Single Entry and Double Entry Accounting

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Single entry accounting/Cash accounting. This system records only cash movement of transactions and that too up to the extent of recording one aspect of the transactions. This means that only receipt or payment of cash is recorded and no separate record is maintained (about the source of receipt and payment) as to from whom the cash was received or to whom it was paid. Double entry book keeping/Commercial accounting. Double entry or commercial accounting system records both aspects of transaction i.e. receipt or payment and source of receipt or payment. It also records credit transactions i.e. recording of Electricity Bill or accruals of Salary payment etc. This concept will be explained in detail in the next lectures but for the time being it should be noted that in cash accounting date of receipt / payment of actual cash is important while in commercial accounting the date on which the expense is caused (whether paid or not) as well as the spreading of the cost of c
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PLANNING AND DECISION AIDS-II

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1.  TECHNIQUES FOR ALLOCATING RESOURCES.

Resources are the assets of the organization and include financial, physical, human, intangible, and structural.

1)  Budgeting

A budget is a numerical plan for allocating resources to specific activities. Budgets are popular because they’re applicable to a wide variety of organizations and units within an organization.
There are four different types of budgets.
a  A revenue budget is a budget that projects future sales.
b  An expense budget is a budget that lists the primary activities undertaken by a unit and allocates a dollar amount to each.
c  A profit budget is a budget used by separate units of an organization that combines revenue and expense budgets to determine the unit’s profit contribution.
d  A cash budget is a budget that forecasts how much cash an organization will have on hand and how much it will need to meet expenses.
These budgets are based on the assumption of a single specified volume—fixed budgets. However, volume can’t be predicted exactly. Therefore, a variable budgetis a budget that takes into account the costs that vary with volume.

2)  Scheduling

Scheduling involves a list of necessary activities, their order of completion, which is to do each, and time needed to complete them. Some useful scheduling tools include the following.
a  The Gantt chart, named after Henry Gantt, is a scheduling chart that visually shows actual and planned output over a period of time.
A Gantt chart is a specialized bar chart that shows the current progress on each major project
activity relative to necessary completion dates.
a  A project is broken down into separate main activities listed on the left side of the chart.
b  The time frame is listed at the top or the bottom of the chart.
c  The duration and scheduling of activities is shown by a bar.
d  Gantt charts do not show interrelationships among activities.
e  Software packages for creating and using Gantt charts (and many other decision tools) on computer are becoming widely available.

b  PERT, or Program Evaluation and Review Technique
PERT is a network planning method for managing and controlling large one-time projects. It is a technique for scheduling complicated projects comprising many activities, some of which are interdependent.A PERT network is a flowchart like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity.
1.  All of the major activities in the project are specified.
2.  The sequences of these activities are determined
3.  A network diagram a graphic depiction of the interrelationships among activities, is constructed.
a  An activity is a work component to be accomplished, and is represented by an arrow on the network diagram.
b  An event (or node) represents a single point in time that is the beginning or the ending of an activity.
4.  Three time estimates for each activity are determined and an expected time is calculated for each activity.
5.  The critical path is the path of activities and events in the network that will take the longest time to complete
a  Delays on any activities on the critical path mean that the project will be delayed.
b  Slack is the degree of latitude about when various activities can be started without endangering the completion date of the entire project.
6.  After the project has begun, actual times for completion of each activity are collected and recorded on the PERT network so that any rescheduling and adjustments can be made as quickly as possible.

Please remember in PERT charts the followings:

1)  Events are end points that represent the completion of major activities in a PERT network.
2)  Activities,which are the time or resources required to progress from one event to another in a PERT network.
3)  Slack time is the amount of time an individual activity can be delayed without delaying the whole project.
4)  Critical path is the longest or most time-consuming sequence of events or activities in a PERT network.

3)  Breakeven Analysis
Breakeven analysis is a technique for identifying the point at which total revenue is just sufficient to cover total costs.
 
4)  Linear Programming
Linear programming is a mathematical technique that can be used to solve resource allocation problems. Linear programming (LP) is a quantitative tool for planning how to allocate limited or scarce resources so that a single criterion or goal (often profits) is optimized.

1.  It is the most widely used quantitative planning tools in business.
2.  There are optimal conditions for using linear programming.
a.  A single objective must be achieved.
b.  Attainable constraints exist.
c.  Variables are linearly related to the objective, i.e., and increase (or decrease) in the variable leads to a proportional increase (or decrease) in the objective.

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