A detailed description of financial statements and explanation on how to use them

1. FINANCIAL
ACCOUNTING
&
MANAGEMENT
ACCOUNTING
Presented by: TRẦN NGUYỄN QUỲNH NHƯ
Student ID: 1301015343

2. 2. Financial accounting and Management accounting
• Definition
• Difference between Financial and Management accounting

4. Interested in:
• Stockholders
• Suppliers
• Banks
• Employees
• Government agencies
• Business owners

7. - Focus on the financial statements
- Produces reports distributed to
stockholders, lenders, financial
analysts, and others outside of the
company.
- Details of statement of Cash flow,
Loss and profit,….
-Focus on providing information
within the company
-Generates reports for an
organization’s internal audiences
(managers, the CEO...)
- Include: company’s available cash
on hand, sales revenues,…

8. -Based on historical data
-Publically reported
-Calculated based on generally accepted
accounting practices
-Primarily forward-looking
-Confidential, for internal use only
- Calculated based on management’s
informational needs

9. ACCOUNTING
& AUDITING
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10. Definition
• Accounting is the systematic process of
recording, storing and presenting company financial
data.
Clear and reliable information
economic
activities
financial
transactions
• Balance sheets
• Income statement
• Statement of changes in equity
• Statement of cash flow

11. Definition
Internal
resources
profitability Cash flow

12. Definition
Auditingis the process of reviewing and investigating any
aspect of a business, whether financial or nonfinancial.
Auditor
analyze and compare accounting reports
and confirmation documents
verify conformity of a company's accounting
with established standards and regulations
point out areas of needed improvement,
potential dangers and incidents

13. Comparison
Accounting Auditing
Meaning
collecting, recording, analyzing and
financial transactions
Examining books of accounts and
point out the weakness to improve
Beginning of
work
When the financial transactions take
place
When finishing the work of
accounting
Nature of
work
Recording the financial transactions Verifying the books of accounts
Staff
A staff of an organization who get
the salary from the business
An independent person who is
appointed for a specific period and
gets a sum of remuneration
Responsibility To the management To the owners or shareholders

14. Conclusion
Accounting provides financial information to users
Auditing is to ensure such information is reliable and
comforts with established rules and regulations.

15. ACCOUNTING
PROCESS
Presented by: TRẦN LÊ MINH PHÚC
Student ID: 1301015369

16. 1. DEFINITION
The accounting process is a series of
activities that begins with a transaction and ends
with the closing of the books.
Because this process is repeated each reporting
period, it is referred to as the accounting cycle and
includes these major steps: Identify the transaction
or other recognizable event.

17. 2. PROCESS
1. Identify the transaction from source documents, like purchase
orders, loan agreements, invoices, etc.
2. Record the transaction as a journal entry
3. Post the entry in the individual accounts in ledgers. Traditionally,
the accounts have been represented as Ts, or so-called T-accounts,
with debits on the left and credits on the right.

18. 2. PROCESS
4. At the end of the reporting period (usually the end of the
month), create a preliminary trial balance of all the accounts
by
a. Netting all the debits and credits in each account to calculate their balances and
b. Totaling all the left-side (ie: debit) balances and right-side (i.e., credit) balances.
The two columns should be equal.
The two columns must be equal.

19. 2. PROCESS
5. Make additional adjusting entries that are not generated through
specific source documents.
For example, depreciation expense is periodically recorded for items
like equipment to account for the use of the asset and the loss of its
value over time.
6. Create an adjusted trial balance of the accounts. Once again, the left-
side and right-side entries – the debits and credits – must total to
the same amount.

20. 2. PROCESS
7. Combine the sums in the various accounts and present them in
financial statements created for both internal and external use.
8. Close the books for the current month by recording the necessary
reversing entries to start fresh in the new period (usually the next
month).

