Accounting HandBook for Small & Medium Businesses

Small and Medium Enterprises are the stepping-stone for sustainable development of the economies towards industrialization. In Pakistan, the SME sector has a share of over 30% in GDP and employs approximately 78% of the non-agricultural labor force thus the making this sector a major driver of the country's economy. Best business practices steer businesses towards competitiveness, which is a key to survive in the seamless markets of globalization culture. Conversely, it is identified that poor business practices, particularly lack of documentation, are an obstacle in SME's growth and the development.

The small and Medium Enterprise sector is considered to be the backbone of a developing economy with its unique capability for employment creation, poverty alleviation, innovation, and competitiveness. Owing to emphasis by the Government together with stakeholders' awareness, adequate support efforts have been directed towards SME development through the creation of a business-friendly environment as well as market development for financial and non-financial services.

SMEDA's effort in the form of a publication, Accounting Handbook for Small and Medium Businesses is an important step towards improving business culture and prevailing accounting and bookkeeping practices in the sector.

Accounting Hand-Book for Small & Medium Businesses is a practical guide for SMEs for developing their accounting and bookkeeping capabilities. This handbook discusses a typical SME business cycle and accounting transactions related to it in a hands-on manner. The handbook is comprehensive and self-explanatory to facilitate a typical SME in recording accounting activities. Accounting processes and control bearing relevance to the operating size of an SME business are discussed in a user-friendly manner. Accounting record preparation is also elaborated in a simplified way, along with examples and templates

Who is it for?

Accounting / Finance managers / Owners of SME businesses with a non-accounting background, currently managing business bookkeeping and accounting in an informal manner

·  Accounting service providers seeking to provide accounting and bookkeeping services designed exclusively for their SME business clients

Contact your nearest SMEDA office to buy this book!

LIST OF SUBJECTS COVERED IN ACCOUNTING HANDBOOK FOR SMALL & MEDIUM BUSINESSES

1.    Use accounting to help your business grow

2.    Useful facts to improve understanding of accounting

3.     Where are accounting transactions recorded?

4.     Want to start a business? Inject capital!

5.     Purchases & payables - improve your margins!

6.     Sales & receivables - sell more and generate cash

7.     Plant & machinery - key in generating profits

8.     Leasing! An attractive option for financing capital investments

9.     Inventory valuation - know your costs to sell at a profit!

10.   Manufacturing! Do you know how much your products cost?

11.   Financing! An alternative to capital injection

12.   Salaries & expenses -controllable costs to improve profitability

13.   How should a business account for transactions in foreign currencies?

14.    Accounting is done - now we need to prepare accounts

15.    Ratio analysis is a useful tool to improve decision making

16.    Income tax - how do I know what needs to be done?

17.    Sales tax - an easy to understand reference guide

TABLE OF ANNEXURES:

