August 18, 2015August 19, 2015 Fareed Siddiqui

How to learn and Improve Accounting skills

Financial Accounting, in simple terms, is the process or work of keeping financial accounts. In a broader sense, accounting is defined as being the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character and interpreting the results thereof.

Financial Accounting is so important that it opens doors in every kind of business. However, it is not just confined to business only. Accounting is important to anyone who deals with money. In this way, learning and improving accounting skills is not much less important than it is for professional purpose. At this point, it is appropriate to mention some of the basic accounting skills: They are as follows:

Understanding about the basic accounting equation
Being familiar with accounting terms
Passing Journal entries
Making Reconciliations
Problems solving ability
Financial Reporting

There are several benefits that you can extract from learning and improving accounting skills. One of the most important benefits of accounting is that it helps you to analyze financial information using the strong knowledge of accounting, so that you may arrive at effective decisions in terms of money. Moreover, it enables you to keep track of your income and expenses – preparing income statement, while aiding you greatly to determine your financial position at a point in time in the form a statement called balance sheet.

Regardless of the reasons, whether it is for professional or personal purpose, anyone who is interested can improve accounting skills. if you want to learn accounting and attain the level from where you can further enhance your skills successfully, then, you may find this article with presentation helpful. Here are some ways you can learn and improve your accounting skills.

In order to get general overview of basic accounting principles and concepts, it is better to buy a book that provides explanations and examples. Books written for absolute beginners are helpful, such as accounting for dummies. It must be noted that publishing such books is generally intended for those who have no prior knowledge about the concerned subject and to help the readers improve their skills appropriately.

Remember that teachers matter – Nothing can replace a good teacher. The importance of an effective teacher or a tutor cannot at all be ignored. The Problems that seem to be difficult can turn out to be easy under the guidance of a well experienced and effective teacher. It’s therefore advisable to take an accounting course or classes that you may learn effectively and efficiently.

Accounting is based on a double entry system which means every financial transaction has two effects involving two different accounts. It further indicates that every transaction which is recorded in accounting records must have two journal entries: a debit and a credit that in turn leads to satisfy the equation: Assets = Liabilities + Equity

Being conceptually good is a good way to improve your accounting skills. The concept of debits and credits is actually the most important thing to get mastery over. A debit is a financial entry on the left side of the T-account which either increases an asset or expense account, or decreases a liability or equity account, whereas, a credit is also an entry shown on the right side of the T-account that either increases a liability or equity account or decreases an asset or expense account. However, understanding well the rules of debits and credits will strengthen the basis and let you improve further in a successful manner.

In addition, it is very important to apply your knowledge practically whenever it is necessary. This will enable to find where you are wrong and what else to be done to bring more improvements in the process of learning and improving your accounting skills.

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Written by:
K. A. Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Blogger, Software Developer
BBA, MBA-Finance, MPhil-Financial Management, (MSc-Software Engineering)
(PhD-Management)
MA-English, MPhil-English
Post Graduate Diploma in Computer Applications and Programming
Certificate course in English language proficiency
Level 1 – Leadership and Management ILM – UK
Pursuing CMA-USA
Individual Member of Institute of Management Consultants of India

August 16, 2015August 16, 2015 Fareed Siddiqui

The Importance of Payroll Accounting System

Payrolls are said to be the lifeline of any organization. It is defined as a list of a company’s employees and the amount of money they are to be paid for the services they provide during a particular period of time. One of the most important tasks in running or managing a business is completing the payrolls in a timely manner and yet maintaining accuracy and reliability.

Payroll accounting, having its own value and importance, is a particular accounting discipline which is concerned with recording the compensations: salaries, gross wages, commissions and bonuses of the employees. In this way, payroll accounting is one of the most essential functions of the accounting department within an organization.

It must be noted that this specific accounting discipline is not as easy as it may seem, but a complex one, as it significantly affects the net income of the company. Since it is the sum of all financial records pertaining to the employees’ salaries, wages, deductions and bonuses, it is of course very important for the employees as well. Any issues with regard to the payrolls can lead to create dissatisfaction among the employees – which in turn may result in to affecting a company’s reputation. Hence, there is a need for having a particular payroll accounting system through which all the process may be done effectively and efficiently.

