Basic Concept of Accounting

• Accounting is a Service Activity that provides Quantitative

Financial Information useful in Business Decision-Making
Sources of Quantitative The Accounting Equation:
Financial Information:
- Balance Sheet
A=L+E
- Statement of Revenue, Cost & Expense Journalizing:
- Statement of Changes in Financial
Position Assets Liabilities Equity
- Cash Flow Statement
- Cost Control Analysis Report Debit (Increase) Debit (Decrease) Debit (Decrease)
- Financial Performance Ratios Credit (Decrease) Credit (Increase) Credit (Increase)
- Financial Statement Analysis
- Budget Plan
 Liquidity Ratios
Financial Ratios Current Ratio Current Assets/Current Liabilities Measures the capability of paying short term
obligations
• Financial ratios are created with Acid Test Ratio Current Assets-Inventories/Current Liabilities Considered as quick assets; cash ratio – measures
the use of numerical values capability to settle short term obligations with cash
taken from financial statements and cash equivalent
to gain meaningful information Leverage Financial Ratios
about a company.
Debt Ratio Total Liabilities/Total Assets Shows the ratio from assets are generated through
• The numbers found on a liabilities

company’s financial statements Debt to Equity Ratio Total Liabilities/Total Equity Shows the leverage between borrowed and invested
capital
– balance sheet, income
statement, and cash flow Efficiency Ratios
statement – are used to Asset TO Ratio Net Operating Result/Average Total Assets Shows efficiency in the use of assets or what
perform quantitative percentage of net profit are generated for each peso
amount of assets utilized.
analysis and assess a company’s
liquidity, leverage, growth, Inventory TO Cost of Goods Sold/Average Inventory Shows merchandise TO (how many times inventory are
sold and replaced over a period of time)
margins, profitability, and rates
Days Sales in 365 days/Inventory TO Ratio Measures number of days inventory is kept in storage
of return. Inventory Ratio before sold

Profitability Ratios
Gross Margin Ratio Gross Profit/Sales Measures ability of sales to absorb operating expenses
or the percentage of profit over sales before OE
Net Margin Ratio Net Profit/Sales Shows percentage of net profit generated for each
peso sale
Return on Equity Net Profit/Equity Shows efficiency in the use of equity
Ratio
Cash 3,251,275 Sales 16,444,257.00
Accounts Receivables 9,645,100 Less: Cost of Goods Sold 7,445,100.00
Merchandise Inventory 1,754,200 Gross Profit 8,999,157.00
Deposit to Suppliers 560,000 Less: Operating Expenses 1,291,332.00
Property & Equipment 20,675,450 Net Profit 7,707,825.00
Trade Payable 3,648,200
Loans Payable 5,000,000 Cash 3,251,275.00
Owner's Equity 19,530,000 Accounts Receivables 9,645,100.00
Total Sales 16,444,257 Merchandise Inventory, End 1,754,200.00
Cost of Goods Sold 7,445,100 Deposit to Suppliers 560,000.00
Operating Expenses 1,291,332 Current Assets 15,210,575.00
Property & Equipment, Net 20,675,450.00
44,622,457 44,622,457 Total Assets 35,886,025.00