1.     Balance Sheet

2.     Profit & Loss Account

3.     Cash Flow Statement

4.     Cash Payment / Bank Payment Voucher

5.     Journal Voucher

6.     Tax Challan

7.     Quarterly Statement

8.     Salary Certificate

9.     Form IT-A

10.   Form IT-B

11.   Tax Payment Challan

12.   Application for Refund of Tax

13.   ST 1

14.   ST 2

15.   ST 3

16.   Sales Tax Return

17.   Sales Tax Return for Distributors & Wholesalers

18.   Sales Tax Return for Retailers

19.   Sales Tax Return for Commercial Importers

20.   Sales Tax Return for Jewelers

21.   Advance Payment Receipt

22.   Nil Return

23.   Documents to be attached along with Returns of Traders

TABLE OF CONTENTS

Chapter 1

1.  What is Accounting?

2.  What are Accounts?

3.  Why do Businesses Need Accounts?

4.  Use Accounting to your Advantage

Chapter 2

5.   Basis of Accounting

6.   The Double Entry System of Accounting

7.   Journal Entries

8.   Accounting Assumptions

9.   Accounting Regulatory Bodies 

 Chapter 3

10.  Double Entry & T Accounts – A Quick Recap

11.  Books of Accounts

12.  Books of Original Entry

13.  Sales Day Book & Sales Ledger

14.  Purchase Day Book & Purchase Ledger

15.  Cash & Bank Book

16.  Inventory Ledger

17.  General Ledger

18.  Vouchers

Chapter 4

20.  Books of Accounts – A Quick Recap

21.  What is Capital?

22.  What is Equity?

23.  How much Capital should be Injected?

24.  How Frequently should Capital be Injected?

25.  Is Capital always in Cash?

26.  Deciding on a Profit Share

27.  Businesses are Separate from Owners

28.  Capital for Companies

Chapter 5

29.  Books of Accounts – A Quick Recap

30.  What are Purchases?

31.  Why is it Important to Record Purchases?

32.  Purchase Cycle

33.  Other Situations in Purchase Cycle

34.  Cash Flow & Cost Management Strategies – Some Tips

Chapter 6

35.  Books of Accounts – A Quick Recap

36.  Why is it Important to Record Sales?

37.  How should Sales be Recorded?

38.  Know your Selling Price

39.  My Customer has not paid me – What do I do?

40.  Convert your Receivables into Cash

41.  Some Suggestions on Improving Liquidity

Chapter 7

42.  Books of Accounts - A Quick Recap

43.  What are Fixed Assets?

44.  Tangible & Intangible Assets

45.  What is the Cost of Fixed Assets?

46.  Understanding the Terminology

47.  What is Depreciation?

48.  Depreciation is not always Charged

49.  My Fixed Assets are worth more now!

50.  What happens when a Fixed Asset is Sold or Lost?

51.  Using Fixed Assets to your Benefit!

Chapter 8

52.  Books of Accounts – A Quick Recap

53.  What is Lease?

54.  Commonly Used Terms

55.  Types of Leases

56.  Why should a Business Lease?

57.  How are Leases Recorded?

58.  Using Leasing to your Advantage

Chapter 9

59.  Books of Accounts - A Quick Recap

60.  What is Inventory?

61.  Why Have Different Valuation Techniques?

62.  What is the Cost of Inventory?

63.  How is Inventory Valued?

64.  Is Inventory Always Shown at Cost?

65.  How can Inventory Costs be Reduced?

Chapter 10

66.  Books of Accounts – A Quick Recap

67.  What type of Inventory is Manufactured?

68.  Why is Costing Important for a Manufacturer?

69.  What is the Cost of Manufactured Inventory?

70.  Costing Terminology Made Easy!

71.  What is a Typical Manufacturing Cycle?

72.  How are Costs Classified?

73.  How is the Cost of Manufactured Inventory Calculated?

74.  What is Accounting for Work in Process?

75.  How should I Decide which Product to Manufacture?

76.  How can these Costing Methods Help in Decision Making?

77.  How much do I have to Produce before I Start Making Profits?

78.   Are there Other Costing Methods MORE SUITABLE TO MY

BUSINESS CIRCUMSTANCES?

Chapter 11

79.   Books of Accounts - A Quick Recap

80.   What are the Sources of Bank Financing?

81.   What Types of Financing are Available to Businesses?

82.   How are Payments Made to the Financing Bank?

83.   Using Long Term Financing to Your Advantage

84.   Some Facts to Keep in Mind!

Chapter 12

85.  Books of Accounts – A Quick Recap

86.  Employees are Important for a Business

87.  What Are the Different Types of Payroll Costs?

88.  What is Included within Salaries?

89 . Maintaining Employee Records

90.  How is Salary Cost Recorded?

91.  When & How is the Tax Department Informed?

92.  What Responsibilities are Placed on Businesses?

93.  What are Overheads?

94.  Why are Expenses Accrued?

95.  What are Prepaid Expenses?

Chapter 13

96.  Books Of Accounts - A Quick Recap

97.  What are Foreign Currency Transactions?

98.  Understanding the Terminology

99.  What are the Different Types of Foreign Exchange Rates?

100. What is the Accounting for Foreign Currencies?

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