Not all systems may be incorporated with the payroll process that is done automatically. However, in general, the payrolls are processed and formulated in the following ways:

Adding new employees
Collecting timecard information or processing attendance of the employees
Making adjustments or Entering changes including deductions
Calculating taxes or other payments
Processing wages or dues accordingly
Generating Financial Entries according to the cost centers
The final task is to distribute each employee’s net pay which can be done in different ways such as, mailing checks, making deposits, making prepaid debit cards or distributing cash personally to the employees.

Though, to all appearances, the payroll processing task seems to be easy or mundane, but in reality, it is not. There are several aspects and complexities involved in it, unless the whole process is done by the concerned staff carefully and efficiently. It requires plenty of time and patience of the employee who is assigned to perform the payroll task. Payrolls should be processed, reviewed and validated in a careful manner, otherwise, a little negligence on an accountant part, can cause a company to reap harsh consequences.

As there has been a revolution in most areas of business management, so it goes with payroll processing and its accounting system as well. The need and importance of payroll accounting system cannot be ignored. Payroll processing software makes the task easier and less time consuming. It would thus be a wise decision to implement payroll accounting system, so that the basic tasks may be done in a way as needed, while the accuracy and reliability in the tasks may be maintained well.

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August 14, 2015August 15, 2015 Fareed Siddiqui

How to enrich your English Language Vocabulary

Improving your English language vocabulary is one of the most important things to do in today’s world. Since maintaining good relationships with others is important and good communication is the at the heart of good relationships, it is of great importance to develop your vocabulary in such a way as to communicate conveniently. In addition, a strong vocabulary is of great help and assistance professionally. You can carry out your job duties in a way as needed based on your communication skills. If you ever think how you can enrich your English Language Vocabulary, you might find this article helpful. Here are some ways in which you can enrich your vocabulary.

Reading has a lot to do with the process of improving your vocabulary. If you want to develop your vocabulary skills, it is important that you get into the habit of reading. If you haven’t yet acquired this habit, then it’s now time to do so. The more you read, the more things you will know. There is a great saying of Francis Bacon about reading, “ Reading maketh a full man; conference a ready man; and writing an exact man.”

In addition to making the habit of reading, it is also advisable that you keep a note book with you so that whenever you encounter a new word, you can jot down and find its meaning according to your convenient time. It is better to note down the words alphabetically, so that you can find them easily.

The importance of using dictionary to know and understanding the meanings and referring to thesaurus (A book that lists words in groups of synonyms, antonyms and related concepts) to find synonyms and antonyms cannot be denied. Keep a dictionary and thesaurus handy that you can gain new words every day.

Learning a word a day, goes the long way. Though you can try to learn as many words as you can, but even if you learn a word daily, your vocabulary will be improving each day considerably. In this way, you will have increased your vocabulary to a reasonable extent in course of time.

All work and no play makes jack a dull boy, so it goes with a person who is engaged all the time. Vocabulary building should not be confined to only one activity, reading or writing. It is better to get out and have fun. How much better it would be if you had something to play for fun and that could help you fulfill your purpose as well. Yes, there are lots of vocabulary building games out there, you can make use of them.

As it goes in these words of Johann Wolfgang Von Goethe “Knowing is not enough; we must apply. Willing is not enough; we must do.” It is important for you to make your vocabulary practical. Making practical and effective use of the words that you have gained in course of time, will be much advantageous to strengthen your vocabulary. One of the best ways is to keep yourself engaged in conversation with other people. This way will not only help you broaden your vocabulary, but will aid you greatly to discover new words.

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Written by:
K. A. Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Blogger, Software Developer
BBA, MBA-Finance, MPhil-Financial Management, (MSc-Software Engineering)
(PhD-Management)
MA-English, MPhil-English
Post Graduate Diploma in Compter Applications and Programming
Certificate course in English language proficiency
Level 1 – Leadership and Management ILM – UK
Pursuing CMA-USA
Individual Member of Institute of Management Consultants of India

https://www.youtube.com/channel/UCVjRXVpHe4W8X9KUTTrkkCQ

August 13, 2015August 13, 2015 Fareed Siddiqui

Steps to boost your Self-esteem

“Never be bullied into silence. Never allow yourself to be made a victim. Accept no one’s definition of your life, but define yourself.” – Harvey Fierstein

Self-esteem is your confidence in your own merit as an individual person. In sociology and psychology, self-esteem reflects a person’s overall subjective emotional evaluation of his or her own worth. It is a judgment of oneself as well as an attitude toward the self. Improving your self-esteem is one of the most important things that you can do to improve your life and live life satisfyingly.

