Basics Of Accounting

• Accounting means the systamatic way of recording ,reporting and analysis of financial transactions of a business.
• Accounting plays a very important role in each and every organisation.Because,managers has to know the gains and losses of a company.

Types of Accounting :

• Accounting classified into 3 types :
1. Real Accounts.
2. Personal Accounts.
3. Nominal Accounts.

Real Accounts :

• The accounts which are related to the assets(tangiable / non-tangiable) called as 'Real accounts'.
• Tangiable :Tangiable means assets which are physically exists.
• Examples : Buildings,Vehicles,Machines,etc.
• Non-tangiable : The assets which are not physically not exists.But they have value.
• Examples : Goodwill, Trademarks,patents,etc.

Debit :What Comes In.

Credit :What goes Out.

Personal Accounts :

• The accounts which releated to the persons or organisations called as 'Personal accounts'.
• Natural Accounts : The accounts which are related to the persons(living things) called as natural accounts.
• Examples :Humans,pet animals,etc.
• Artificial Accounts : The things which are related to the organisations,lands,etc called as artificial accounts.
• Examples :Pvt ltd companies,LLc's,LLP's,etc.

Debit:Receiver. 

Credit:Giver.

Nominal Accounts:

• The accounts which are related to the money(incomes/gains and expenses/losses) called 'Nominal Accounts'.
• Income / Gain :The amount which comes into the organisastion is called income.
• Expenses / losses :The amount which goes out from the organisation is called expenses.

Debit :Expenses / losses.

Credit :income / gains.

Sales Cycle in QuickBooks Software

• In quickbooks sales cycle will be processed in 2 ways.
• Case 1 : 
• If customer want to pay the amount for purchased items at that time supplier will not go with the whole sales cycle.
• Supplier will give the sales receipt after customer makes the payment.
• If you want to go sales receipt :

• Case 2:
• If customer want to pay the money after few days then whole sales cycle will processed.
• Quickbooks online editor will not provides the sales order, pick list and packing list options.
• Quickbooks pro version will provide the option for sales order creation.
• For creating the sales order quickbooks provides the "Estimate" option.

Estimate :

• Sales order will create by using "Estimate".
• If you want to create the sales order, do like below:

Invoice :

• After creating the sales order if customer accepting the prices of the products and quantity mentioned in sales order then supplier will create the invoice.
• We can directly copy the sales order details from 'Estimate' form to invoice by clicking on 'copy to invoice' button at the top right corner of the sales estimate page.

Receive Payments :

• After receiving the goods, customer will pay the money to the supplier.
• Supplier will mention in his accounts about customer payment details.

Sales Cycle in Tally Software

• Tally sales cycle contains the following steps:
• In tally sales cycle, starts with the sale order directly.Whoever asks for the quotation for those people separately create the quotation.

Quotation :

• Create separate voucher for quotation then only tally allows to create the Quotation for particular customer.
• Quotation contains the details like,quotation id ,buyers details,goods details.
• If you want to create the quotation go to,Inventory features --> voucher type(ex:sales) --> quotation.

Sale Order :

• Sale order will create after accepting the quotation by the customer.
• Go to, gateway of tally --> Transactions --> Order vochers -->Sales order.

Delivery Note :

• Delivery note also known as packing list.which contains the details about goods which are going to delivery.
• Go to,  gateway of tally --> Transactions --> Inventory vouchers --> Delivery note.

Sales Invoice :

• Sales invoice is the document for payment.
• Go to,gateway of tally --> Transactions --> Accounting vouchers-->sales.

Rejection In :

• Sometimes customer will receive the faulty goods at that time he will return the goods to the supplier.
• Go to,  gateway of tally --> Transactions --> Inventory vouchers --> Rejection In.

Receipts :

• After receiving the goods customer will make the payment to the supplier.
• Supplier will notice those details into his accounts receivables.
• Go to, gateway of tally --> Transactions --> Accounting vouchers-->receipts.

Disadvantages :

• Tally software doesn't provide the option for storing the customers details who are in hold . 
• Tally sales cycle is difficult to maintain because it is not step-by-step procedure.

Sales Cycle in Peachtree Software

• Peachtree sales cycle starts with the quotation and after agree the quotation by the customer it will create the sales order.
• Peachtree contains the 4 phases in sales cycle.
• Sales Quotation(pre-sales).
• Sales Order Creation.
• Invoice.
• Receive the payments.

• Peachtree home page is shown like below : 

Sales Order Creation :

• In peachtree sales cycle first step is sale order creation.
• If customer agrees with the quotation sended by the supplier then only sale order is created.
• Go to, Sales Orders --> New Sale Order.

