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What are Final Accounts?

What are Final Accounts?
What are known as Final Accounts? Trading, profit & loss account and balance sheet, all these three together, are called as final accounts. Final result of trading is known through Profit and Loss Account. Financial position is reflected by Balance Sheet. These are, usually, prepared at the close of the year hence known as final accounts. They serve the ultimate purpose of keeping accounts. Their purpose is to investigate the consequence of various incomes and expenses during the year and the resulting profit or loss. 1. Trading and Profit and Loss A/c is prepared to find out Profit or Loss. 2. Balance Sheet is prepared to find out financial position of a  concern. Trading Account Trading refers buying and selling of goods. Trading A/c shows the result of buying and selling of goods. This account is prepared to find out the difference between the Selling prices and Cost price. Profit and Loss Account Trading account discloses Gross Profit or Gross Loss. Gross Profit is transferred to credit side of Profit and Loss A/c. Gross Loss is transferred to debit side of the Profit Loss Account. Thus Profit and Loss A/c is commenced. This Profit & Loss A/c reveals Net Profit or Net loss at a given time of accounting year. Trading Profit And Loss CMD from knoxbusiness Balance Sheet Trading A/c and Profit & Loss A/c reveals G.P. or G.L and N.P or N.L respectively; besides the Proprietor wants i. To know the total Assets invested in business ii. To know the Position of owner’s equity iii. To know the liabilities of business. Definition of Balance Sheet The Word ‘Balance Sheet’ is defined as “a Statement which sets out the Assets and Liabilities of a business firm and which serves to ascertain the financial position of the same on any particular date.” On the left hand side of this statement, the liabilities and capital are shown. On the right hand side, all the assets are shown. Therefore the two sides of the Balance sheet must always be equal. Capital arrives Assets exceeds the liabilities. BUY “ACCOUNTING CONVENTIONS AND CONCEPTS” OBJECTIVES OF BALANCE SHEET: 1. It shows accurate financial position of a firm. 2. It is a gist of various transactions at a given period. 3. It clearly indicates, whether the firm has sufficient assents to repay its liabilities. 4. The accuracy of final accounts is verified by this statement 5. It shows the profit or Loss arrived through Profit & Loss A/c. PREPARATION OF FINAL ACCOUNTS Preparation of final account is the last stage of the accounting cycle. The basic objective of every firm  maintaining the book of accounts is to find out the profit or loss in their business at the end of the year. Every businessman wishes to find out the financial position of his business firm as a whole during the particular period. In order to accomplish the objectives for the firm, it is essential to prepare final accounts which include Trading, Profit and Loss Account and Balance Sheet. It is mandatory that final accounts have to be prepared, every year, in every business. Trading and profit & loss accounts are prepared, after all the accounts have been completely written and trial balance is extracted. Before preparing final accounts, it becomes obligatory  to scritinize whether all the expenses and incomes for the year for which accounts are prepared have been duly provided for and included in the accounts. Form of Final Accounts: There is a standard format of final accounts only in the case of a limited company. There is no fixed prescribed format of financial accounts in the case of a proprietary concern and partnership...