Remember that you can be either, the winner or the loser, as it all depends on how you think and you react. If you think positively, chances are that you can be winner. The power of positive thinking cannot be denied. Talk positively always. It is better to be with those who talk positively. Negative thinkers can not only discourage you, but can make you sick.

Comparison is not good for judging the people. So, it goes with you too. Don’t compare yourself to others. As it goes in the words of Bill Gates, “Don’t compare yourself with anyone in this world. If you do so, you are insulting yourself.”

Get into exercise habit. If you become an exercise addict and you stick at it, you can not only improve your mood, but also immune system helping you to reduce the risk of developing chronic diseases. Exercise can have a positive effect on your self-esteem.

One of worst things that does not let you improve your self-esteem is to strive for perfection. Striving for continuous improvement is far better than striving for perfection. In the former case, you can develop your self-esteem positively, while in case of latter, you can lose your hope. It is worth mentioning what has been said by Vince Lombardi, “Perfection is not attainable, but if we chase perfection, we can achieve excellence.”

That which gives you pleasure is a good thing to do to improve your self-esteem. Spare time to do things that suit your interest best, so as to be happy and to get personal fulfillment as well. Such as reading, writing, drawing or painting, learning a language, educating yourself more. It’s not only a good way to increase your self-esteem, but a good source for overcoming your boredom – in case you feel it.

Celebrate successes even if they are small. They may be simple but can brighten your days. The little satisfying effects can enhance your positive energy. Simple pleasures can help you beat your strain and stress leading to increase your self-esteem day by day. Simple pleasures can make you feel better and make your life worth living.

It is worth mentioning what has been pointed out by Ayn Rand, “The man who does not value himself, cannot value anything or anyone.”

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August 5, 2015August 5, 2015 Fareed Siddiqui

The need and Importance of Grammar in Business Communication

“A man’s grammar, like Caesar’s wife, should not only be pure, but above suspicion of impurity.” – Edgar Allan Poe

Grammar may be simply defined as a system of rules that defines the grammatical structure of a language. It’s a study of what is to be preferred and what avoided in inflection and syntax.

In a broader sense, grammar can be defined as the whole system and structure of a language or languages in general, usually taken as consisting of syntax (the ordering of and relationship between the words and other structural elements in phrases and sentences) and morphology (the structure of words in a language, including patterns of inflections and derivation) and sometimes also phonology(the study of speech sounds) and semantics(the study of meaning in a language).

Grammar is very important within the English language. In today’s fast paced world, everyone seems to be too busy to look for effective ways to improve grammar skills, while they look for short cut methods, but the importance of learning grammar and improving grammatical skills cannot be underestimated. It’s also true that a language can be learnt through the ways in which it is used on day-to-day basis, but learning or enhancing grammar skills has its own value and importance and benefits.

There can be a number of problems caused by incorrect grammar. Poor grammar is a major reason for students not to score well on their exams. As regards the working people, poor grammar skills can result in negative consequences. In addition to create misunderstanding in communication, bad grammar skills don’t leave a good impression on others. Hence, whether it’s general English communication or communication in business English, grammar has its own place and importance.

Business English is English language specifically related to international trade, commerce and industry. It’s a part of English language which is used to fulfill various purposes. To put it simply, business English is English communication for business or work. Business English is used for various occasions, such as, business meetings, professional presentations, seminars, conferences, workshops, emails, newsletters and telephone conversations. So, the communication in business English for employees or businesspersons primarily depends on correct use of grammar. Correct grammar aids you greatly in planning and creating your sentences with the clarity of thought, so that you can convey your message appropriately. It’s on the basis of good grammar skills effective coordination process can be established which in turn leads to achieve the business goals and objectives in ways that are needed or desired.

