SIGNIFICANT MANAGEMENT BALANCES ficant management balances (SMB) also known as intermediate balances of the management accounts (classes 6, 7 & 8 accounts) are the different balances between the revenues and the expenses permitting to bring the different phases of the net result. It is a ‘managerial indicator which is used to appreciate the management of an enterprise in an analytical perspective, SMB helps to explain how the enterprise result (profit/loss) is generated. 1- DESCRIPTION Considering the nomenclature of OHADA accounting plan, the SMB is based on the same elements found on the income statement but follows a different method of calculation. It can be calculated using absolute values or as a percentage of the net uurmuver 2- RESULT LEVELS REVEAL BY THE SMBS ~ Oper: - Financial Result (profit/loss): difference between financial income and financial expenses 1g Result (profit/loss): difference between operating income and operating expenses - Ordinary Activity Result (Profit/Loss): sum of Operating Result and Financial Result - Off Ordinary Activity Result Profit/Loss: difference between Off Ordinary Activity income and Off Ordinary Activity expenses = Net results: sum of Ordinary Activity Result and Off Ordinary Activity Result 3- CALCULATION OF SMB IN ABSOLUTE VALUES The SMBs are calculated in chained steps based on accounting information (such as the trial balance, the income statement). The table below helps in the determination of SMBs using the method generally accepted. 018 Copyright© NCHENDEH CHRISTIAN (M.Sc Finance) 674-10-16-90FUNDAMENTAL STEPS IN CALCULATING SIGNIFICANT MANAGEMENT BALANCES Purchases of goods (601) + Variation of stock (6081) Sales of| goods (701) + + Purchases of raw materials (602): Variation of stocks (6032) + Other Purchases (604 to 608) + 6033 Transport (61) + External services (62 & 63) + Taxes {Rates (64) + Other Expenses (65) Sales of finshed goods & services (702 to 707) + Operating Subsidies (71) + Owned Production (72) + Variation of stock of finished products (736) + Other Income (75) + Operating Expenses Transferred (781) esx =e Less : Personnel Expenses (66) | Operation Depreciation (684) + Operating Peowicion (681) ‘Operating Provision Written Back (791) + Depreciations Written Back (798) + Investment Subventions Written Hack (799) Finacial and Assimilated Expenses (67) + Finacial Provisions and Inpairment Losses (697) Financia Incomes and Related Incomes (77) + Financial Expenses Transfer (7871+ Financial Provisions and impairment Losses Written Bock (797) + Fnanciat protttss (136) + ff Ordinary Expenses (R148R485) ff Ordinary Revenues (82484486488) + rotors 008 03) ===! 018 Copyright© NCHENDEH CHRISTIAN (M.Sc Finance) 674-10-16-90 Less: Porsomne! Pancination (87) Income Tex (89) +STEP 1: GMG=701-(601+ 6031) STEP 4: OP/L=(GOS+791+798+799)-(681+691) Dr_Commercial margins (132) _Cr Dr_Operating profitloss (135)_Cr ool 701 eal: 134 6031 ool 791 798 799 STEP2: VA Dr VALUE ADDED (133) cr 602: 132 STEP 5: FP/L=(77+7874797)-(672697) 032: 02 Dr_Financlal profivioss (136) _ Cr 6033: é 03 oF : - 7 em on 697: 787 0s: 705 SQ 608: 706 G8 ane pene) STEP 6: PIL O: C : ao ou! ws OA (37)_Cr 6: a fee TD Senn 5 64 vee 1736 cn Be 65: 75 781 STEP 7: P/L OOA=(82+84+86+88)-(81+83+85) Dr_Prof OA (138)_Cr a 22 STEP 3: GOS=VA-66 e° Bd Dr_Gross operating surplus (134) Cr 85; 86 133 88 STEP 8: NR=(137+138)-(87+89) Dr_Net res a7 "BT 89: 138 ‘2018 Copyright© NCHENDEH CHRISTIAN (Misc Finance) 674-10-16-90FINANCIAL MANAGEMENT AND ANALYSIS (OHADA) COURSE INSTRUCTOR: NCHENDEH CHRISTIAN (M.Sc; DIPET 2) Contact: 674-10-16-90 Tutorial N° 1: Significant Management Balances Question one The trial balance after inventory of Daddy-Chris Plc as at 31/12/2014 presents the following elements: Ac Balances Ne Account name Debit Credit 601 | Purchase ot goods 11.700; 5 6031 | Variation of stock of goods 4.200 602 | Purchases of raw materials ~~15.000 | : 6032 | Variation of stack of raw materials / 5.400 - 605 | Other purchases 3.000 - 6221 g of land 2.380 - 6224 | Losses on containers 2.000 6371 | Interim personnel ~~ Y 857 5 Other external services 100 : Losses on customer's debts 1.000 - Sundry expenses 1.380 : Personnel expenses 11.370 - Discounts granted 910 - Other interests 2.000 : Depreciation expenses 4.674 : Sales of goods : 25.084 Sales of finished products : 20.000 Accessory income : 90 Incomes from investment securities - 13.360 Operating expenses transfer : 240 Book value on disposal of fixed assets 500 - Income from disposal of fixed assets - 14.000 Knowing that Daddy-Chris Plc operate under the standard system, calculate the different signiticant management balances Tight@ NCHENDEH CHRISTIAN (M.Sc Finance) 674:10-16-90FINANCIAL MANAGEMENT AND ANALYSIS (OHADA) COURSE INSTRUCTOR: NCHENDEH CHRISTIAN (M.Sc; DIPET 2) Contact: 674-10-16-90 Tutorial N° 2: Income Statement and Significant Management Balances ‘The trial balance of Daddy-Chris Enterprise after the end-of-year adjustments as at 31" December 2013 is given as follows: Daddy-Chris Enterprise Trial balance as at 31/12/2013 we ELEMENTS ove a esate ioe - \ ai ing Balances 101 | Capital -| 25,000.000 ~| 20.000.000 =| 45,000.00 118 | Reserves -| 5.000.000 =] 1.050.000 =| 6.050.000 131 | Net profit -| 7.000.000 7.000.000). : : 162 | Borrowings and debts from bank -| 10,000.00) 5.000.000 |, 5 5.000.000 201 | Original establishment expenses : =| 4.000.000 =| 4,000,000 5 2441 | Office equipment '38,000.000 =| 5.000.000 | 10,000,000 | 43,000.00 - 2844 | Depreciation of office equipment =| 8.000.000) 3.100.000 5.300.000 =| 0.200.000 311 | Stock of goods 5.000.000 =]/15.500.000| 15.000,000 | 15.500.000 - avi | Suppliers, book debts =| sus) 9.0.00 | 1v.000.000 =| 1000-000 411 Customers, book debts 6.000.000] 13,000.000 | 12.000.000 7.000.000 465 | Shareholders dividend payable ~-[ =] 5.950.000/ 5.950.000 - - 571 | Cash 4.000.000 -| 59.000.000| 53.420.000| 9.580.000 a 601 | Purchases of goods LY - -| 20,000.00 =) 20,000.000 5 6031 | Variation of stock of goods ND : =| 15.00.00] 15.00.00 =| 5.00.00 6052 | Other purchases-electricity : =| 600.000 =| 600,000 : 6281 | Telephone expenses > =| 720.000 =] 720.000 5 6462 | Stamp duties > =| 4.000.000 4,000,000 > 661 Personnel expenses : =| 2.400.000 | =) 2.400.000 | : 671 | Interest on borrowings : =| 750.000 =| 750.000 : 681 | Operating depreciation : =| 5.300.000 =| 5.300.000 - 701 | Sales of goods : 5 =| 32.500.000 -| 32,500.00 781 | Operating expenses transfer : : =| 4.000.000 =| 4.000.000 812 | Book value of disposal of assets - =| 6.900.000 =| 6.900.000 : 822 Income from sales of assets - - 7.500.000 =| 7.500.000 = TOTAL fevocu neo iter coneea) 39222000] 39222008 