Download - Assignment on financial accounting
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Submitted By: AMIT ARORAEnrolment No: M090700005Dated: 16 Sep,2009
Submitted To:Dr. ASHOK BHANSALI
ASSIGNMENT
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Information management has become a powerful resource and a large expense for many organizations.
Helps in decision making at various levels.
o Environmental management o Creation of slack resources o Optimum utilization of resources
1.NEED FOR INFORMATION
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Facility information modelPlant information modelBuilding information model
Flow of information in an ORGANIZATIONVERTICALLYHORIZONTALLY
INFORMATION MODEL
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Computer Age or Information EraUse of INTERNET - Digital Revolution
INFORMATION AGE
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Information management (IM) To control the structure & functioning of Org.understanding of the technologyinformation management entails organizing,
retrieving, acquiring and maintaining information
practice of Data Management
NEED
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vast need for decision making prevent individuals from acting strictly
rationalaccess, collect and evaluate all environmental
informationdecision at a reasonable price, i.e., time and
effort design strategies for organization
INFORMATION PROCESSING
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Reduction of information processing needs Environmental management Creation of slack resources Creation of self-contained tasks
Increasing the organizational information processing capacity Creation of lateral relations Vertical information systems
Five main organization design strategies
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formal records of the financial activities of a business, person, or other entity
financial statements are often referred to as accounts
an overview of a business or person's financial condition in both short and long term.
2.FINANCIAL STATEMENTS
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Balance sheet: reports on a company's assets, liabilities, and Ownership equity as of a given point in time.
Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time.
Statement of retained earnings : explains the changes in a company's retained earnings over the reporting period.
Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.
Four basic financial statements
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Owners and managers require financial statements to make important business decisions
Employees also need these reports in making collective bargaining agreements (CBA)
Investors make use of financial statements to assess the viability of investing in a business.
PURPOSE
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Financial institutions use them to decide whether to grant a company with fresh working capital or extend debt securities
Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes
Vendors require financial statements to assess the creditworthiness of the business.
PURPOSE
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An Annual report is a comprehensive report on a company's activities throughout the preceding year.
Gives shareholders and other interested persons information about the company's activities and financial performance.
3.ANNUAL REPORT
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Balance statement of financial position
summary of a organization's balancesIncludes Assets, Liabilities & Ownership EquityEquity = Assets - Liabilities
FIRST REPORT
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Cash flow statement
provide information on a firm's liquidity and solvency
information for evaluating changes in assets, liabilities and equity
indicate the amount, timing and probability of future cash flows
SECOND REPORT
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Income statement [(P&L) and Statement of Operations]
The purpose of the P&L is to show managers and investors whether the company made or lost money
Operating sectionRevenue Expenses
THIRD REPORT
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field of accountancy concerned with the preparation of financial statements
fundamental need for financial accounting is to reduce principal-agent problem
used to prepare accounting information for people outside the organization
help managers make decisions to manage the business.
4.FINANCIAL ACCOUNTING
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Financial analysis is performed on statements to provide management with a more detailed understanding of the figures.
statements are also used as part of management's annual report to the stockholders.
Employees or labor union need these reports in discussing their compensation, promotion and rankings.
ROLE
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Financial analyses are often used by Investors and are prepared by financial analysts, thus providing them with the basis for making investment decisions.
Project stakeholders a) Sponsor a project b) Have an interest in a project.
Examples : customers, the user group, the project manager, the testers, etc.
ROLE
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MANAGERSAims
Formulating strategies Planning and constructing business activities Helps in making decision Optimal use of Resource (economics) Supporting financial reports preparation Safeguarding asset
ROLE
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CREDITORSIt is a person or institution to whom money is
owedAccounting classification
Long-term liabilities 'Long-term creditors'
Current liabilities 'Current creditors'
ROLE
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objective of financial statements is to provide information about the financial position
useful to a wide range of users in making economic decisions
Financial statements should be understandable, relevant, reliable and comparable
ROLE
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Media and the general public are also interested in financial statements for a variety of reasons
describe management's performance and the company's financial highlights.
effective way for corporations to communicate with individual shareholders.
ROLE
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1. How important is financial reporting to a technology company?
To understand the strategy of performance Single window for our investors to look into
our operations and aspirations.To understand financial values of the
company
INTERVIEW WITH Mr. MURTHY (Infosys)
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2. Philosophy of InfosysUnder promise, Over Delivery
3.Financial reporting as a part of business strategy.
To assess the viabilityHelps customer to understand the strategy
INTERVIEW WITH Mr. MURTHY
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4. Financial disclosure results in competitive disadvantage
It should not create asymmetry of benefitsWe believe to disclose, when in doubt
5. Summary of annual report to retail investorsIt is worthwhile for the company as well as
for customers .
INTERVIEW WITH Mr. MURTHY
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INTERVIEW WITH Mr. MURTHY6. PRESSURE ON MANAGERS• Globalization & competition• Sharing with the investors
7.EXPENSING STOCK OPTIONS• Do not dilute more than a certain %age• Benefit to investors
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8. Independent Directors• Corporate governance – minimization cost• Risk mitigation – to protect shareholders
9. Quarterly reporting discourage risk• Profits in Long term investment• Investment will indeed bear fruit
INTERVIEW WITH Mr. MURTHY
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10. Globalization / corporate governance in INDIA
• Maximizing shareholder value• Transparency, fairness and accountability to
stakeholders• Pressure to Benchmark• Market capitalization
INTERVIEW WITH Mr. MURTHY
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THANK YOU