In an ideal world, based on your good grammar skills, you cannot only put your point across and that your voice may be heard and accepted amongst people, but also you can produce a good impression about yourself. More to the point, good grammar skills can help you improve the way you communicate by guiding you and developing your style of speaking and writing. And indeed, that is what is needed in today’s world of business. Thus, It’s not just putting emphasis on the importance of grammar, it’s a fact that basic grammar is the necessity and a foundation for effective communication.

Remember that “the quality of your communication is the quality of your life.” And the quality can be well maintained based on certain things that are needed as prior condition, and one among them is to have good grammar skills.

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July 31, 2015July 31, 2015 Fareed Siddiqui

Things to do to improve your Self esteem

“The more you work at just being yourself, the more likely you’ll feel purposeful and significant in your life.” – Wayne W. Dyer

The ways leading to happiness and a better life are within your grasp. You too can find them as others have done providing you proceed with an assertive approach and continue with motivational development.

It must be borne in mind that one of the most important factors to happiness and well-being is self-esteem. A person who has confidence in his own merit and feeling of being happy with his own character and abilities is a person who has self-esteem.

Building or developing self-esteem is finding happiness and achieving success. And finding happiness and achieving success eventually leads to living a better life. Every person as an individual who wants to measure well-being and find happiness should seek the ways that are relatively important. Here are some important ways in which you can build and improve your self-esteem.

At the outset, one of the most important things to do is that you should love yourself if you don’t do it. If you do it, then, you need to do it more. As much your love and affection you think others deserve, as you deserve your love and affection too. The more you love yourself, the more you improve yourself. It will allow you to discover more abilities as well as fallibility or weaknesses. In case of former you begin strengthening them, while the latter aids you greatly in correcting them or finding ways of turning them in to your strengths. It would thus be of great help in finding happiness within you based on your developed self-esteem.

It must be noted that one should not be discouraged if one finds weakness in some aspects of life. Such as, poor communication skills, inadequate or no education, lack of social skills etc. But, one should try to improve them, because life is a continuous learning process and experience.Remember that education has no boundaries and neither does it have any age limit. Each and every human being, irrespective of his age or gender,has a right to be educated. It’s therefore never too late to learn something new.

Regardless of the ways, it is advisable that you attain a reasonable educational level. Attaining education in itself has an immense value to give you value in the society and aid you in gaining more confidence. Increasing general awareness and knowledge and education are the key elements to building or enhancing self-esteem. An educated and well-informed person can not only make wise decisions in every aspect of life, but also carry out a successful conversation with relatives, friends, acquaintances and maintain better social skills.

Without being hesitant and without thinking what others would think of him or her, one shouldn’t be held back, rather, one must cultivate the habit of speaking up boldly and with intellect. In this way, the awareness, knowledge and education that you attain will help you deal with people successfully.

The way you look matters, as it makes others see you accordingly. The way you dress up reflects your personality indicating your tastes, ideas, interests and ambitions. Poor dressing sense not only intervenes in your way of developing confidence but also leaves a poor impression on others. Since you are working on developing your self-esteem, you need to discover and wear the dresses that suit best your personality. In this way, it’s better to find ways to develop your clothing personality that helps you extremely in building and developing your self-esteem.

It’s true that in some spheres of life, especially as regards employments and professions, the body image, facial features and height matter, but they should not be considered as warning signs of low self-esteem – based on poor or below average body image. Rather, it must be borne in mind that self-esteem is not related with how one looks, but it is about how one’s outlook is and how one feels about oneself and that must spell one’s talents and genius in order to develop self-esteem. So, the self-esteem that you improve will ultimately lead you to find ways to lasting happiness and measuring well-being.

Finally, I would like to mention the saying of an anonymous writer which is noteworthy and It can help you improve your self esteem, “Make sure you don’t start seeing yourself through the eyes of those who don’t value you. Know your worth even if they don’t.”

