Human Resources Training

Accounting Skills for New

Supervisors
 Agenda: Day One

8:30-8:45 Session One: Course Overview

8:45-9:00 Icebreaker: Time’s Up!
9:00-10:45 Session Two: Getting the Facts Straight
10:45-11:45 Session Three: The Accounting Cycle
11:45-12:00 Morning Wrap-Up
12:00-1:00 Lunch
1:00-1:15 Energizer: Count Me In!
1:15-3:15 Session Four: The Key Reports
3:15-4:15 Session Five: Keeping Score
4:15-4:30 Day One Wrap-Up
 Session One: Course Overview

Over the course of this two-day workshop, you will

learn all about:
•The art of finance and financial management
•Key financial terms
•Your role in company finances
•Where to find the rules and regulations for your area
and industry
•Various types of financial reports, including income
statements, balance sheets, cash flow statements,
and statements of retained earnings
•How a chart of accounts is created
•Cash and accrual accounting
 Session One: Course Overview

• Debits and credits

• Identifying and analyzing important financial data
• Making financial decisions
• Reading annual reports
• Determining if a company is financially high/low risk
• Different types of organizational financial plans
• What budgets are and how to prepare them
• What computer skills you need to make you a
financial whiz
• Dealing with financial situations that impact the
people that work for you
 Session Two:
Getting the Facts Straight
 Session Two:
Getting the Facts Straight

• Bookkeeping is the exercise of identifying,

categorizing, and recording all the transactions that
take place in a business.
• Accounting is the methodology used to record the
transactions and prepare financial statements and
reports.
• A financial report is a document prepared for
internal company use.
• A financial statement is a formal document
prepared in a specific format that is prescribed by a
legal body.
 Session Two:
Getting the Facts Straight

GAAP (Generally Accepted Accounting Principles)

•Comparability among different companies
•Reliability of information
•Business entity concept
•The matching principle
•The cost principle
•The consistency principle
•The time period principle
•The going-concern principle
•The objectivity principle
•The stable currency assumption
•The realization principle
 Session Two:
Getting the Facts Straight
 Session Two:
Getting the Facts Straight
 Session Two:
Getting the Facts Straight
• Measurers are focused on assessing and planning.
– Controller/comptroller
– Accountants
– Tax Accountants
– Cost Accountants
– Internal Auditors
– Budget Officers

• Managers are focused on planning and execution.

– Credit Managers
– Inventory Managers
– Plant Managers
– Capital Budgeting Staff
– Budget Officers
– Sales Staff
 Session Two:
Getting the Facts Straight
 Session Three:
The Accounting Cycle

• Methods of recording transactions:

– Cash accounting
– Accrual accounting
• Accounting periods:
– Fiscal year end
– Calendar year end
– Business is allowed to choose
 Session Three:
The Accounting Cycle
 Session Three:
The Accounting Cycle

• Journal: Book that all transactions are

originally recorded in
• Ledger: Final book of entry
• Transaction: Any kind of financial event
 Session Three:
The Accounting Cycle

• Balance sheets and income statements

are two of the most important financial
statements.
• Permanent accounts are those that
appear on a balance sheet.
• Temporary accounts (such as expenses
and revenue) are closed at the end of each
period, so that they do not carry over a
balance.
 Session Four: The Key Reports

The Income Statement

•Revenue is what the business earned from the sale
of goods and services during this period.
•Expenses are bills incurred during this period.
•Net income or loss is the net financial result of the
business efforts during that period.

Revenue – Expenses = Net Income or Loss

Session Four: The Key Reports
 Session Four: The Key Reports

The Balance Sheet

•Assets are anything that the business owns.
•Liabilities are anything the business owes to
others.
•Equity is what the business is worth.

Assets – Liabilities = Equity

 Session Four: The Key Reports

• Current assets are generally considered to

be anything that will be converted into cash
within one year.
• Fixed assets are more permanent.
• Liquidity provides a relative measure of
how quickly a company can convert its
assets into cash to meet obligations.
Session Four: The Key Reports
 Session Four: The Key Reports

Cash Flow Statement

•Shows the flow of cash for an accounting
period.
•Divided into three sections:
– Operating
– Investing
– Financing
 Session Four: The Key Reports

Statement of Retained Earnings

•Shows how much of the company’s profits

were kept inside the company
 Session Four: The Key Reports

Income Balance Words Accounting Fun

Statement Sheet and Cycle Facts
Phrases
$100 $100 $100 $100 $100
$200 $200 $200 $200 $200
$300 $300 $300 $300 $300
$400 $400 $400 $400 $400
$500 $500 $500 $500 $500
 Session Five: Keeping Score

• Elements of key equations form buckets in

chart of accounts:
– Assets
– Liabilities
– Equity
– Revenue
– Expenses
 Session Five: Keeping Score

