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1Copyright © Texas Education Agency, 2012. All rights reserved.
Financial Data Collection
Statistics & Risk Management
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A Brief History
Robert (Bob) Cratchit (Scrooge’s book-keeper-by hand-Tiny Tim’s Dad)
Computer Assisted Book-keepingIntegrated and Automated Accounting
Systems
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Shoe Box Book-keeping
Small businesses often avoid book-keeping processes.
No timeNo expertiseNo fundsBig Mistake if Employees are involved.
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Shoe Box Book-keeping
Save Receipts and Bank Statements and give them to an Accountant at Tax Time.
Is it unethical/unlawful to hide income to avoid taxes….
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Book-keeping Vs. Accounting
Book-keeping is the collection of business operations data performed on a hourly/daily basis.
Accounting is compilation of the collected statistical data structuring it for high level analysis.
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Book-keeping Methodologies
Receivables: Income/Revenue Data Collection
Payables: Expenditure Data CollectionInternal Transaction Data Collection
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Double-Entry General Ledger
• Journals• Revenue (Credit/Debit Balanced)• Expenditure (Debit/Credit Balanced) • Adjustment (Either Order)
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Double-Entry General Ledger
• General Ledger Accounts• Assets (Debit Balance +)• Liabilities (Credit Balance -)• Income (Credit Balance -)• Expense (Debit Balance +)
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Financial vs. Managerial
Financial Accounting refers to industry accepted accounting practices used for public accountability.
Managerial Accounting is company specific and usually used internally to identify problems.
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Financial Reports
Balance Sheet shows the tangible assets, liabilities, and capital accounts of an organization (Net Worth).
Income Statement shows the operating income and expenditures (Profit or Loss).
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For Who?Who will want to read Financial
Statements/Reports–Owners/Investors–Managers– Customers– Vendors– Banks– Governments (Taxes & Agencies)