21. Trial balance

22. Balance Sheets
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23. Definition:
• a snapshot of a business's financial condition
at a specific moment in time.
• A balance sheet comprises assets, liabilities,
and owners' or stockholders' equity.
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24. Usage:
• Balance sheets can identify and
analyze trends, particularly in the
area of receivables and payables
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25. 1.Assets:
• subdivided into current and long-term
• Cash is considered the most liquid of all assets.
• Long-term assets are less likely to sell overnight or
have the capability of being quickly converted into a
current asset such as cash.
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26. 2.Current Assets:
• Current assets: are any assets that can be easily
converted into cash within one calendar year.
• Cash
• Accounts receivables
• Notes receivables
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27. 3.Fixed Assets:
• Fixed assets: Fixed assets include land,
buildings, machinery, and vehicles that are
used in connection with the business.
• Land
• Buildings
• Office equipment
• Machinery
• Vehicles
• Total fixed assets
Hà Khánh Phước - 1301015373

28. 4.Total Assets:
• Total assets: represents the total
money value of both the short-term
and long-term assets of your
business.
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29. 5.Liabilities and owners' equity
• Includes all debts and obligations owed
by the business to outside creditors,
vendors, or banks that are payable within
one year, plus the owners' equity.
• Accounts payable
Notes payable
Accrued payroll and withholding
Total current liabilities
Long-term liabilities
Mortgage note payable
• Owners' equity
Common stock
Retained earnings
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30. 6.Total liabilities and owners' equity:
• all debts and monies that are owed to
outside creditors, vendors, or banks and
the remaining monies that are owed to
shareholders, including retained earnings
reinvested in the business.
Hà Khánh Phước - 1301015373

31. Structure of Balance Sheets:
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32. INCOME
STATEMENT
Presented by: Hồ Thị Mai Phương
Student ID: 1301015376

33. OVERVIEW
1.
DEFINITION
2.
PURPOSE &
USE
3.
STRUCTURE
& EXAMPLE

34. 1. DEFINITION
• The income statement presents the financial results of a
business for a stated period of time
• The basic equation on which an income statement is
based:
Revenues Expenses
Net
Income

35. 2. PURPOSE & USE
Performance can be assessed from the income statement:
•Change in sales revenue over the period
•Change in gross profit margin, operating profit margin and
net profit margin over the period
•Increase or decrease in net profit, operating profit and gross
profit over the period
•Comparison of the company's profitability with other
organizations

36. 3. STRUCTURE & EXAMPLE
• Total Revenue
• Cost of Goods Sold
• Gross Profit
• Operating expenses
• Operating Profit
(EBIT)
• Interest Expense
• Earnings before
tax (EBT)
• Taxes
• Net Income
……

37. Example

38. CASH FLOW
STATEMENT
Presented by: Nguyễn Thuỳ Minh Phương
Student ID: 1301015383

39. OVERVIEW
1.
DEFINITION
2.
PURPOSE
3.
STRUCTURE
&
ELEMENTS

40. 1. DEFINITION
A cash flow statement is a financial statement that shows
how changes in balance sheet accounts and income
affect cash and cash equivalents, and breaks the analysis
down to operating, investing and financing activities.

42. 2. PURPOSE
• provide information on a firm's liquidity
and solvency and its ability to change cash
flows in future circumstances
• provide additional information for evaluating
changes in assets, liabilities and equity
• improve the comparability of different firms'
operating performance by eliminating the
effects of different accounting methods
• indicate the amount, timing and probability of
future cash flows
Statement of Cash Flow - Simple Example
for the period 1 Jan 2006 to 31 Dec 2006
Cash flow from operations $4,000
Cash flow from investing ($1,000)
Cash flow from financing ($2,000)
Net cash flow $1,000
Parentheses indicate negative values

43. 3. STRUCTURE & ELEMENTS
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

44. Presented by: Bui Nhu Quynh
Student ID: 1301015403
ANNUAL
REPORT

45. ANNUAL REPORT
An annual report is a comprehensive report on a company's activities throughout the
preceding year.

46. The content of annual report
The directors’ report
The corporate governance report
The financial report
The audit report

49. The purpose of annual report
Provide
financial
information
Highlight
achievements
Promote
company
Other
information.

51. Presented by: Pham Nguyen Nam Phong
Student ID: 1301015359
ENRON
CASE STUDY

52. • Enron, the 7th largest U.S. company in 2001,
filed for bankruptcy in December 2001.
• Enron investors and retirees were left with
worthless stock.
• Enron was charged with securities fraud
(fraudulent manipulation of publicly reported
financial results)
The Enron Scandal