Invoice :

• After creating the sale order, supplier will create the Invoice for sale order.
• Invoice is the bill for payment for purchased items.

Receive Payments :

• After receiving the goods, customer will make the payment to the supplier for purchased items.
• Supplier will record the payment details in his account.

Advantages :

• Peachtree provides the simple sales cycle / process.

Disadvantages :

• Peachtree software pick ticket and packing list option is not provided.

Sales Cycle in Stone Profit Systems

• SPS sales contains the following phases:
• Sales Order.
• Pick List.
• Packing List.
• Invoice.
• Receive Payment.
• SPS sales home page is like below :

1.Sales Order :

• Sales order is created directly from the selection sheet or hold or quotation phase in SPS sales cycle.
• Sales order is created based on customer purchase order details or after knowing the customer requirements directly.

2.Pick Ticket :

• After creating the sales order, Pick ticket is generated.
• Pick ticket contains the details like products name, quantity, location of the products and sales order number, etc.
• Pick ticket is used to identify the product location.
• Pick ticket is used for taking the goods from its location.

3.Packing List :

• After creating the pick ticket, packing list is created.
• Packing list are useful for verifying the ordered goods and packing goods are same or not.
• Packing list contains details of packing goods.

4.Invoice :

• Invoice is generated after creating the packing list.
• Invoice sended to customer along with the goods or before delivering the goods or after delivering the goods to the customer.
• Invoice means request bill for payment of the  customer purchased goods.

5.Receive Payments :

• After receiving the goods customer will pay the money to the supplier.
• Supplier will records the received payments details in Accounts Receivable account. 

6.Payment Returns :

• Customer will return the goods to the supplier because of fault in goods after making payment also.
• Supplier will returns the full or partial amount of payment to the customer after receiving the goods to the customer.

Advantages :

• SPS provides the step-by-step procedure.
• In Stone Profit Systems, Sales order will create from the any pre-sale order phases like selection sheet, quotation, hold.
• SPS sales process will not allow the due customers(who are not payed for the before purchase) to create the sale order .After releasing the locked customer then only possible to create the sale order.

Sales Cycle in SAP

• In SAP, sales A/R processes the selling goods to the delivering those goods and along with that invoice to the customer for payment.
• The SAP sales process contains the following steps : 

1.Sales Order :

• Sales order will created after completing the pre-sale activities.
• A sale order is a commitment from a customer to lead to buy at agreed quantities and agreed price of the goods or service.
• In SAP, sale order is created for goods and services also by entering the details in items / services field.
• For creating sales order in SAP, go to Sales A/R -->Sales order.  

2.Delivery :

• Delivery indicates the goods are ready to shipping.This document also referred as "packing slip".
• To create the delivery note, go to Sales A/R--> Delivery.
• In version-9 of SAP software, once the delivery note is creates it is not possible to edit.

 

3.A/R Invoice :

• An A/R invoice is a request for payment by customer.
• Posting an A/R invoice records the revenue in the profit or loss statements.
• To create the A/R invoice go to, Sales A/R--> A/R Invoice.
• Once the A/R Invoice is posted, only fields which so not effect the journal entry of the customer and revenue accounts.

4.Incoming Payments :

• Incoming payments is the last step in SAP basic sales cycle.
• Go to, Banking --> Incoming Payments.
• When you create the incoming payment to clear(fully or partially) a document or transaction takes  place automatically internally. 

5.Returns :

• Customer will returns the goods because of faulty in goods.
• Supplier will update invoice and return the payment to the customer after receiving the returned goods.

Advantages :

• SAP business one provides the relation map automatically between the each and every phase. 

Disadvantages :

• Pick ticket and packing list details are not available in SAP sales cycle.

SPS Pre - Sales Process

Pre - Sales : 

• Pre-sales is a process or set of activities which occur before the customer buy the product from the supplier.
• The Pre-sale process helps the customer to take the decisions for buying the products.
• Pre-sales process contains the phases like samples,hold,approval,etc.

Pre - Sales in SPS :

• SPS contains the following pre -sales phases :
• Opportunity.
• Selection sheet.
• Sample order.
• Quote / Proposal.
• Hold .
• Sales order.

• SPS pre - sales home page is like below :

1.Opportunity :

• Whenever customer visit the products that time we will mention all the details into this page.
• Customer or visitor details will stored by using the "opportunities" tab.
• Under "New Opportunity" tab Supplier will mention the all the details of customer.

• After entering the customer details into supplier system.Customer details shown like below :

2.Selection Sheet :

• In selection sheet customer will select the goods.
• The selection sheet contains the customer details and purchased items whatever required. 