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July 31, 2015July 31, 2015 Fareed Siddiqui

Basic skills and traits of a good trainer

“Those who know, do, those that understand teach.” – Aristotle

It is undoubtedly true that Knowledge is the power to success. And every person who is knowledgeable can lead a successful life both financially and socially. When knowledge is used in teaching or training, it plays a larger role. Since new knowledge and skills is dependent on pre-existing knowledge and skill, teachers or trainers are of great value and importance. Their role involves more than standing and lecturing in front of a classroom. It would be appropriate to mention that they play a significant role in the development of learners. They are not just facilitators of learning process or leading discussions, but are considered a major source of inspiration and encouragement. Not only do they create an environment which is conductive to both teaching and learning, but also give students the reasons to excel in what they need to do and to make them strong candidates. Thus, in order for a trainer to succeed in his role, the following some basic traits and skills are important.

As the saying of Sir Francis bacon goes, “The more one knows, the more one will be able to control events.” Those who impart training and development programs can deal with teaching situations successfully based on their solid educational background, understanding and awareness. For them, knowing the subject fully is being able to train the learners successfully.

There are several attributes and skills that help trainers provide training and ensure understanding. Some of the important ones are: Excellent knowledge of the subject and relevant experience, effective communication skills, organizational skills, integrity, social skills and time management skills.

A good and well-experienced trainer provides valuable services to a business organization or an Institution by developing employee oriented programs and making better employees.

His way of teaching with his particular methodologies being designed is so beneficial to the students that they can not only develop themselves in terms of what they need, but also can lead themselves to a level from where they can find their own ways for professional growth and development.

He holds relevant qualifications and required skills and experience to train and energize the employees in an effective and efficient manner. Since learning from a person who can provide specialist training is of great assistance to the students in fulfilling their purpose, it is to be proven under the guidance of such knowledgeable trainer. It is his quality of teaching that causes credibility and helps students gain confidence in them being convinced with the methods he adopts to impart lectures.

Having been associated either with his innate abilities or the acquired ones adding greater importance to his personality, he imparts his lectures in such a manner that before the students want to clarify any doubts they are cleared. A unique way of giving examples and providing case studies while implementing particular strategies to make the students understand the whole course module successfully creates great interest for students to attend the lectures regularly, while his art of articulation motivates them to be more desirable of gaining more knowledge and understanding and insight.

The way he imparts training is effective to help the attendees in gaining the required knowledge and in developing the required skills that are practically applicable in their work. His teaching methodologies are thought through and comprehensible that all that is needed to learn can be learnt conveniently and effectively. Since the purpose of providing training and development programs to employees is to enable them to perform better and to achieve business objectives, a good trainer is of great importance to do so. It’s through the training that they employees are enabled to perform better and and produce expected results.

A good trainer is a valuable asset to the institution or a firm which he belongs to. He is capable enough for designing the course curriculum or manual successfully. He gets the students completed the specific designed courses through is valuable lectures and training methods that in turn leads to create the zeal and enthusiasm in students causing the institution to increase a good reputation both in the short term as well as long term.

As final point, it must be noted that having thought of going in to teaching or training seems easy outwardly, but the practical aspects relating to it are not that easy as it may seem, as they involve hard work, patience, people management skills, excellent presentation skills and the perfect knowledge of the concerned subject with an ability to make lesson plans and making the lessons more interesting based on the high level of creativity to make the whole learning process interesting. It is worth mentioning what has been pointed by Albert Einstein, “It is the supreme art of the teacher to awaken joy in creative expression and knowledge.”

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July 29, 2015July 30, 2015 Fareed Siddiqui

Some ways to take care of yourself when you have depression

“To dwell on the things that depress or anger us does not help in overcoming them. One must knock them down alone. “ – Albert Einstein

Feeling truly good about yourself is a good way to fill your mind with confidence and feel energized naturally. Bringing pleasure, it keeps you engaged in what you do. Feeling better, on the one hand, will make you love yourself, on the other hand, it will aid you greatly to lead out of the dark side of life saving you from getting the blues from time to time, while providing a long-lasting self-esteem. Thus, there is a significant link between how you feel and your sense of well-being.

This is true with every individual that he or she wants to be self-sufficient in every aspect of life, and so everyone wants to be happy always, but things don’t happen the way they are hoped to. Life does not always feel the same, it’s filled with happiness, sadness, tears, smiles, laughter including other emotions. You don’t have forever to be the same person you are. Hence, finding a happy balance in your daily life is a great way to live a satisfying life and overcome negative mind-set including depression. Here are a few ways to combat depression.

