ACCOUNTING BASICS FOR HR PROFESSIONALS MAY 8,

Transcription

1 ACCOUNTING BASICS FOR HR PROFESSIONALS MAY 8, 2014

2 Objectives 2 Define business strategy Identify C-Suite focus Review accounting vocabulary Define basic accounting entries Discuss accounting decisions through relevant examples

3 What does it Take? 3 WHAT DOES A BUSINESS OWNER NEED TO KNOW TO START AND TO GROW SUCCESSFULLY? PROCESS... PROCEDURES... PRACTICES... POLICIES... PRECEDENCE... WHAT DOES IT TAKE FOR AN HR PROFESSIONAL TO GET TO THE C-SUITE AND REMAIN THERE SUCCESSFULLY? PROCESS... PROCEDURES... PRACTICES... POLICIES... PRECEDENCE...

4 Business Strategy Concepts 4 A Vision A Purpose A Plan Values A Realistic Picture People who Can Means to Communicate/Market Basic Knowledge Processes and Procedures Checks and Balances Relationships

5 What is Strategic Planning? 5 A process to establish priorities on what you will accomplish in the future. Forces you to make choices on what you will do and what you will not do. Pulls the entire organization together around a single game plan for execution. Gives you a framework within which to work, clarifies what you are trying to achieve and the approach you intend to use. Provides the big picture to guide your organization.

6 A Good Strategic Plan should 6 Address critical performance issues. Create the right balance between what the organization is capable of doing vs. what the organization would like to do. Cover a sufficient time period to close the performance gap. Convey a desired future end state. Allow and accommodate change. Guide decision making at all organization levels operational, departmental, individual.

7 The Purpose for Business 7 Make a Profit and Create Shareholder Wealth

8 Accounting: What It is and What It isn t 8 Bookkeeping is the practice of recording the transactions of a business Accounting is the bookkeeping methodology involved in creating a financial record of business transactions and in preparing statements concerning assets, liabilities and operating results of a business.

9 Accounting is a TWO-STEP Process 9 Step 1 Choose the right accounts used in a transaction. Step 2 - Determine the correct amount to be used in the transaction. Chart of Accounts Assets Current Fixed Liabilities Short Term Long Term Equity Revenue Cost of Goods Sold (Direct) Expenses (Indirect) Non-Operating Income/Expenses Gains/Losses Estimates

10 The Accounting Cycle BIG PICTURE 10

11 Cash or Accrual Accounting 11 Cash basis of accounting records revenue and expenses as the business owner pays for them Accrual basis attempts to place earnings and expenses in the same month, based on a matching principle. Understanding that cash is not the same as revenue. Under accrual, revenue is recorded when it is earned.

12 Balance Sheet (Point in Time) 12 Assets = Liabilities + Owners Equity (Net Worth)

13 Sample Balance Sheet 13

14 Income Statement (Over Time) 14 Revenue - Expenses

15 Sample Income Statements 15

16 Statement of Cash Flow 16 Cash (Liquidity) Disbursements

17 Sample Cash Flow Statement 17

18 Chart of Accounts (just one more thing to know) 18 Assets Liabilities Owners Equity Revenue Expenses Cash Accounts Capital Earnings Wages Payable Utilities Accounts Withdrawal Supplies Receivable Note Repair Payable Rent Equipment Interest Automobile Insurance Building Advertising Land Training

19 Quick Quiz Performed services for a client for cash. 2. Performed services for a client on account. 3. Paid the HR staffs wages. 4. Paid the utility bill. 5. Collected cash on the account in transaction #2. 6. Paid a three year insurance policy premium.

20 How Does HR Really Impact the Numbers? 20 Pull Out Your Worksheets We will walk through a basic recruiting example to show how HR impacts the bottom line to the organization.

21 Leanne E. King, SPHR (210)