Source of Cost of Goods Sold Trade Payable 3,648,200.00

Inventory Beginning 2,030,250 Loans Payable 5,000,000.00
Add: Purchases 7,169,050 Total Liabilities 8,648,200.00
Cost of Goods Available for Use 9,199,300 Owner's Equity 19,530,000.00
Less: Inventory, End 1,754,200 Retained Earnings 7,707,825.00
Total Owner's Equity 27,237,825.00
Cost of Goods Sold 7,445,100 Total Liabilities & Owner's Equity 35,886,025.00
Books of Accounts
General Journal
Manual Books of Accounts • General journal is referred to as the book of original entry. It records
Loose-Leaf Books of Accounts business transaction in order of date using the principle of “debit and
credit”.
Computerized Books of Accounts General Ledger
• General ledger is referred to as the book of final entry. It summarized all
the journal entries of an account to get the ending balances.
Cash Receipt Journal
• Cash receipt journal is a special journal used to record cash sales
and/or collection of receivables.
Cash Disbursement Journal
• Cash disbursement journal is a special journal used to record cash
payments of expenses and/or payables.
Sales Journal
• Sales journal is a special journal used to record sales on credit
(receivable from customer)
Purchase Journal
• Purchase journal is a special journal used to record purchases on credit
(payable to supplier)
Subsidiary Ledgers
• Accounts Receivables
• Trade Payables
COSTS CONTROL
Different Types of Costs
• Direct Costs
• Indirect Costs
• Variable Costs
• Semi-Variable Costs
• Fixed Costs
• Operating Costs
• Opportunity Costs
• Sunk Costs
Food & Beverage Costing & Pricing
• Recipe
• Portion
• Actual Price from the Supplier
• Cost Percentage Standard
• Actual Cost Percentage
• Point of Break Even
Examples: For Multi-Product BEP, use Weighted Average SP and
(if cost per plate is Php350 and your %age standard is 35%, how CM%. E.g.: Average SP is Php 800.00 weighted VC is
much is the selling price?) 200.00 and fixed costs is Php 60,000.
(if you sold 10 plates and actual food costs is Php3,700, what is
your actual cost percentage)
CM%age = (800-200)/800
(If you sold 15 plates; inventory beginning is Php1,200, end is 900 BEP Sales = 60,000/75% or 80,000
and total purchases is 4,000; what is your actual cost
percentage?) BEP Unit = 60,000/600 or 1,000 plates
(Referring to the first example, if your estimated total fixed costs
is Php6,500.00, what is your BEP?)
Sales (1,000 units x 800) 80,000.00
Variable Cost (1,000 units x 200) 20,000.00
Gross Profit 60,000.00
Fixed Costs 60,000.00
Excess/Deficiency 0.00
VALUE ADDED TAX The same example but VAT Inclusive Vatable Sales and Purchases of Php
800.00 and 500.00, what is your VAT Payable?
• a tax on the amount by Output Tax = Php 800.00 x 12 / 112 or 85.72
Input Tax = Php 500.00 x 12 / 112 or 53.58
which the value of an
To Record:
article has been increased Cash Receipts 800.00 Cash Disbursements 500.00
Output Tax 85.72 Input Tax 53.58
at each stage of its Sales 714.28 Purchases 446.42
production or distribution
Using the First Example with Vatable Sales and Purchases of Php
Example: 896.00 and 560.00:
VAT Exclusive Sales of 800.00 and Purchases of 500, what is your VAT Sales = Php 896.00 /1.12 or 800.00 x 12% output tax of 96.00
Payable? Purchases = Php 560.00 /1.12 or 500.00 x 12% input tax of 60.00
Output Tax 800 x 12% = 96.00
Input Tax 500 x 12% = 60.00
VAT Payable 36.00

To Record:
Cash Receipts 896.00 Cash Disbursements 560.00
Out Tax 96.00 Input Tax 60.00
Sales 800.00 Purchases 500.00
Inventory Management
• Least and most popular stocks (fast moving items)
• Inventory Organization (similar type of items and expiration dates
matched with rate of item movement to identify re-order period
and quantity)
• Inventory Method (FIFO)
• Demand Forecasting
• Economic Order Quantity (EOQ Model) – balance between the
inventory maintenance costs vs cost per order/delivery
• Safety Stock and Re-Order Point
• Perpetual Inventory Management (record vis a vis physical count)
• Inventory under Consignment (terms of agreement and significant
dates)
SALES FORECASTING & BUDGETING
• Identify Daily Capacity (available seats by the foot traffic)
• Average Ticket Size
• Conduct Inventory Projection (quantity of orders)
• Factor-in environmental variables (seasonality, cyclical and scheduled
events)
• Staffing (using Time and Motion Study – hours of preparation,
complexity of job, standard service time)
• Conduct of Job Analysis and Prepare Job Specification and Description
• Queuing Analysis (cost of manpower and facility vs opportunity losses
from queues)
• Project Other Costs (indirect and semi-variable costs)
• Project Operating Costs (combination of fixed and semi-fixed –
administrative costs; support or cost from back offices)
• Prepare Revenue and Costs Model to check target rate of profitability
BUSINESS PLANNING
PLANNING CYCLE
Business Planning
LEADERSHIP & MANAGEMENT
A Manager
tells you what
• While managers lay down the structure and delegates authority and responsibility, leaders
to do… provides direction by developing the organizational vision and communicating it to the
employees and inspiring them to achieve it.
• While management includes focus on planning, organizing, staffing, directing and controlling;
A Leader sells leadership is mainly a part of directing function of management. Leaders focus on listening,
building relationships, teamwork, inspiring, motivating and persuading the followers.
you the idea • While a leader gets his authority from his followers, a manager gets his authority by virtue of his
of why it has position in the organization.
• While managers follow the organization’s policies and procedure, the leaders follow the same but
to be done… balances with their gut and recommend change.
• Management is more of science as the managers are exact, planned, standard, logical and more
of mind. Leadership, on the other hand, is an art. In an organization, if the managers are
required, then leaders are a must/essential.
• While management deals with the technical dimension in an organization or the job content;
leadership deals with the people aspect in an organization.
• While management measures/evaluates people by their name, past records, present
performance; leadership sees and evaluates individuals as having potential for things that can’t
be measured, i.e., it deals with future and the performance of people if their potential is fully
extracted.
• If management is reactive, leadership is proactive.
Leader Inspires Action…
Manager Seek Efficiency…
Management is a process of planning, decision making, organizing,
leading, motivation and controlling the human resources, financial,
physical, and information resources of an organization to reach its
goals efficiently and effectively.
Management Tend to Neglect…