• Single Entry Accounting

– Each transaction can be entered only once
Very small businesses
– Cash-based accounting
• Double Entry Accounting
– All transactions must correspond two (or more)
accounts
– After each transaction, the changes to all
accounts must balance
 Agenda: Day Two

8:30-8:45 Re-Connect: Group Pursuit

8:45-9:15 Session Six: A Review of Financial Terms
9:15-10:00 Session Seven: Understanding Debits and Credits
10:00-11:45 Session Eight: Your Financial Analysis Toolbox
11:45-12:00 Morning Wrap-Up
12:00-1:00 Lunch
1:00-1:15 Energizer: Beep Boop Bop
1:15-2:00 Session Nine: Identifying High and Low Risk Companies
2:00-3:15 Session Ten: The Basics of Budgeting
3:15-3:45 Session Eleven: Computer Survival Skills
3:45-4:15 Session Twelve: People and Numbers
4:15-4:30 Workshop Wrap-Up
Session Six: A Review of
Financial Terms
 Session Seven: Understanding
Debits and Credits

• In accounting, debits and credits can

both be positive or negative amounts
• Each can be either an increase to a
balance or a decrease
Session Seven: Understanding
Debits and Credits

Account Category Debit Credit

Assets (normal balance) X
Assets transactions (increase asset balance) X
Assets transactions (decrease asset balance) X
Liabilities (normal balance) X
Liabilities transactions (increase liability balance) X
Liabilities transactions (decrease liability balance) X
Capital X
Withdrawals X
Revenue X
Expenses X
 Session Eight: Your Financial
Analysis Toolbox

• Balance sheet, income statement, cash

flow statement, and statement of retained
earnings will often provide the basic
information necessary for many decisions.
• Annual report can be another good
resource.
 Session Eight: Your Financial
Analysis Toolbox

• Additional reports can include:

– Inventory valuation reports
– Shareholder’s equity statements
– Budgets (including actual figures at end of year
and summary of variances)
– Industry averages
 Session Eight: Your Financial
Analysis Toolbox

Reading Annual Reports

 Session Eight: Your Financial
Analysis Toolbox

Charts and Graphs

•Column and Bar Charts
•Line Charts
•Pie Charts
 Session Eight: Your Financial
Analysis Toolbox

Break-Even Point
•Break-Even Point = Fixed Costs + Variable
Costs
•Fixed costs are those that remain the same
during production, like rent or office
equipment.
•Variable costs encompass the materials and
labor required for the product.
 Session Eight: Your Financial
Analysis Toolbox

Cost-Benefit Analysis

Robbie the Robot Rachel the Robot

Widgets Produced Per Hour 75 60
Value of Widgets Produced Per Hour 75 x 5 = 375 60 x 5 = 300
($5 sale price each)
Cost of Units Produced 75 x 1.5 = 112.50 60 x .25 = 15

Total Value – Total Cost = 375 – 112.50 = 262.50 300 – 15 = 285.00

Estimated Benefit
 Session Eight: Your Financial
Analysis Toolbox

Return on Investment
•Payback minus Investment divided by
Investment
•Result is expressed as a percentage
 Session Nine: Identifying High
and Low Risk Companies

Low-Risk Corporations
•70-30 split between current and fixed assets
•25% or less of liabilities are current
•15% or less of debt is long-term
•Shareholder’s equity is around 50-60%
 Session Nine: Identifying High
and Low Risk Companies

High-Risk Corporations
•30-70 split between current and fixed assets
•25% or more of liabilities are current
•45% or more of debt is long-term
•Shareholder’s equity is around 35%
 Session Ten:
The Basics of Budgeting

• What are some good reasons to be able to

budget?
• What are some types of budgets?
 Session Ten:
The Basics of Budgeting
 Session Ten:
The Basics of Budgeting
 Session Eleven:
Working Smarter

Computer Survival Skills

Internet and E-mail
Word Processing
Spreadsheet Processing
In-House Financial System (if applicable)
 Session Eleven:
Working Smarter
Things to Consider:
•Why do we want to upgrade?
•What is the initial investment?
•What will the cost be later on?
•Will we need training? How much will that
cost in time and money?
•What support options are available?
•Will this software improve my company’s
productivity?
•Will this software grow with my company?
 Session Eleven:
Working Smarter

• What are some of the most popular accounting

packages?
• What are their advantages and disadvantages?
• What are the advantages and disadvantages to
manual bookkeeping?
• What system does your company use? What are
its advantages and disadvantages?
• What are the benefits to both small and large
businesses?
• Will we ever achieve the paperless office?
 Session Twelve:
People and Numbers

What if…
•An employee asks for a raise that they
deserve but that the company can’t afford.
•An employee asks for a raise that they don’t
deserve but the company can afford.
•Someone has to be laid off.
•Someone’s pay has to be cut.
•An expense report doesn’t look correct.