1. Accounting and Taxation
By Peter Baskerville
16/06/2019

2. Taxation Get a good accountant – suburban Vs mid-tier Vs Big 4.
Income Tax, GST, BAS
PAYG withholding tax for employees – use tables – paid with BAS
Superannuation 9.5% Gross – monthly
Optus’ “Think Bigger” and “Supersonic” campaigns misleading and deceptive 2

3. Fringe Benefits Tax - car Payroll Tax – big business – State based
Taxation
Fringe Benefits Tax - car
Payroll Tax – big business – State based
Record keeping – audit - 5 years from lodgement – electronic – cheque a/c & credit card.
Optus’ “Think Bigger” and “Supersonic” campaigns misleading and deceptive 3

4. Management accounting
Finance & Accounting
Financial accounting
Record Past
Financial statements
MYOB + Qualified CA, CPA
Strict standards
External stakeholders - ATO
Management accounting
Predict Future
Budgets
MYOB + Excel + Us
User determined
Internal stakeholders - Us
You
are
here

5. Why do we need accounting?
Compliance
Funding
Financial performance
Budgeting and control
Comparison

6. History of accounting

7. The purpose of accounting
MIS
Recording Transactions
Communication stakeholders
Planning Budgeting
Decision Making
Compliance
Tax, IR, ASX, Environment

8. The language of business
Funders, investors and interested parties all speak ‘finance & accounting’
We need to learn the language of business
Glossary of finance & accounting terms
Also Known As (aka) – 500 year evolution

9. Basic Accounting Concepts

10. Accounting conventions
Dual Aspect - financial transactions consist of both a debit side and a credit side of equal amounts.
Matching principle expenses should be recorded in the same period in which the revenue is earned. This approach is supported by the accrual accounting method.
Objectivity ensure that the information recorded in the accounting system is based on fact and not just on personal opinion.
Separate accounting entity assumption the business is an entity that is perceived to have its own existence, separate from its owner.
Time Period assumption allows for the performance evaluation of a business to be broken-up into specific period of time such as a month, a quarter or a year.

11. Accountant Vs Bookkeeper
Bookkeeper Vs Accountant
Accountant Vs Bookkeeper
Bookkeeper
clerical
task oriented
routine and systematically records the organisation
classify transactions
Up to 'trial balance'
Accountant
big picture + overall structure
results oriented
interpretation and use
reporting to governments
Advice
highly qualified
membership of a peak accounting body – CPA, CA

12. Accounting System
Accounting System
Input
Process
Output

13. Accounting Process Accounting Process Financial transaction occurs
Source document collected and coded
Financial transaction details entered in the Journal
Financial transactions posted to the ledgers
Trial balance used to check accounts
Income statement produced
Balance sheet produced

14. Source doccuments Source documents
Evidence of a financial transaction taking place
Used for data entry & audit
Source document for every transaction
Types: Cash receipt original/duplicate, payment advice (cheque butt), supplier invoice, bank statement, authorised memo.

15. Account groups 5 Account Groups Asset Liability Equity Revenue Expense

16. Account groups explained
Items of future economic value
Asset
$ owed by business to non-owners
Liability
$ owed by business to owners
Equity
$ received from business activities
Revenue
$ paid out to earn revenue
Expenses

17. Profit
Profit
Revenue
Expenses
Profit – owed to owners

18. Chart of Accounts Chart of accounts
Asset
Liability
Equity
Revenue
Expenses
Cost of goods sold
Extraordinary profit
Extraordinary cost
Ease of computerised data entry & analysis
Industry based
Enterprise customised
Quick recognition of group

19. Accounting equation
Accounting equation
Assets
Liabilities
Equity

20. Double-entry bookkeeping
500 years old
Two sides to every financial transaction
Called ‘Debit’ & ‘Credit’
At least two accounts affected
Keeps the accounting equation in balance

21. Who keeps the books? Accountants? Bookkeeper? You
Too expensive Poor use of time
They don’t want it – no value add
Compliance (Tax, ASIC, funding)
Bookkeeper?
Cheaper but needs your time – Q&A
Their business rules
Can’t spot the mistakes
You
MYOB makes it possible
Forces surveillance of costs/class
Better cashflow & profit budgeting

22. Financial statements MIS produces financial statements – health report
Financial statements help
Managers make decisions
Businesses comply with the law
Two you should know about:
Balance Sheet (aka) – Snap shot – financial strength. Assets = Liabilities + Owners Equity
Income Statement (aka) – Past period – financial sustainability. Revenue – Expenses =

23. Balance Sheet Every financial transaction changes the balance sheet
Balance sheet represents the accounting equation. A=L+OE
Owners equity is what would be left over after selling the assets and repaying the liabilities – net worth
Current earnings = Net profit
Current & non-current

24. Income Statement
Expansion of the current earnings on the balance sheet
Looks at the revenue less the expenses that created the current earnings
Provides key information to assist with comparison benchmarking & forecasting (GP%, Variable cost %, Fixed costs per month)
Sustainability – ability to endure