Depression is a state of unhappiness and hopelessness. It’s a common mental disorder showing symptoms such as persistent feeling of hopelessness, dejection, poor concentration, lack of energy, inability to sleep and sometimes suicidal tendencies. It’s a state of low mood and aversion to activity that can affect a person’s thoughts, behavior, feelings and sense of well-being.

Being depressed makes a person feel helpless, so, it is far better to feel better. And making yourself feel better or putting you in a better mood takes time. One cannot get there unless there are some positive changes made in life. So, for people struggling with depression, it is important to make some life style changes.

The beneficial effects of exercise and physical activity are indisputable. Regular and recommended exercise methods can be an effective way to treat depression serving as a distraction from stressors. As regards diet, there is no magic diet that you need to eat in order to beat your depression, but yes, eating healthy food would of course be a good cause to alleviate your depressed mood.

Getting enough sleep is a vital part of our life to keep us healthy both physically and mentally. If you want to be at your best or improve your well-being, you need 7 to 8 hours of sleep each night. It is much better to aim for 8 hours of sleep. It must be noted that too little sleep can make depression, while the right amount of sleep helps you overcome depression. This way will help you relax and energize you.

One of the most important things to do to beat depression is to combat negative thinking. It should be noted that a negative frame of mind does not allow one to come out of depressed state of mind. Negative thinking will not only drain the energy out of a person, but it will greatly contribute to depression leading him or her to de-motivation. One of the effective ways is to jot the instances of negative thinking, so that you can bring changes in your life accordingly to cope with depression.

Almost everyone has the blues at one time or another in life. There is no escape from depression. The need is to learn how to overcome depression. Everyone has sad feelings sometimes, but this feeling does not last long.True, there is no predictable schedule for grief, but there may be healthy ways to cope with loss. When you are depressed, you should not feel that your life is not worth living or thinking about hurting yourself or attempting or committing suicide. Neither should you think that it’s the end of life. According to experts, it is quite natural to feel sad, scared or even to be anxious about death. But it does not at all mean to see everything at its worst or having scary thoughts about ending your life. Since one of the features of depression is pessimistic thinking, changing your thinking will be of great benefit. Whenever you are feeling down, depressed or desperate, start challenging your negative ways of thinking. As your thoughts begin to change, you will begin to feel better. This way, you will have succeeded in getting out of depression.

The things that you like to do and enjoy doing have a great impact on your happiness or personal fulfillment. If you feel depressed, doing something new or things that you take pleasure in is a good way to brighten your days. Besides getting simple pleasures that life has to offer including general feeling of happiness and well-being can create a calming energy and lift your mood that in turn helps you to naturally fight depression. Learn to take time to sit down and enjoy each and every moment of life. You need to remember that life only comes once, you should enjoy it to the extent at which you are satisfied with. As it goes in this saying, “Slow down and enjoy life. It’s not only the scenery you miss by going too fast-you also miss the sense of where you are going and why.” -Eddie Cantor

It must be noted that depression is a normal part of life and affects about one in 10 of us at some point of time in life. However, there are different types of depression and each type of depression has different treatment approach. If you are depressed much of the day, you don’t feel hopeful or happy all the time or face chronic unhappiness; if the depressed state persists and deepens and you don’t find any obvious reason, it is advisable to consult with your doctor to make an accurate depression diagnosis and find remedies accordingly. There are lots of effective treatments and health professionals who can help people with depression.

Finally, I would like to mention that it’s good time to turn to the one who is the very source of healing and who does control everything, God Almighty, to find healing and peacefulness in your life. “Always remember that your present situation is not your final destination. The best is yet to come.”

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July 27, 2015July 27, 2015 Fareed Siddiqui

The Contribution margin Income Statement – Why is it important?

The income statement is of great value and importance to a business, as it shows the whole story of a business transactions during a particular period of time. While it measures a company’s financial performance over an accounting period, it shows the entity’s net profit or loss incurred over a specific accounting period presenting how much money a company made and spent. It is one of the three main financial statements. The other two are balance sheet and cash flow statement.