129375000] 119.750. ° WORK REQUIRED In accordance with the OHADA law and in conformity with the standard system, prepare the following financial statements of Daddy-Chris Enterprise as at 31° December 2013 a) Present the significant management balances b) Profit and loss account using financial tablesFINANCIAL MANAGEMENT AND ANALYSIS (OHADA) COURSE INSTRUCTOR: NCHENDEH CHRISTIAN (M.Sc; DIPET 2) Contact: 674-10-16-90 Tutorial N° 3: Income Statement and Significant Management Balances The trial balance after inventory of Daddy-Chris Plc (tax card N° M040967410169R) as at 31/12/2014 presents the following elements: AIC Balances 5 Account name N Debit Credit 601 | Purchase of goods 29,500.000 Ww - 602 _ Purchases of raw materials 6,000,000 605 | Other purchases 1,000,000 - 6221 Hiring of land 1,240,000 6224 | Losses on containers 1,000,000 6371 Interim personnel 585,000 645 Tax and rates 300,000 - 647 _| Fines and penalties 1,500,000 - 638 Other external services 200,000 651 Losses on customer's debts 2,000,000 - 658 | Sundry expenses - 1,220,000 5 66 _ Personnel expenses NA 31,000,000 - 673 Discounts granted TN” 110,000 674 Other interests 2,900,000 - 681 Depreciation expenses 4,600,000 701 Sales of goods Ss” =| 36,800,000 702 _ Sales of finished products =| 25,000,000 736 | Stock variation of finished products - 4,350,000 707 Accessory income : 600,000 774 Incomes from investment securities -| 13,700,000 781 | Operating expenses transfer = 2,400,000 812 | Book value on disposal of fixed assets 5,500,000 . 822 Income from disposal of fixed assets =) 19,000,000 831 | Expenses recorded OOA 880,000 : |\845 | Gifts and donations received - 4,500,000 891 | Income tax tor the financial year 3,875,000 “The situation inventory situation is as follows Elements | Stock on 01/01/2014 | — Entries, Exits Stock on 31/12/2014 Goods 10,000,000 29,500,000 | 15,500,000 > Raw materials 34,000,000 6,000,000 ? 16,000,000 Work required 1-Complete the inventory situation 2- Present the significant management balances 3-Present the income statement(standard system) using appendix 1FINANCIAL MANAGEMENT AND ANALYSIS (OHADA) COURSE INSTRUCTOR: NCHENDEH CHRISTIAN (M.Sc; DIPET 2) Contact: 674-10-16-90 Tutorial N° 4; Income Statement and Significant Management Balances The extract of a trial balance of Fosoh and Sons Enterprise is presented on the 31/12/2003 as follows: alc — Movements Closing Balances N Dr cr Dr cr 6010 | Purchases of goods 49.020| 1.776] 47.244 WY 6031 | Variation of stock of goods 10.300) 11.440 -| 41.140 6033 | Other stock variation 700; 700 - - 6047 | Purchases of office supplies 2.680 76| 2.604 - 6231 | Multi risk insurance premium 1.700 -| 1.700 : 6412 | Patent, license and other tax 3.234 -[ 3.234 - 6591 | Provision for short term risk 1.000 ~ {1.000 - 6593 | Provision for stock 100 100 6710 | Interest on borrowings 1.700 -| 1.700 : 6811 | Depreciation of deferred charges 100) a 100 5 6813 | Depreciation of fixed assets 2.540, - 2.540 - 6972 | Provision for financial fixed assets 1.400 -| 1.400 : 7010 | Sales of goods 7 -| 76.014 -| 76.014 7073 | Accessory products 1.600 e 1.600 e WORK REQUIRED Following the standard system of closing financial statements, 1-Present the significant management balances 2-Present on the 31/12/2003 the profit and loss account. (Appendix 5 to be handed in with your