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Introduction
[ top]
Advice in
accounting and bookkeeping for medium and large enterprises should be done
by professionals. Most micro and small enterprise operators do not need a
complex accounting system but a rather simple introduction to a cash book
and introduction to how to produce and keep records in the form of receipts.
Micro and Small Enterprises (MSEs) often face problems with regard to
recording their daily transactions. This is due to the fact that most of the
operators do not know how to make such records in a simple and easy manner.
As a result, many operators find it very difficult to give information on
their income and expenses and eventually do not know whether they have lost
or profited from their business activities. The absence of recording has
also caused some problems in handling customer needs, particularly in
maintenance services and also in cases of sales on credit services. The lack
of recording also makes it very difficult for the tax offices to levy
reasonable taxes that are commensurate with the business activities. As a
result, business operators complain on the taxes that are levied on them on
the basis of estimation, which they say are too heavy to bear.
Accounting
procedures
and formats for micro and small enterprises
[ top]
Micro
and Small Enterprises (MSEs) often face problems with regard to recording
their daily transactions. This is due to the fact that most of the operators
do not know how to make such records in a simple and easy manner. As a
result, many operators find it very difficult to tell their incomes and
expenses and eventually don’t know whether they have lost or profited from
their business activities.
The
absence of recording has also caused some problems in handling customer
needs, particularly in maintenance services and also to provide sales on
credit services.
The
lack of recording also makes it very difficult for the tax offices to levy
reasonable taxes that are commensurate with the business activities. As a
result, operators are complaining on the taxes that are being levied on the
basis of estimation, which they say are too heavy to bear.
Cashbook format
[ top]
The cashbook is very
important to show the situation of the business at any moment in time, as it
provides both the charges and credits for a any given period. The balance
column is the difference between the charges and credits columns.
|
Cashbook |
|
No. |
Date |
Description |
Cash in |
Cash out |
Balance |
|
Birr |
Ct |
Birr |
Ct |
Birr |
Ct |
|
1 |
2.2.04 |
Initial
cash in |
2 345 |
00 |
|
|
2 345 |
00 |
|
2 |
3.2. |
Electricity |
|
|
126 |
50 |
2 218 |
50 |
|
3 |
3.2. |
Shop rent |
|
|
930 |
40 |
1 288 |
10 |
|
4 |
4.2. |
Sales of
products |
455 |
70 |
|
|
1 743 |
80 |
|
5 |
5.2. |
Taxes |
|
|
780 |
90 |
962 |
90 |
|
6 |
5.2. |
Sales of
products |
1 675 |
80 |
|
|
2 638 |
70 |
|
7 |
5.2. |
Raw
materials |
|
|
1 675 |
80 |
962 |
90 |
|
8 |
7.2. |
Sales of
products |
780 |
45 |
|
|
1 743 |
35 |
|
... |
... |
... |
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Electronic
cashbook
[ top]
For
small and medium enterprises with electronic facilities, an effective but
simple system is that on an Excel sheet.
The
following cashbook for download has the same structure as the cash book
above but adds up automatically.
cashbook-1.xls
(take
the right mouse button for download)
Electronic
cashbook with accounts
[ top]
The
electronic cashbook with accounts includes several columns for accounts as
charges for equipment, personnel, sales etc. By recording the cashbook
journal, the accounts are calculated automatically.
cashbook-2.xls (take the
right mouse button for download)
|
Electronic
cashbook with accounts |
|
No. |
Date |
Acc |
Description |
Cash in |
Cash out |
Balance |
|
1 |
2.2.04 |
10 |
Initial cash in |
2 345.00 |
|
2 345.00 |
|
2 |
3.2. |
51 |
Electricity |
|
126.50 |
2 218.50 |
|
3 |
3.2. |
52 |
Shop rent |
|
930.40 |
1 288.10 |
|
4 |
4.2. |
10 |
Sales of products |
455.70 |
|
1 743.80 |
|
5 |
5.2. |
53 |
Taxes |
|
780.90 |
962.90 |
|
6 |
5.2. |
10 |
Sales of products |
1 675.80 |
|
2 638.70 |
|
7 |
5.2. |
61 |
Raw materials |
|
1 675.80 |
962.90 |
|
8 |
7.2. |
10 |
Sales of products |
780.45 |
|
1 743.35 |
|
9 |
8.2. |
61 |
Raw materials |
|
345.70 |
1 397.65 |
|
10 |
9.2. |
51 |
Water |
|
125.60 |
1 272.05 |
|
Sum / Balance |
5 256.95 |
3 984.90 |
1 272.05 |
E.g. all
entries with the account number 61 may automatically be filtered and added
(see cashbook-2.xls on the web page).
