My Small Business Theory, Book keeping and Financial reporting Presentation by Mr Boye Sodeke, 3 May 2014 My Small Business

SECTIONS 1.THEORY OF ACCOUNTING 2.BOOK KEEPING 3.FINANCIAL REPORTING

My Small Business Section 1:Theory of Accounting Accounting defined The systematic recording, reporting, and analysis of financial transactions of a business Book keeping defined: The recording of financial transactions through books of primary entry or "day books" (journals). It forms part of the accounting process. Importance of Accounting/Book keeping Gives a structured, standardised, easy to understand, and timely information on the performance and state of business, which provides basis for good decision making by Management, lenders, tax authorities, suppliers and other stakeholders

My Small Business Section 1:Theory of Accounting (Cont’d) Specific Accounting disciplines/fields 1)Financial Accounting, 2)Management (and or Cost) Accounting, 3)Auditing, 4)Taxation, 5)Special (Reporting Acctg to public offers, Fin. Due Diligence to M&A, etc) Fundamental accounting concepts 1) Entity; 2) going concern; 3) Prudence/ Conservatism 4 )Accruals, Matching & Amortisation; 5) Periodicity; 6)Materiality; 7)Economic substance over legal form, etc

My Small Business Section 1:Theory of Accounting (Cont’d) Accounting policies. Specific relevnt examples 1)Depreciation: Straight-line versus Reducing line method; 2) Stock valuation: Average cost method, Last-In-First-Out (LIFO) method, First-In-First-Out (FIFO) method, etc 3) Asset capitalisation Some relevant bodies: 1)Financial Accounting Standard Board (FASB); 2)International Accounting Standards Board (IASB); 3) HM Revenue, etc Broad Types of business (for accounting purposes) 1) Manufacturing (Cussons, BP, etc;) 2) Trading (House of Fraser, TESCO, IKEA, etc); 3)Service (Barclays, Aviva, NHS, Wonga, MOT centre etc); 4) Others (Construction, etc)

My Small Business Section 1:Theory of Accounting (Cont’d) Some other Considerations 1) Guiding principles for admissibility of expense (“WREN”) – a)Wholly; b)Reasonably; b)Exclusively; c)Necessarily 2) Common causes of failing small businesses: a) Poor book keeping - unrecorded transactions, errors, etc; b) Non separation of business from personal dealings - think Entity Concept!! c) Incessant drawings in all forms - think WREN! d) Absence of, or disregard for policy e) Ineffective pricing policy/practice f) Lack of clear strategy (eg volume Vs margin) 3) Principle of double entry*****

My Small Business Section 2: Book keeping for SmallBiz Ltd

My Small Business Section 2: Book keeping for SmallBiz Ltd (Cont’d)

My Small Business Section 3: Financial Reporting for SmallBiz Ltd

QUESTIONS? for Boye Sodeke