answer sheet).Case study: ereakthrough enterprise, P.O Box 67410, Douala Bonaberi; tax payer's number 237674101690 Using the data below, present the significant management balances and income statements of the enterprise. Breakthrough Enterprise Trial balance after inventory as at 31/12/2014 alc Opening Balance ‘Movements Closing Balances, Nn ELEMENTS. Or cr Dr or Oe er 101 Capital | 162-400-00 -| 7.900.000 -| 170.300.000 2021 | Deferred charges 12,000.00 : =| 3.000.000 9.000.000 : 244 | Office equipment 1116.000.000 = |71.850.000| 7.000.000 | 180.850.000 : 245. Transport equipment 145,000.00 > - =| 145,000.00 - 261__ Investment equity - =| 4.000.000 =| 4.000.000 5 275 Deposit and caution 10.000.000 ~ | 5.000.000 =| 15.000.000 : 2844 | Depreciation of office equipment ~| 1.600.000 | 1.050.000 |" 11.600.000 =| )22.150.000 2845 | Depreciation of transport equipment =| 29.000.000 | 28.000.000 | 8.000.000 311 _ Stock of goods 1.148.000 5 zi =| "1.148.000 5 321 | Stock of raw materials 2.552.000 ~/ 3.103.000] 2.522.000/ 3.103.000 - 331__Consumable materials 640.000 - 345.000 640.000| 345.000 : 3351 | Disposable containers E = 300.000 =| 300.000 : 3352 | Recoverable containers 3.000.000 - -| 120.000 2.880.000 : 361_ Finished products - = 701.000 =| 701.000 5 5 110,310.00 401 Suppliers, book debts - 0 29.977.160] 31.404.070 -| 111.736.910 4409 | Suppliers, hills payable : 7 =|) 5a7 760 =| _5a7 740 4094 | Suppliers claims on containers ~ 18.000 18.000 : : 411_ Customers, book debts : = 1.520.000] 1.035.000/ 485.000 : ‘4194 Customers, debts on containers - =] 4.200.000] 1.200.000 : : 448 _ State, accrued expenses - =| 2.402.020 =| 2.402.020 - 485 _Debts on disposal of assets e =| 4.000.000 =| 4.000.000 = 502 _ Investment securities E = 4.000.000 =| 1.000.000 : 521 | Bank 20,000,000 - -|_17.624.000| 2.376.000 : S71 Cash 3.000.000 =| 44,630,000 | 47.251.700| 378.300 5 601. Purchases of goods 7 = _4.272.400| _284.800| 3.987.600 : 602 Purchases of raw materials > ~ | 20,000.00 =| 20.000.000 - 6031 | Variation of stock of goods - = 3.583.000| 4.220.000 -| 637.000 {6032 | Variation of stock of raw materials : =| 2.200.000] 2.985.000 =| 785.000 6033 | Variation of other stocks > =) 1.082.000|"_763.000/ 319.000 - 604 _ Purchases of other supplies : = 1.102.500 =| 1.102.500 : 6052 Electricity E =| 2.545.000 =| 2.545.000 : 6081 Purchases of disposable contai E =| $80,000 =| 880.000 - 611_ Transport : = 220.000 =| 220.000 : 6225 | Hired containers E = 500.000 =| 500.000 : 631__ Bank charges - ~ 588.550 =| 588.550 : 6464 | Windscreen license - = 300.000 =| 300.000 - 647 Penalties and fines : =)_150.000 =) 150.000 : {6582 | Donations (gifts) : ~ | 200.000 =| 200.000 : 661 _ Personnel expenses - =) 15.000.000 =| 15.000.000 - 681__ Operating depreciation : = 40,600.00 =| 40,600.00 5 701__ Sales of goods E E ~|__4:150.000 ~|__4150.000 702 _ Sales of finished goods - - =| 91.630.000 | 91.630.000 707 | Accessory revenues 5 5 =| 165.000 =| 165.000 736. Variation of finished products - - =| 701.000 =| 701.000 773__ Discount received E E E 18.300 E 18.300 781 | Operating expenses transfer =| 120.000 =| 120.000 812_Book value of disposal ot assets : ~ 5.950.000 =| 5.950.000 : 822 | Income from sales of assets = = =| 4.000.000 =| 4,000,000 TOTAL 313.310.000 | 313.310.000 269.939.630| 269.939.630 _464.980.970| 464.980.9370