3.Sample Order :

• Sample products will given to customers who are not decided by seeing the products.
• Customers whoever asks for the samples of products. Those people details and sample products details  will store in sample order.

4.Hold :

• Customer want to buy products but after some days or time because of the some reasons those goods will place into the hold.
• Goods are in hold until customer releases the goods.
• Supplier will not sell the holded goods to another buyer.

5.Sales Order :

• Sales will generated after selecting the goods.Based on customer situations :
• Case 1 -If customer ready to buy the goods immediately then that time only sales order will generate.
• Case 2 -If customer want to take the goods but after some time(Hold) then after releasing the goods under the hold sales order will generate.
• Case 3 -If customer want to take the decision after seeing the samples then in that case after customer approval for products, sales order will generate.

Pre - Sales in Peachtree Software

• Pre-sales in peach tree software contains only 2 phases.  
• Quote / proposal.
• Sales order creation.

Quote / Proposal :

• Before generating the sales order for customer purchase order supplier will generate the quote for customer purchase order.
• Here, supplier will generate the quote for customer PO.

Sales Order :

• Sales order will generate after getting the approval from the customer for quote.

Pre - Sales in SAP

• SAP pre-sales contains the 3 phases .
• SAP Opportunities.
• Quotations.
• Sale Order.

Sales Opportunities :

Sales opportunities process flow :

• Sales managers set up important information such as the stages that a sale passes through and the likelihood (by percentage) that a sale in a given stage will close. 

• The sales opportunities module allows the you to create a sales opportunity in the application after opportunities has been identified.

• Sales opportunities reports give you visibility into the sales pipeline, won and lost opportunities, sales forecasting, and more.

Sales Quotation :

• Before customers place the order, they frequently asks for quotation that they can help to take decisions for buying the products. 

• To create a sales quotation, select Main Menu → Sales - A/R → Sales Quotation. 
• Once customers are satisfied with the quotation details, click Add. SAP Business One adds the sales quotation. You can make changes later as needed.

Sales Order :

• After approving the quotation. You will create a sales order either from a sales quotation or from menu.
• If you wan to create the sales order from the sales quotation then using the Copy To button.
• If you want to create the sales order from the menu then click Sales - A/R → Sales Order.

Account Types

• Account types are classified into 5 types.

Assets :

• The asset account represents the value of the asset owned by the business.
• Only the items have a resale value those only recorded in this account.
• Every year the assets are adjusted to accommodate depreciation or appreciation of their value. 
• Examples for assets are computer,real estate lands, etc.

Classification of  Assets :

1. Current Assets.
2. Fixed Assets. 

Current Assets :

• A current asset is something that the business owns and will consumed or converted into cash within one year.
• Current Assets means asset which is easily convertible into the cash, money, stock,etc.
• Current Assets are ones that an entity expects to use within one-year time from the reporting date.
• for example, Trade debtors, cash at bank or in hand, etc. 

Fixed Assets :

• Fixed assets are of a fixed nature in the context that they are not readily convertible into cash.
• A fixed asset is something that the business owns and will be used in the business for at least one year.
• For example, Vehicles, Buildings, Land, etc.

Liabilities :

• A liability account represents a type of debt or upcoming cost for the business.
• The type of liability determines the duration of the debt.

Classification of Liabilities :

   1.Current Liabilities :Liabilities which are normally due and payable within one year are grouped as current liabilities. These liabilities are also known as short-term liabilities.

   2.Long-term Liabilities :Liabilities which are not immediately due but become due after a year or more are classified as long-term liabilities. Long term bank loans like term loans, debentures, deferred tax liabilities, mortgage liabilities.
   3.Contingent Liabilities : Certain liabilities are payable on the occurrence of some event or contingency. Contingency signifies something which may or may not take place. If a liability is due on happening of such an event, it is termed as the contingent liability.

Expenses :

• Money spent or cost injured in an organisation efforts to generate revenue, representing the cost of doing business.Expenses may be in the form of actual cash payments.
• An expense is a cost that occurs as part of a companies operating activities during a specified accounting period. 

Income :

• Income is money that an individual or business receives in exchange for providing a goods or services.
• or Income means an amount by which the total assets increase in an accounting period.
• According to a retailer , income means operations in sales minus the cost of goods sold minus operating expenses.

Difference between revenue, income and gain :

• Revenue means the amount earned from a company main activities many activities such as selling merchandise or providing services.
• A gain results from a peripheral activity such as selling the old delivery truck. A gain is the amount received more.
• Income is sometimes used instead the word revenue.Some people refer to the rent they received as rent income.

Capital :

• Capital is the money or wealth needed to produce goods and services.In the most basic terms , it is money.
• All business must have capital in order to purchase assets and maintain their operations.