Pemergian Michael Jackson Peluang Anda?

Pemergian Michael Jackson Peluang Anda?

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COSTING

I just wonder how many people really concern about "costing".

Normally factory or those involve in production and construction very concern about "costing".

My experience in costing was when I was a Cost Accountant in foreign-based multinational company.

Basic costing elements are Raw Materials Cost, Packaging Materials Cost, Direct Labor and Direct Overhead which resulted in a Production Cost. I will not touch on other Indirect Costs.

Raw Materials and Packaging Materials Costs are taken based on its issuance from the store or warehouse. The storekeeper normally records each time the materials were recieved in terms of qauntity and price.

The question here is, if under certain circumstances the value or price varies from time to time due to foreign exchange how does it takes into account. It has been in practice that it is determined by LIFO (last in first out) or LILO (last in last out) or average cost.

If the item is identifiable or countable physically its a lot more easier compared to if it is in the form of liquid in a drum. I realised the inconsistency in using the calculation methods resulted in a very high variance or discrepancy repot.

Usually the drum has a Gross Weight and Net Weight printed outside the drum. There are 2 possibilities of ignorant or negligent in establishing the actual issues or consumptions of the liquid for the production.

If a standard empty drum weight is taken as a basis to deduct from the "balance" drum weight at a cut-off date (last day of the month) as a Closing Date, definitely will result in high discrepancy. This happen when it is determined by just looking at the Stock/Inventory Cards.
If a little extra effort is taken by recording the actual empty drum weight, the actual consumption of the materials can be established more accurately. The worst thing that happen when it is deermined by "dipping" a measuring stick inside the drum and multiply by a conversion rate. This will result in a tremendous variance or high discrepancy. At the end of the day the "Production Staffs" were made accountable for this discrepancy. To certain extreme they were penalised but in actual fact it is because of the wrong "applications" in establishing the month-end or closing stock figures.

The end result would be the cost is registered incorrectly and the selling price is deemed to be set higher than it should be. The customers have to pay for the price that it should not be.

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Pre or Post Invoicing Sytem?

In 1978 when I was appointed as Credit Control Supervisor, Sterling Drugs (later change to "Health"); the company was using Post Invoicing System. Meaning, Invoice is prepared after the goods were shipped and signed acceptance by the Client. Once the Chop & Sign Delivery Order is signed, a copy shall be forwarded to Credit Control Department to issue its Invoice. The said Invoice will only be posted to the Client accordingly.

Now, can you imagine the time lost - from the time the goods left the Warehouse, delivered to the Client's premise, bring back the Delivery Order, prepare and post the Invoice while posting again takes few days ( payment will only be made 30 days from the date of the Invoice). In view of this System and Procedure, the company lost about 14 - 30 days.

The Client normally will take 30 - 60 days to issue the check and will take few days to reach the office. Thus will effect the Cash Flow tremendously.

Realising this inefficiency and ineffectiveness, I personally introduced "Pre-Invoicing" system and procedure. It involved Sales & Marketing Department, Warehouse Department and Credit Control Department.

Once the Salesperson placed the order and submit to Warehouse Department, Stock availability and Credit Limit will be established. Immediately, Invoice is prepared by Credit Control Department. The Warehouse Department staffs will then deliver the Goods together with the Delivery Order and Invoice. Thus, the 30 days credit period is counted from the day the goods were received. Henceforth, there will be no idle time lost. As a result, the Credit Report or Aged Listing Report had been enhanced and reflected the true transaction period.

Sterling Health had investment (factories) in 52 countries throughout the world. Before I introduced the system and procedure, sad to say that Malaysia was always the 3rd last company to submit its report to New York via telex.

Eversince my system and procedure was implemented, we were always in the TOP 3 countries to submit the report to New York Headquarters. The Vice President Finance from New York HQ came down to Malaysian office to understudy my system and procedure. Since then, all subsidiary and associate companies of Sterling Health throughout the world, ADOPTED my system and procedure.

As a reward I was given 15% salary increment ( a 16 years history was broken at that time - 1978 since no staff had ever recieved such a high increment). Then, I was promoted to Cost Accountant and thus became the youngest accountant in Malaysia - 23+ years old.

Fixed Assets and Depreciation

NOW! feel relax, take a deep breath and go through this. I am sure you will think its very easy to understand the accounting just like eating peanuts. Just like writing a, b, c .... and 1,2,3 .....

Here, I will demonstrate to you a simple accounts prepared for a simple business like "selling burgers".

Now you imagine a person selling burgers at a burger stall on the road-side.

What are the physical things that you see?

1. a counter with a Castor wheel
2. an umbrella
3. a showcase
4. a burner
5. a frying plate

These are the physical features that you can see, touch and can last for maybe 5 years.

So this is the catch - in accounting principles; this is what we term as or classified as "Fixed Asset". Since they will last for 5 years meaning it will depreciate over 5 years. Thus in terms of percentage they will depreciate 100/5 = 20% per year. Meaning every year the value that you purchased those assets (Book Value) will have to be depreciated by 20%. Example if the TOTAL ASSETS are US$5,000.00 therefore this amount will be reduced by US$1,000.00 (20% of US$5,000.00) every year. Beginning of next year the value of the Fixed Assets will be US$5,000.00 - US$1,000.00 (depreciation) = US$4,000.00.

Now, this Fixed Assets category will be reported in a "Balance Sheet" - you will learn this later.

Normally, at the point of purchasing the assets; the invoice, delivery order, purchase order and official receipt are clipped together with a "Payment Voucher".

Then it will be recorded in a "Cash Book" as payment was made (the Invoices were first filed and recorded as "Accounts Payable" and posted in a General Ledger.

