This list is called trialBalance.
• Both sides of trial balance i.e. Debit side and credit side must be equal. If both sides are not equal,there are errors in the books of accounts.
• Trial balance shows the mathematical accuracy of the books of accounts.

Limitations of Trial Balance

• Trial balance only shows the mathematical accuracy of the accounts.
• If both sides of trial balance are equal, books of accounts are considered to be correct. But thismight not be true in all the cases.
• If any transaction is not recorded at all, trial balance can not detect the omitted transaction.
• If any transaction is recorded in the wrong head e.g. if an expense is debited to an assets account.Trial balance will not be able to detect that mistake too

Profit & Loss A/c

Profit and Loss Account also known as an income statement or statement of revenue and expenses. The account represents the financial performance of the entity in a particular period.

First of all the net sales (sales – sales return) is recorded after that the cost of goods sold is deducted, and the result is the gross profit of the entity. Now from this gross profit the office and administration (rent, insurance, printing, and stationery, etc.), selling and distribution (carriage outwards, bad debts, etc.) expenses are reduced which amounts to operating profit.

After arriving at operating profit operating income (rent received, profit from the sale of assets, etc.) are added to it while the operating expenses (interest on loan, loss on sale of assets) are lessened from it which results in the net profit or loss. If the income exceeds expenses it represents net profit while the expenses exceed income it represents a loss.

Balance Sheet

The balance sheet is one of the three fundamental financial statements and is key to both financial modeling and accounting. The balance sheet displays the company’s total assets, and how these assets are financed, through either debt or equity. It can also sometimes be referred to as a statement of net worth, or a statement of financial position. The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity.

Taxation : Service Tax/ TDS/ GST/ Vat/ Income Tax

Goods and Services Tax (GST)- About Goods and Services Tax (GST),  Activating Tally in GST, Setting Up GST (Company Level, Ledger Level or Inventory Level) , GST Taxes & Invoices , Understanding SGST, CGST & IGST,  Creating GST Masters in Tally,  Cost Centres and Cost Categories , Purchase and Sales Reporting, Stock Analysis and Reports ,  Cash and Bank Reports , Financial Reports - Trail Balance, Profit & Loss Account, Balance Sheet, Export, Import, Backup and Restore, Tax Deducted at Source (TDS), Value Added tax (VAT), Income tax, & Service Tax.