|
Autofilter for account No. 61 |
|
No. |
Date |
Acc |
Description |
Cash in |
Cash out |
Balance |
|
7 |
5.2. |
61 |
Raw materials |
|
1 675.80 |
962.90 |
|
9 |
8.2. |
61 |
Raw materials |
|
345.70 |
1 397.65 |
|
Sum of account no. 61 |
|
2 021.50 |
|
Records
for maintenance services
[ top]
This
format helps to record items that are brought to the operator for
maintenance purposes. As the format has columns for date the items are
received, name of client, type of item and the date on which the maintained
item is submitted to the customer, it helps to organize the operator and
provide efficient service. This format helps to avoid problems of
messing the items and keeping appointment dates for delivery of the items.
| Records on
maintenance services |
| No. |
Date item
received |
Name of
client |
Type of
item received |
Estimated
fee to be paid |
Date of
submission |
Signature |
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Receipt
format
[ top]
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Name
of the Business
Address
Receipt
No.:
Date: |
|
Qty |
Description |
Amount |
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Ser.
Tax
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Tax
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Total
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Sales
on credit
[ top]
The
format is intended for recording all credit sales so that the operator is
reminded of the remaining cash to be collected from customers who took
credit service. As the format
provides for identification of the customer, the date on which sales on
credit is effected, the amount of cash remained to be paid and the date on
which it is to be paid back, it helps the operator to clearly account for
his/her income. This format
also helps to identify those who default and those who pay back on time for
taking the necessary measures in extending credit sales in the future.
| Sales on
credit |
| No. |
Date |
Name and
Address of client |
Product /
Service |
Unit value |
Advance
paid |
Remained
to be paid |
Date final
payment |
Signature |
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Format
for raw material inventory
[ top]
This
format helps to have record of inventory of raw materials in order to
account for raw material used in the calculation of expenses. Thus, the operator deducts the quantity of raw material used
from the column of raw material purchased and maintains the inventory both
in terms of quantity and value. This
helps the operator to identify the amount of raw materials used during a
given period of time, and the amount of inventory he has and helps to make
proper calculation for expenses incurred.
| Raw
material inventory |
|
No. |
Date |
Raw
material purchased |
Raw
material used |
Inventory |
| Type |
Qty |
Total
value |
Type |
Qty |
Total
value |
Qty |
Total
value |
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Profit
and Loss Statement
[ top]
The
Profit and Loss Statement is the final accounting procedure to be presented
to the taxation authorities, in order to be taxed on the real activity and
not on estimation basis.
Go
to explanation to the Profit and Loss
Statement
|
Company |
|
Profit
and Loss Statement
Period:
from............... to.................... |
|
Gross
Sales |
|
|
Less:
Returns and allowances |
- |
|
=
Net Sales |
= |
|
Less:
- Costs of goods sold |
- |
|
-
Direct material |
- |
|
-
Direct labour |
- |
|
-
Factory overhead |
- |
|
=
Gross Profit |
= |
|
Less:
- Administrative and selling expenses |
- |
|
-
Salaries |
- |
|
-
Telephone |
- |
|
-
Water |
- |
|
-
Electricity |
- |
|
-
Rentals |
- |
|
-
Others |
- |
|
=
Operating Profit |
= |
|
Less:
- Interest expense |
- |
|
=
Net Profit before Tax |
= |
|
Less:
- estimated Income Tax |
- |
|
=
Net Profit after Tax |
= |
|
Date
Signature |
Help/
Explanation |
Cash Flow Statement
[ top]
Introduction
Cash in business can be compared to water that
flows in a river. Cash flows in from sales, loans, and equity. In the
process of producing goods and services, cash flows out to pay for
materials, salaries (including the entrepreneur's), rent, electricity,
water, interest, supply, transport.
If there is more water coming out than coming in
to the river, then it will soon dry out. Similarly, businesses having more
cash outflows than cash inflows will soon get into trouble. They will not be
able to pay for their expenses as they fall due - a difficult situation that
every prospective entrepreneur should avoid. Hence, cash flow planning is an
important issue to be considered by the operator. However, many
entrepreneurs fail to realise this. They constantly run the risk of being
unable to settle most of their bills. Poor cash planning practice is a
major cause of many small business failures.
