• During the last twenty years aviation business has become perhaps the most complex institution in our rapidly changing society.

• Much of its evolution has resulted from the rapid growth and structural changes of corporate world.

• The continuous upsizing, downsizing and outsourcing has forced the world to incorporate financial changes.

Introduction

• The modern aviation enterprise must conduct business in a rapidly changing and highly competitive environment.

Financial Management & Accounting Procedures

• The objective of accounting is to provide information on economics activity that is relevant to decision makers.

• Two main users of accounting information– The Internal Users, primarily the managers– The external users, the stake holders

• Two main systems of accounting– Managerial & Financial accounting

The need for Accounting Information in Business

• A firms internal accounting

information should provide data

that will enable managers to

– Plan– Assess– Control and make

– Operational decisions

Managerial Accounting

• Asset accounts• Liability accounts• Equity accounts• Revenue accounts• Expense accounts

Five categories of accounts

• An asset is any resource that permits a company to conduct business.

• Any thing owned by the company that has value

• Intangible assets are also included, which has no physical existence eg copy rights, patent and trademarks

Asset Accounts

• Assets are divided into three distinctive areas– Current assets are those that will or can, be

converted into cash within the current accounting period

– Fixed assets are resources of firm that will be used to generate revenue. These assets will not be converted into cash, like current assets, unless they are sold, damaged, or otherwise replaced.

– Intangible asset are those that do not represents physical property.

It comprises the debts of the business, that is, what the company owes.

Liability Accounts

• Current liabilities• Long term Liabilities• Obligation Liabilities

Three Sub groups

• Current liabilities are debts that must be paid during the current accounting period, usually one year. eg salaries paid to the employees or taxes paid to the Govt.

• Long term liabilities are debts that will not be paid in the current accounting period but that are still to be paid, eg loan payment for the equipment.

• Obligations liabilities under capital lease are also considered as a liability account. These are the rent agreements

Equity Accounts