Accounting and

Finance Management
Atty. Rheneir P. Mora, CPA
Mentor
Accounting and Finance
Management
• What is accounting?
• Basic bookkeeping
• Simplified Income Statement
• Simple Cash Flow
• Evaluating Investment Opportunities/Options
• Cash flow Management
• Budgeting
• Where to put your money?
What is Accounting?
Farming can be profitable
By Ruben Cruz Jr. on March 10, 2020

“At first glance, you think there’s little money in farming. But in time
you realize that, with the right moves and equipment, you can really
grow a profit. Why do you have to keep sailing abroad when what
you earn there, you can also earn here, on land?” Fadrigo said.

With the government’s all-out support, there could be many more of

them—farmer-entrepreneurs who will help our country achieve
food security.

https://businessmirror.com.ph/2020/03/10/farming-can-be-profitable/
Who are Farmer-Entrepreneurs?

Farmer-entrepreneurs operate in a complex and dynamic

environment.
They are part of a larger collection of people including
other farmers, suppliers, traders, transporters, processors
and many others.
Agribusiness ideas in which you can invest including but
not limited to crop cultivation, production and processing,
aquaculture, animal health and feeds.
What is Accounting?
What is Accounting?

• Accounting is the process of recording

financial transactions pertaining to a business.
• The accounting process includes
summarizing, analyzing and reporting these
transactions that is intended to be useful in
making economic decision.
What is Bookkeeping?

• It is the recording phase of accounting.

• It is the chronological recording of financial
transactions of the business in suitable
records.
What are Assets?

• An asset is anything of monetary value

owned by a person or business that
produces inflows of cash in the future
Example of Farm Assets?
• Cash on Hand
• Cash in Bank
• Receivables
• Inventory
• Property
• Farm Equipment
• Biological Assets (plants/animals)
What are Liabilities?

• Liabilities are debts and obligations of

the business representing as creditor's
claim on business assets
Example of Liabilities?

• Promissory Note
• Loans Payable
• Trade Payable
• Salaries Payable
• Taxes Payable
What is Capital?

• Money a business owner contributed in

the business
• It is also identified as “Net Worth”
What is Balance Sheet?
What are Revenues?

• Revenue is the money your business

receives during a certain accounting period.
• Sale of farm outputs
(fruits/vegetables/crops)
• Sale of animals (pigs/chicken)
• Income from Farm Tourism
What are Expenses?

• Money spent or cost incurred in an

organization's efforts to generate
revenue, representing the cost of doing
business.
• Two types of Expenses = Cost and
Operating Expenses
What is Income Statement?
What is Profit?

• The objective of most businesses is to earn a

profit.
• Profit is the difference between the amounts
received from customers for goods or
services and the amounts paid for the inputs
used to provide the goods or services
Why pay Taxes?

• Taxes help the government fund their projects

for economic development. It's also the
lifeblood of outstanding government
employees, like teachers.
• Contributing your share of the pie greatly
helps in the development of the Philippines as
a whole.
What is Cash Flow?
What are the basic Books
of Accounts for Farm Accounting?
• Cash Book
• Debtors and Creditors Register
• Stock Register
• Fixed Assets Register
• Loan Register, contains record of loans,
details of interest etc.
 FORMAT OF
FORMAT OFAAJOURNAL
CASH
BOOK
Date Particulars/ CASH CASH BALANCE
Purpose IN OUT
How to evaluate Investment
Opportunities/Options?

• Payback period is the length of time required to

recover the cost of an investment.
• It is an important determinant whether to
undertake the project or not.
How to evaluate Investment
Opportunities/Options?
Payback Period
Cost of Investment Net Cash Flow Balance Payback

Year 1 250,000 38,632.70 211,367.30 1

Year 2 250,000 137,975.74 73,391.57 1
Year 3 250,000 145,269.82 - 0.51
Payback Period 2.51
2 years and 6 months
How to evaluate Investment
Opportunities/Options?

• Return on investment (ROI) is a financial ratio used

to calculate the benefit an investor will receive in
relation to their investment cost.
• It is most commonly measured as net income divided
by the original capital cost of the investment. The
higher the ratio, the greater the benefit earned.
• ROI = Net Income / Cost of Investment
How to evaluate Investment
Opportunities/Options?

Formula Year 1 Year 2 Year 3 Year 4 Year 5

Return on Net Income 20,632.70 119,975.74 127,269.82 133,722.91 141,840.56
Assets/Investment Average Total Assets 270,632.70 330,620.57 454,243.35 584,739.71 722,521.45
7.62% 36.29% 28.02% 22.87% 19.63%
How to evaluate Investment
Opportunities/Options?

• Net profit margin is the percentage of revenue

left after all expenses have been deducted from
sales.
• The measurement reveals the amount of profit that
a business can extract from its total sales.
How to evaluate Investment
Opportunities/Options?

Profitability Ratios Formula Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 20,632.70 119,975.74 127,269.82 133,722.91 141,840.56
Net Profit Margin
Sales 419,220.00 466,374.00 489,912.00 513,450.00 539,454.00
4.92% 25.73% 25.98% 26.04% 26.29%
What is Budgeting?
What is Budgeting?

• Budgeting is the process of creating a plan to spend your

money. This spending plan is called a budget.
• Creating this spending plan allows you to determine in
advance whether you will have enough money to do the
things you need to do or would like to do.
• Budgeting is simply balancing your expenses with your
income.
Where to put your money?

• Time deposits are among the best investments for

beginners who are afraid of risks yet want to earn higher
interest than a traditional savings account.
• Most savings accounts have interest rates of less than 1%,
while time deposits earn up to more than 4%.
• Let say you put PHP 100,000 in a time deposit account
with an interest rate of 3.70% per annum. After a year,
you’ll get PHP 103,700.
Where to put your money?
• The Pag-IBIG Modified Pag-IBIG II (MP2) is a
voluntary government savings program that allows Pag-
IBIG members to invest for as low as PHP 500 every
month over a five-year period.
• What makes the Pag-IBIG MP2 one of the best
investments for medium-term financial goals is its dividend
rate that has grown from 4.58% to 8.11% since its
inception in 2010.
• Through the years, this fund growth has been on an upward
trend.
Where to put your money?
• Investing in stocks yields high earnings when you
purchase stocks at a low market price and then sell them
later at a higher price.
• However, stock market prices tend to rise and fall rapidly.
If the market price goes down, you’ll lose funds.
• Investing in the stock market is ideal for your long-term
goals because an investing horizon of more than 10 years
greatly minimizes your risks from market crashes, which
can take years to recover from.
Where to put your money?
• Real estate is also among the best investments for your
long-term goals—but approach this with caution.
• The real estate market follows an up-and-down cycle.
• The uptrend is when people are buying properties left and
right, and a downtrend is when people sell, driving prices
down.
• If you buy during the peak of an uptrend, and sell during
a downtrend, you can either break even or lose money.
Where to put your money?

• Investing in equity UITFs (unit investment trust

funds) is different from investing directly in the stock
market.
• When you invest in stocks, you buy stocks individually at
the Philippine Stock Exchange and create your
investment portfolio on your own.
• But when you invest in equity UITFs, fund managers are
the ones who manage your pool of stocks.
Where to put your money?

• Money market funds are ideal for newbie and

conservative investors who want to earn a little higher
than time deposits.
• They’re the best investments for capital preservation in
one year or less.
• The funds are invested in corporate bonds, government
treasury bills, and other risk-free, short-term securities.
ACTIVITIES
THANKS…..