Since it’s the traditional income statement, it is used commonly in every business entity. The purpose behind the preparation of the traditional income statement is to show the classification of costs in terms of manufacturing or non-manufacturing expenses while showing the operating results of a business thereof. In traditional income statement, cost of goods sold, variable and fixed costs, are subtracted from sales revenue in order to get gross profit figure. And then marketing and administrative expenses, variable and fixed, are subtracted from gross profit figure so that the net operating income may be determined.

However, there is an alternative format of income statement which is known as the contribution income statement- also called as the contribution margin income statement.

A contribution margin income statement is an income statement in which all variable expenses are deducted from sales to arrive at a contribution margin, from which all fixed expenses are then subtracted to arrive at the net profit or loss for the period.

In a contribution margin income statement, the computation is done in this way that the variable cost of goods sold is subtracted first from sales revenue, so that the gross contribution margin may be obtained. Then the variable marketing and administrative expenses are subtracted from gross contribution margin in order to get contribution margin. Subsequently, after the contribution margin figure is determined, the net operating income is ascertained by subtracting all fixed expenses from contribution margin figure.

Every business necessitates the process of planning and decision making. In this way, the contribution income statement is very much useful in planning and decision making process of a business entity, as it deals with the costs by behavior showing the relationship between variable costs and the fixed costs, unlike the traditional income statement, that provides the information in terms of the function of costs. It is with the help of contribution margin analysis a distinction can be made between the variable costs and the fixed costs through which the extent to which there has been contribution may be identified. The contribution margin is the excess over variable costs. That is, the amount which is available to meet the fixed costs or expense. This will help a business entity to ascertain whether it is capable enough to cover the fixed costs or not.

Since every business is interested in profit planning constantly, the preparation of contribution income statement enables managers or the concerned people to undertake the profit planning activities by providing great insights. It shows the break-even point that represents the level at which the sales revenue equals the variable costs and the fixed costs.Your break-even point is the point at which total revenue equals total costs or expenses. At this point there is no profit or loss – in other words, you ‘break even’. It must be noted that the break-even point is the amount of revenue that a company needs to generate to cover its costs and expenses. If a company has additional sales revenue above the break-even point, it indicates that it is making profits. Similarly, if the contribution margin is less than the break-even point, it means that the company is being operated at a loss. Thus the contribution income statement or the contribution margin income statement helps to calculate a company’s margin of safety enabling us to control the variable costs in order that the profitable operation may be created, while it aids greatly in determining the desired income or target income.

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July 24, 2015July 24, 2015 Fareed Siddiqui

Some Important qualities of a good manager

“Decisiveness is the one word that makes a good manager.” – Lee lacocca

A person who is in charge of running a business or somebody who is responsible for directing and controlling the work and staff of a business or a department is known as manager. Manager is a key-person to a business organization. Since the success is ascribable to the personal and leadership qualities of a manager, the following few skills are necessary for any person who manages people and who is in charge of a business or a manager.

As a manager, it’s essential for him to maintain the flow of information and make it clear and effective on the basis of acquired effective communication skills. In this way, the importance of a manager lies in the fact that he creates the skillful and balanced movement of diverse activities of the organization. He sets up better coordination among the employees leading them towards the attainment of organizational goals and objectives. It would thus be a manager by his easy and graceful conversational style is eminently fitted for the task.

In a friendly and sociable manner a manager maintains good relationships with his subordinates and others in relation to the organizational activities. He is an intermediary to collect the information from the subordinates and transmit to the top management, the desired parties, relevant people as and when needed. He is watchful about the functioning state of a business and reviews constantly, while providing the necessary information to the board of directors periodically.

He must be regarded as a true exponent to the entire organizational development and competencies. He is a good spokesperson to guide and inspire his subordinates as to how they should be working efficiently and effectively. As a dynamic leader of his team, he directs his team towards success. A Manager needs to have a fellow feeling, an awareness of having interests in common with others and feeling sympathy for the people who work for him. Those who deserve career development, he should provide the opportunities accordingly. As H.S.M.Burns says, “A good Manager is a man who isn’t worried about his own career but rather the careers of those who work for him.”

A manager needs to think rationally in order to make right decisions as and when needed. He strategizes on the basis of his skills and knowledge and experience. It is worth mentioning that a true manager thinks in the most constructive terms in order to uplift the entire organization and so he leads it towards sustainable development, competencies and unceasing success.

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