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Cash Flow is important to
help predict cash needed,
how much money will be needed and when it will be
needed, or to predict cash surplus and plan investments. |
The cash planning process begins with figuring out how much cash is
generated from sales receipts as well as other sources like loans, etc. for
a certain time period. This figure represents cash inflows. Obviously,
credit sales are excluded since they are not cash until they are fully paid
for. Then, figure out how much cash is needed to pay all expenses for
materials, rent, salaries, and others. This figure represents cash outflows.
Credit purchases are excluded since they are not cash transactions until
they are fully paid for.
The difference between
cash inflows and cash outflows represents the ending cash balance. This cash
balance within a period, say for a month, will automatically become the
beginning balance for the next month.
Preparing
cash flow projection consists of cash inflows (or cash receipts) and cash
outflows (or cash payments). Likewise, it will have spaces for beginning
and ending cash balance. The aim is to ensure that the available cash will
be sufficient to meet the needs and obligations of the proposed business. If
there are more cash outflows than inflows in the cash flow projection, then
measures such as selling more products, converting personal assets to cash
or borrowing some money must be considered to avoid this situation.
Definitions
of Terms used in Cash Management
-
Cash inflows:
all cash receipts realised within a given period.
-
Cash sales:
cash revenues realised from sales of finished goods/services.
-
Credit sales:
sales made without receiving cash.
-
Depreciation: a
cost charged against fixed assets for their replacement.
-
Cash outflows:
total of all cash payments.
| Example
of Cash Flow Statement |
|
Item |
0 |
I |
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II |
|
| Real |
Forecast |
Real |
Forecast |
Real |
|
1. Initial Cash |
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2.
Inflows |
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2.1
Sales |
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2.2
Others |
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2. Total Inflows |
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3.
Outflows: |
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3.1
Dividends |
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3.2
Labour costs |
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3.3
Promotion material |
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3.4
Rent |
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3.5
Energy |
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3.6
Telephone |
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3.7
Publicity/Promotion |
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3.8
Renovation |
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3.9
Registration fee |
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3.10
Others (insurance etc.) |
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3. Total Outflows |
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4. Net Flow Return (2-3) |
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5. Final Cash Flow (1+4) |
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Professional
accounting for small and medium enterprises
[ top]
For small
and medium enterprises professional accounting is needed in order to comply
with accounting standards acceptable by the tax authority. Thus, the list of
adapted softwares, providers and training institutions are provided below
for your reference.
Accounting
Software and Software Providers
[ top]
CyberSys
Technology
Befekadu
building, Bole road, opposite to Saay Pastry
e-mail:
cybersys@telecom.net.et
Software:
- Peachtree
Accounting, Original 300 Birr
- Quick Book, ask for price
- Dac, ask for price
PRO
- TECH
P.O.Box
1612 Addis Ababa, Tel. 620425, 620729, Fax 620840
Software:
- Peachtree
Accounting
Bookkeeping
and accounting training courses
[ top]
CyberSys
Befekadu
building, Bole road, opposite to Saay Pastry
P.O.Box 19674 Addis Ababa
e-mail:
cybersys@telecom.net.et
|
Courses
provided: |
-
Peachtree
accounting, 40 Hrs, 700 Birr
-
Quick book
accounting, 28 Hrs, 700 Birr
-
Dac accounting,
28 Hrs, 700 Birr
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Webpagedesign,
Frontpage, 20 Hrs, 600 Birr
-
Other trainings
|
African
Lakes
Near the National Stadium, P.O.Box 3533 Addis Ababa, Tel. 518444
|
Courses
provided: |
-
Peachtree
accounting 2002, 50 Hrs, 690 Birr
-
Other as Word,
Excel, Access, Windows
|
City
Business Computers
Bole Road, in front of Bole Printing Enterprise, P.O.Box 6052 Addis Ababa
Tel. 51.71.97, 51.33.65, 53.37.30,
Fax 251-1-52.27.56
email:
cbc@telecom.net.et,
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Courses
provided: |
-
Peachtree
accounting
-
Other
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Formats
for Download
[ top]
To
download these documents on your PC, click with the right
mouse button on the link of your interest and then choose the menu "save
target as...".
[top]
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