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Inventory Control – An Introduction

Inventory Control – An Introduction
Inventory Control Learning Objective: To know the meaning, types and functions of inventories Meaning of Inventory: The word inventory refers to any kind of resource having economic value and is maintained to fulfil the present and future needs of an organization. Fred Hansman has defined Inventory as “An idle resource of any kind provided such a resource has economic value”. Such resources may be classified into three categories: A. Physical resources such as raw materials, semi-finished goods, finished goods, spare parts, lubricants etc. B. Human resources such as unused labor (man power) and C. Finance resources such as working capital etc. Inventory of resources is held to provide desirable service to customers and to achieve sales turnover target. At the same time holding big inventory severely affects the cash flow and working capital of an organization if the production vs demand cycle is not stream-lined. Because inventory often represents more than 25% of total assets and therefore it becomes very essential to maintain an optimal level of inventory in each resource so that the total inventory cost is near its minimum. Functions of Inventory: Inventory serves several important functions that add flexibility to the operations of a firm. Provides stock of goods to meet the anticipated demand of customers. In the case of consumer goods with a seasonal demand, the establishment of inventories in distribution and production warehouses also ensures that production can run continuously at full capacity despite swings in seasonal demand. De-Coupling function: The down time in one manufacturing stage should not affect the whole manufacturing process and this vital purpose is solved by holding inventory which acts as a buffer between successful stages of production. Quantity Discounts: Many suppliers offer QD’s for large orders of inventory. Procurement warehouses can result from a company’s desire to get volume discounts from a supplier or more favorable conditions from a carrier. Price speculation – Inventory also helps to hedge against inflation and price changes. Inventories of procurement and distribution warehouses are increased if the price of a good is expected to rise. In such a situation, the purchasing company aims to amass the good at the current low price. The supplier may speculate that supply shortages will drive the prices higher, and he uses the warehouse to store the good. Shortages can occur regularly due to irregular supply of raw materials, weather, quality problems or improper deliveries. Inventory shall act as “safety stock’ – extra goods on hand which reduce the risk of stock-outs. Helps to permit operations to continue smoothly with the use of “work in process” inventory. This is because it takes time to make goods and because a pipeline inventory is stocked through-out the process. JUST IN TIME MANUFACTURING CONCEPT Types of Inventory: Inventory can be classified according to the basis of type of material maintained in the firms and also on the basis of the functions they tend to perform in an organization. On the basis of type of material, the firms maintain four types of inventories: Raw material inventory Work in process inventory Maintenance/operating supply (MRO) inventory and Finished goods inventory Raw material inventory is the one which has been purchased and yet to be processed. The work in process material has undergone some change but is not completed. Work in process exists because of the time it takes for a product to be made which is called the “CYCLE TIME.” MRO inventory is devoted to maintenance/repair/operating supplies. They exist because the need and timing for maintenance and repair of some equipment are unknown. Products completed and waiting for shipment are called finished goods inventory. Finished goods may be inventoried because customer demand for...
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Top 50 Killer Quotes from Peter Drucker

Top 50 Killer Quotes from Peter Drucker
Top 50 Quotes from Peter Drucker Peter Drucker is known as the father of modern management. A prolific writer, business consultant and lecturer, he introduced (rather re-invented) many management concepts that have been embraced by corporates all over the world. TOP 50 MARKETING AND SALES QUOTES This modern “Managementguru” has delivered timeless and time-tested ideas on management, leadership, change, education, motivation, marketing and what-not. A lot of companies are successfully functioning based on Peter Drucker’s management concepts. What follows is a compilation of Peter Drucker’s sayings and messages to the management fraternity. His open and result-driven thought process is what attracts me the most. “Doing the right thing is more important than doing the thing right.” “If you want something new, you have to stop doing something old.” “There is nothing quite so useless as doing with great efficiency something that should not be done at all.” “What gets measured gets improved.” “Results are gained by exploiting opportunities, not by solving problems.” “So much of what we call management consists of making it difficult for people to work.” “People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.” “Meetings are by definition a concession to a deficient organization. For one either meets or one works. One cannot do both at the same time.” “Long-range planning does not deal with the future decisions, but with the future of present decisions.” “Management is doing things right. Leadership is doing the right things” “The best way to predict your future is to create it” “The most important thing in communication is to hear what isn’t being said.” “Unless commitment is made, there are only promises and hopes; but no plans.” “No one learns as much about a subject as one who is forced to teach it.” “Efficiency is doing the thing right. Effectiveness is doing the right thing.” “Whenever you see a successful business, someone once made a courageous decision.” “The leaders who work most effectively, it seems to me, never say “I.” And that’s not because they have trained themselves not to say “I.” They don’t think “I.” They think “we”; they think “team.” They understand their job to be to make the team function. They accept responsibility and don’t sidestep it, but “we” gets the credit. This is what creates trust, what enables you to get the task done.” “The purpose of business is to create and keep a customer.” “Business has only two functions — marketing and innovation.” “Your first and foremost job as a leader is to take charge of your own energy and then help to orchestrate the energy of those around you. “Plans are only good intentions unless they immediately degenerate into hard work.” “Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth.” “Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window. “ “A manager is responsible for the application and performance of knowledge. “ “Strategy is a commodity, execution is an art.” “The aim of marketing is to know and understand the customer so well, the product or service fits him and sells itself.” “A person can perform only from strength. One cannot build performance on weakness, let alone on something one cannot do at all.” “Management by objective works – if you know the objectives. Ninety percent of the time you don’t. “Most discussions of decision making assume that only senior executives make decisions or that only senior executives’ decisions matter. This is a...
