MELJUN CORTES Financial Accounting Overview

Financial Accounting(FI)

- Overview -

Unit 3

January 2008© SAP AG - University Alliances and The

Rushmore Group, LLC 2008. All rights reserved.

2

SAP Enterprise System

R/3

FIFinancialAccounting

COControlling

PSProjectSystemWF

WorkflowISIndustrySolutions

MMMaterials Mgmt.

HRHumanResources

SDSales and Distribution

PPProductionPlanning

QMQualityMgmt.PM

Plant Maintenance

SMServiceMgmt.

Client / ServerIntegrated BusinessSolution

ECEnterpriseControlling

AMFixed AssetsMgmt.



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Unit 3, Part 1 – Overview

• Financial Accounting (FI)– Goals and Objectives

– Target Audience

– Components

• Managerial Accounting (CO)– Goals and Objectives

– Target Audience

– Components

• Comparisons and Relationships



4

R/3


COControlling

PSProjectSystemWF


MMMaterials Mgmt.

HRHumanResources



QMQualityMgmt.PM

Plant Maintenance

SMServiceMgmt.



AMFixed AssetsMgmt.

Financial Accounting (FI)



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Goals and Objectives

• Financial accounting is designed to collect all of the data needed to support the preparation of financial statements for external users



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Target Audience

Internal

• Executives

• Senior Management

• Accounts

• Administration Staff

• Employees

External

• Legal Authorities

• Banks

• Auditors

• Shareholders

• Insurance

• Taxing Authorities

• Media

• Financial Analysts



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Components of Financial Accounting

Financial Accounting

(FI)

AccountsReceivable

AccountsPayable

SpecialPurposeLedger

FixedAssets

Banks

GeneralLedger



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R/3


COControlling

PSProjectSystemWF


MMMaterials Mgmt.

HRHumanResources



QMQualityMgmt.PM

Plant Maintenance

SMServiceMgmt.



AMFixed AssetsMgmt.

Controlling (CO)



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Goals and Objectives

• Managerial accounting is designed to collect data for the preparation and analysis of reports for use by internal users



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Target Audience

• Executives

• Senior Management

• Department Managers

• Controllers

• Cost Accountants



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Components of Managerial Accounting

Controlling(CO)

CostElementAcct

CostCenterAcct

ProductCostControlling

InternalOrders

ActivityBasedCosting

ProfitCenterAcct

ProfitabilityAnalysis



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Comparison

Managerial Accounting

• Cost Center Accounting

• Profit Center Accounting

• Product Costing

• Profitability Analysis

• Different Valuations

• Flexibility


• External Accounting

– Balance Sheet

– Profit & Loss Statement

• Legal Requirements

• Standards



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Comparative Reporting


External Reporting

Managerial Accounting (CO)ProductCostsReports

Internal Reporting

CostCenterReports

ProfitCenterReports

ProfitMargin

RetainedEarningsReport

LiquidityCalculation

Income Statement

BalanceSheet



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Income Statement Bal. Sheet


(FI) TransactionDocumentAmountG/L Account #Cost Center1900012432

(CO) Transaction DocumentCost Center Cost Element20000657 Controlling

100100

BankSupplies Exp.

Cost Center

100

Interrelated and Closely Connected


- The Basics -



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Unit 3, Part 2 – Overview

• General Ledger

• Chart of Accounts

• Balance Sheet– Assets

– Liabilities

– Equity

• Income Statement– Revenues

– Expenses



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General Ledger

• The General Ledger provides a complete record of all "acceptable" business transactions from the viewpoint of an accountant

• An acceptable business transaction has the following traits– Affects the financial position of the entity– Measurable in a currency– Affects at least two accounts– Assets = Liabilities + Equity– Debits = Credits



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Chart of Accounts

• The foundation for the General Ledger is the Chart of Accounts

• A Chart of Accounts contains a complete list of all of the accounts utilized in the General Ledger for a given company

• Financial accounting reports are prepared from the balances contained in the General Ledger’s Chart of Accounts



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Chart of Accounts (continued)

• There are five types of accounts contained in a Chart of Accounts– Assets– Liabilities– Equity– Revenues– Expenses

• There are two primary accounting reports prepared from the General Ledger Chart of Accounts– Balance Sheet– Income Statement



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Balance Sheet – Assets

• Things of value that a company owns or controls that accountants have agreed to measure in monetary terms.

• Examples of these accounts include:

– Cash

– Accounts receivables

– Plant and equipment

– Inventory



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Balance Sheet – Liabilities

• Things that a company owes or must provide services in order to settle that accountants have agreed to measure in monetary terms.

• Examples of these accounts include:

– Accounts payable

– Notes payable

– Bonds payable

– Unearned revenue



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Balance Sheet – Equity

• Equity is simply the mathematical difference between assets and liabilities.

• Includes the monetary amounts collected with respect to all preferred and common stock transactions, the aggregate net income reported since organization of the company, and a reduction for dividends that have been paid to stockholders.

• Owner’s share of the company’s assets



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Balance Sheet



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Income Statement – Revenues

• The monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year.



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Income Statement – Expenses

• The monetary amounts paid to vendors in settlement for goods purchased by our company or services rendered to our firm by other companies during the current fiscal year.



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Income Statement

MELJUN CORTES Financial Accounting Overview

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