Blog 3 - Reasons to connect Jayashree @ Dakshil.com

We have heard this proverb many times but have we understood how relevant it is really? Small things matter the most….and if neglected they are going to cause really big issue in the future.

Do you agree with me on above statement? Yes, this happens.

Sometimes a small mistake or negligence of an employee , results in heavy losses to the employer.

If the employees working in Accounts department do not have the knowledge of the simple mathematical formulas, the company may be at the risk of paying out huge penalties and fines. You may find this hard to believe. But it is true.

But why does this happen? Most of the time the company does not check if the candidate has fabricated his resume ie they have given fake information nor do they ask the basic questions to check the understanding of the candidate at the time of hiring him.

To overcome this issue , I will be writing a series of blog posts to help Accounts professionals to understand some simple formulas.

It is necessary for the Accounts person to apply his knowledge, apply some simple formulas to arrive at the results and do his job. And trust me, the formulas are not some rocket science but they are simple calculations which we often do in our day to life. What is required is to put our theoretical knowledge into practice. It is just so similar to what we are already doing. For example when we buy something, we pay the billed amount to the seller, check the calculation and ensure that balance money is returned by the seller

Now let’s learn some formulas with the help of simple examples.

1). Formula to calculate closing stock qty.

Consider this situation - many times you have to submit the Production Qty data to the government / statutory tax authorities and imagine you are working as an employee in the Accounts department and you need this data but the production department is not able to give you the production qty details. How will you handle this? The statutory tax reporting requirement can’t stop because of the unavailability of data. If you do not meet the Tax compliances, the company will have to pay heavy interest, penalty / fines.

To make my point simpler, let’s see this case study –

Case study - Aaryan is a college going student. Every month his Mummy gives him some amount as his pocket money. Last month he could manage to save Rs. 100. This month his Mummy gave him Rs. 2500 as his pocket money. From this money he bought the shoes of Rs. 1500 during the month. At the end of the month he calculated the balance money & it was Rs. 1100.

If we express this in mathematical terms, the calculation would be

The point here is that we can find out any missing figure if we know the remaining values in a formula. The same thing also applies in Accounting.

In accounts there is a similar formula to find out the Closing Stock Qty or Quantity of Finished Stock or Final Product Quantity at the end of the current month. The formula is given below: –

Closing stock of previous month becomes the opening stock for the current month.

Isn’t it so simple? But the lack of knowledge of the employees may result in making the company to pay crores of Rupees as Penalty & Interest.

2). Formula to calculate material consumption:

Case study –

Mr. Dheeren runs a small factory which makes clay toys. He buys the clay and converts it into toys of different shapes. Last month, he made some toys and 100 kg clay remained unused and is there in the warehouse. In the current month he purchased 500 kg of clay and made the toys. On the last day of the month, he thought of placing the purchase order for the next month. So he thought he will check the balance qty of clay and decide how much clay he needs to buy for the next month. He found that he had 150 kg of clay in the warehouse stock.

He asked his accountant to tell him how much clay was used during this month. The accountant could not do the calculation because he was not aware of the method to do.

If the accountant knew the formula, he would have given the consumption data immediately. By now, we know that the closing stock of last month becomes the Opening stock of current month. Let’s see the formula -

Material Consumption Qty = Opening Stock Qty + Purchase Qty - Closing Stock Qty

If you want to calculate the value of material consumed the formula will be –

Value of material consumption = Value of opening stock + Purchase value – value of

closing stock.

Now we will calculate the Qty of clay consumed for our example case study –

Opening Stock of Clay = 100 kg

Add Purchase of clay = 500 kg

Less Closing stock of clay = 150 kg

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Consumption of clay = 450 kg

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Was this not simple?

As an Accountant you if you know some basic formulas, you will not have to remain dependent on anybody to solve your small problems all the time. The seniors don’t have the time to teach each and every sub-ordinate.

If you do not learn and do not improve in your job performance, you will not get the promotion or the salary increment. So do you want to see yourself working at the same salary or position for the rest of your life, while your colleagues get salary hike & promotion?

You will have to learn so that you do not make any mistakes in your job. Unless you learn how to do the things correctly, you will not even understand that you are making mistake. And if you keep on doing the same mistakes over a period of time and still manage to save your job just because the mistake got unnoticed, doesn’t mean that you were correct. The mistake will surface one day and then you will get fired.

Getting experienced in mistakes is not going to help you to grow in your career? You have to learn the correct way of accounting from some professionals only. We at Dakshil.com believe that we have the adequate knowledge and experience to help the job seekers and people aspiring for job promotion to get the required Accounting skill so that they can to do their job efficiently.

If you are passionate about your job and understand that the company also earns the money the hard way like you and you don’t have a right to suffer anybody to pay for your mistakes then the only solution is to learn and apply whatever you have learnt. This is not only required to save the employer from suffering losses but you have to learn and improve to grow in your career. Only when you perform well in your job, you will get the chance to handle next level of responsibilities and get promoted.

Do you believe that if you learn even a single new thing every day or at least every week and put it in practice, you will become successful?

If yes, then why don’t you connect with me at Dakshil.com. Here is a list of reasons to join me -