• ‘your business is only as good as your employees’

• You may have the best materials, the latest technology, the coolest
working spaces, the newest innovations, the most creative product -
but all these things are really quite meaningless without the CORE
OF BUSINESS – THE EMPLOYEES
• poorly motivated and uninspired people can have a direct affect on
the overall performance of any company
• Productivity needs to be a visible business issue and every
employee within the organization should have an understanding of
how productivity is measured
• Replace working by "rule of thumb," or simple habit and common
sense, and instead use the scientific method to study work and
determine the most efficient way to perform specific tasks.
• Rather than simply assign workers to just any job, match workers
to their jobs based on capability and motivation, and train them to
work at maximum efficiency.
• Monitor worker performance, and provide instructions and
supervision to ensure that they're using the most efficient ways of
working.
• Allocate the work between managers and workers so that the
managers spend their time planning and training, allowing the
workers to perform their tasks efficiently.

Use of Scientific
Management in
Leadership
• To maintain records for
compensation packages, wage
structure, salaries, pay raises, or
restructuring.
• To identify the strengths and
weaknesses of employees.
• To assess and maintain the
potential each person has for
further growth and development.
• To provide feedback to employees
regarding their performance.
• To serve as a basis for improving
working habits of employees.
• To review and retain promotional
and other training programs.
Payroll
Conditions Regular Holidays Special Non-Working Holidays

No Pay, Unless Indicated in the Contract or

Did Not Work Daily Wage
CBA

Did Work Daily Wage x 2 Daily Wage x 1.3

(Daily Wage x 2)+(Hourly Rate x Extra (Daily Wage x 1.3)+(Hourly Rate x Extra
Overtime Work
Hours Worked x 2.6) Hours Worked x 1.69)

Worked on A Rest Day (Daily Wage x 2)+[(Daily Wage x 2) x 0.3] Daily Wage x 1.5

(Daily Wage x 2)+[(Daily Wage x 2) x (Daily Wage x 1.5)+(Hourly Rate x Extra

Worked Overtime on A Rest Day
0.3]+(Hourly Rate x Extra Hours x 2.6) Hours Worked x 1.59)
Business Decision-Making
• Formulate Ethical
Standards
• Reflect in Mission
Statement
• Establish Company
Culture
• Let Standards Be Known
• Train Employees
• Practice
Ethical Standards in Food Business
• Food Sanitation & Safety
• Supplier Standards and Transparent Supply Chain
• Public Health Issues
• Professional Integrity
• Quality Products
• Service Excellence
• Customer Relations
• Employee Relations
• Community Involvement
• Ethical Attitude and Behavior
• Pleasant Relations with Other Stakeholders
• Adherence to Industry Standards
• Adherence to National and Local Government Standards
UNHEALTHY WORKING ENVIRONMENT
Thank you!