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A Small Intro to Supply Chain Management

A Small Intro to Supply Chain Management
What is Supply Chain #Management? Investopedia: Supply chain management is the streamlining of a business’ supply-side activities to maximize customer value and to gain a competitive advantage in the marketplace. Supply chain management (SCM) represents an effort by #suppliers to develop and implement supply chains that are as efficient and economical as possible. THE INTEGRATED MARKETING FRAMEWORK Wikipedia: Supply chain management (SCM) is “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term #performance of the individual companies and the supply chain as a whole.” Business Dictionary: Management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost. Supply chain management requires the commitment of supply chain partners to work closely to coordinate order generation, #order taking, and order fulfillment. They thereby create an extended enterprise spreading far beyond the producer’s location. Supply Chain More Environmentally Friendly   Supply Chain Management in Simpler Terms: The EFFECTIVE movement and management of materials and information as they flow from their source to the end customer. Supply Chain encompasses #purchasing, #manufacturing, warehousing, transportation, customer service, demand planning and supply planning. Supply Chain management is a daunting task and calls for proper planning and execution. OBJECTIVES OF FORECASTING Supply chain management(SCM) is the control of the supply chain as a process from supplier to manufacturer to #wholesaler to #retailer to #consumer. Supply chain management does not  only comprise  the passage of a physical product  through the chain but also any data that goes along with the product (such as order status information, payment schedules, and ownership titles) and the actual entities that handle the product from stage to stage of the supply chain. There are essentially three goals of SCM: To reduce inventory To increase the speed of transactions with real-time data exchange and To increase revenue by satisfying customer demands more efficiently. When you think of the world’s most efficient and successful performance and supply chains, what comes to mind? For me it is not Wal-mart  or Pepsi but #Mumbai Dabbawalas. The Success of Supply Chain of Dabbawalas in Mumbai –Said to be Six Sigma Compliant No over-reliance on technology, all manual operations Create an integrated performance chain, the chief, team leaders and delivery men. Acute visibility Keep it simple. Real simple with a color coding to identify where the food has to be delivered and to whom. Timely Delivery as the shelf life of food is 4-5 hours. Why is it so important for companies to get products to their customers quickly? Faster product availability is significant  to increasing sales and there’s a sizeable profit advantage for the extra time that you are in the market and your competitor is not. The earlier and faster you are in the market, the more orders and market share you enjoy. The ability to deliver a product faster also can make or break a sale. If two competitive products appear to be equal and one is immediately available and the other will be available in a week, which would you choose? Supply Chain Management is all about moving goods more quickly to their destination in a strategic and tactical manner. Supply Chain Management Tomorrow: The future for Supply Chain Management looks very bright. Two major trends are benefiting Supply Chain Management operations- Customer service focus and  Information technology. Successful organisations must excel in both of these areas, the fundamental objective being to “ADD VALUE.” Which Companies Impress You When You Think of Effective SCM in India?...
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