53. • Enron was a Houston-based natural gas pipeline
company formed by merger in 1985.
• By early 2001, Enron had morphed into the
7th largest U.S. company, and the largest U.S.
buyer/seller of natural gas and electricity.
• Enron was heavily involved in energy brokering,
electronic energy trading, global commodity and
options trading, etc.
Introduction

54. • On October 16, 2001, in the first major
public sign of trouble, Enron announces a
huge third-quarter loss of $618 million.
• On October 22, 2001, the Securities and
Exchange Commission (SEC) begins an
inquiry into Enron’s accounting practices.
• On December 2, 2001, Enron files for
bankruptcy.
Timeline

55. Auditing Process
Auditors
Arthur Anderson
Audit
Committee
(Directors)
Enron Board
of Directors
Enron
Shareholders
SEC
Company Report

56. 1993-2001: Enron also used complex &
dubious accounting schemes
• to reduce Enron’s tax payments;
• to inflate Enron’s income and profits;
• to inflate Enron’s stock price and credit rating;
• to hide losses in off-balance-sheet subsidiaries;
• to engineer off-balance-sheet schemes to funnel
money to themselves, friends, and family;
• to fraudulently misrepresent Enron’s financial
condition in public reports.
Investigative Findings …

57. •Enron’s rapid growth in late 1990s involved
large capital investments NOT expected to
generate significant cash flow in short term.
•Maintaining Enron’s credit ratings at an
investment grade (e.g., BBB- or higher by
S&P) was VITAL to Enron’s energy
trading business.
Case Study of One Accounting Scheme

58. •Enron received $10 million in
guarantee fee + fee based on loan
balance to JEDI.
•Enron received a total of $25.7
mil revenues from this source.
•In first quarter of 2000, the increase in
price of Enron stock resulted in $126
million in profits to Enron.
Profits?

59. • Lax accounting by Arthur Anderson (AA) Co?
•“Rogue” AA auditor David Duncan (fired 1/15/02)?
•Enron’s senior management for hiding losses in
dubious off-balance-sheet partnerships?
•CFO Andrew Fastow for setting up these partnerships
(6 year prison sentence 9/26/2004)?
• Timothy Belden (trading schemes, 2yrs probation 2007)
• CEO Jeff Skilling (24 year prison sentence 10/23/06)?
• CEO Kenneth Lay (died 7/23/06 with charges pending)?
• Media exaggeration and frenzy?
• Stock analysts who kept pushing Enron stock?
Responsibility?

60. Profitable?
Sustainable?
LEGAL?
Lessons from Enron Scandal

61. FINANCE & ACCOUNTING
Career Prospects
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62. WHY SHOULD YOU FOLLOW FINANCE &
ACCOUNTING?
Stability
Diversity

63. STABILITY
"If you can't count it, you can't manage it.“
– John Nessel, president of the Restaurant Resource Group -

64. DIVERSITY
F&A is on the top 10 out of
60 occupations taking up
46% the recruitment online
needs.
F&A has the highest rate of
competitiveness (1: 2,44)
F&A has the highest
proportion (21,4%) in
labor supply
A wide selection of fields
and areas in accounting
- 1,5 million jobs offered
on Google.com
HOWEVER,

65. WHAT WILL YOU DO AS AN ACCOUNTANT ?
RECORDING MANAGINGANALYZING

66. Job description of Junior Accountant in Deloitte’s
Finance Department
 Recording payable invoices & expenses claims
 Control of expense claims
 Support to the filing of Payables and General Ledger teams
 Administrative support to Accounts Payable and General Ledger managers for
miscellaneous tasks in the context of SAP implementation

67. REQUIRED EDUCATION & CERTIFICATES
 A bachelor's degree in accounting or finance
 Certificates from ACCA, AAT or CPA – financial & accounting organisations
 English certificates

68. What Skills and Competencies should you have ?
 Organisation
 Tasks & Time Management
 Communication
 Openness
 Leadership

69. THANK YOU