Together with other accounts, beginning of next month a "Trial Balance" will be extracted as at last month end e.g. 31 May 2009..... Only then a "Trading, Profit & Loss Account" and "Balance Sheet" are prepared.

You can just use Microsoft office "Excel" Templates to register these records.

You observed there are many accounting terms or classifications mentioned above. Do not worry if you do not understand. For those who had qualified and practicing is OK. I just do not want to be naive as to be so ignorant for not mentioning them.

Please take note of the different "terminology" used in "US Accounting" compared to "UK Accounting". Below are some examples:
• accounts payable - creditors
• accounts receivable - debtors
• inventory - stocks
Continue to visit my blog to see more of these ..............

Want to be an "Accountant" like me?

Accounts or accounting has always been related to "figures". For those who are not good writing and lazy to read, accounts will enable to tell you almost the whole story about the company's business.

When I was in secondary school we only learned "Commerce" which is quite related to accounts. As soon as I finished the exams, I was enrolled into a college called "MARA Institute of Technology" in January 1973. Here, 3 of the young lecturers graduated from OHIO University, USA. They thought us Accounting, Economics and Introduction to Business.

When I am almost seating for the 1st semester's examinations, i was offered to enroll at the High School. Immediately after my exams finished, I jumped into the classroom of the High School. Then the results for my 1st semester examinations came out where I was declared as 2ND BEST STUDENT.

NOW! A dilemma; to proceed with my High School or to continue 2ND Semester with the college.

I had to make a very tough decision because I was enrolled in the School of Accountancy. After much deliberation I was persuaded to pursue with the college with the hope of becoming an accountant (very true enough I became a Cost Accountant in 1979 at the age of 24).

The main reasons were because I hate to read and I do not like "writing".

Unfortunately, half of the subjects in every semester requires reading and writing such as Commercial Laws, Company Law, Economics, Business Management and so forth.

Eventually I graduated and started developing my career.

TYPES OF ACCOUNTING

• Financial Accounting is "a major branch of accounting involving the collection, recording and extraction of financial information, and the summary of it in the form of a periodic profit and loss account, a balance sheet and a cash flow statement in accordance with legal, professional, and capital market requirements". Association of Chartered Accountants (ACA) professional graduates best designated as Financial Accountant and upgraded as Finance Manager – Financial Controller.

• Management Accounting is another branch of accounting performed within an organization to provide information only accessible to its decision-makers. Cost accounting falls within this management accounting which normally required by factories or manufacturing concerns. Chartered Institute of Management Accountants professional graduates suitable to undertake as Cost Accountant or Management Accountant or Corporate Accountant.
• Open-book accounting is an accounting principle that aims to improve accounting transparency of organizations. Normally, cooperatives and non-profit organizations such as sports club, cultural groups and charity establishments.
• Tax accounting is the accounting needed to comply with jurisdictional tax regulations. Certified Public Accountants, Chartered Accountants and those qualified Fellowships in the respective fields are best to resume the responsibilities and public trusts as Auditors and Tax Consultants.
• Accounting scholarship is the academic discipline which studies the theory of accountancy.
• Government accounting is a non-profit accounting which uses “public tax payers’ fund” spent in running the states and federal governments.
• Project Accounting is applicable for the nature of works-in-progress where the expected date of completion is determined over a span of time.
• Development Accounting is appropriate for property development such as “housing estates or developers” where completion period for each type of houses is more than 2 years. Some developers divide the land into few phases and varies the type of houses deemed to be constructed.

The related, but separate financial audit comprises internal audit and external audit. External audit - carried out by independent auditors - examines the financial statements and accounting records in order to express an opinion as to the truth and fairness and adherence to Generally Accepted Accounting Principles (GAAP). Commonly used GAAP include the US Financial Accounting Standards Board (FASB), which issues FASB Pronouncements including Statements of Accounting Standards, and the International Accounting Standards Board (IASB), which issues International Financial Reporting Standards (IFRS). Many other countries have instituted local standards resulting in a local country GAAP. Internal audit and/or management audits aim at providing information for management usage, and is typically carried out by employees.

History of Accounting

Accounting started way back from the earliest days of human agriculture and civilization (the Sumerians in Mesopotamia and the Egyptian Old Kingdom). It facilitated the creation of accurate records of the quantities and relative values of agricultural products, methods that were formalized in trading and monetary systems by 2000 B.C. Simple accounting is mentioned in the Christian Bible (New Testament) in the Book of Matthew, in the Parable of the Talents. The Islamic Quran also mentions simple accounting for trade and credit arrangements.

In the twelfth-century A.D., the Arab writer, Ibn Taymiyyah, mentioned in his book Hisba (literally, "verification" or "calculation") detailed accounting systems used by Muslims as early as in the mid-seventh century A.D. These accounting practices were influenced by the Roman and the Persian civilizations that Muslims interacted with. The most detailed example Ibn Taymiyyah provides of a complex governmental accounting system is the Divan of Umar, the second Caliph of ISLAM, in which all revenues and disbursements were recorded. The Divan of Umar has been described in detail by various Islamic historians and was used by Muslim rulers in the Middle East with modifications and enhancements until the fall of the Ottoman Empire.

The development of mathematics and accounting were intertwined during the Renaissance. Mathematics was in the midst of a period of significant development in the late-15th century. Hindu-Arabic numerals and algebra were introduced to Europe from Arab mathematics at the end of the 10th century by the Benedictine monk Gerbert of Aurillac, but it was only after Leonardo Pisano (also known as Fibonacci) put commercial arithmetic, Hindu-Arabic numerals, and the rules of algebra together in his Liber Abaci in 1202 that Hindu-Arabic numerals became widely used in Italy.