Finance And Accounting In The Media Industry Accounting Essay
Media and amusement includes a assortment of merchandises that entertains or keeps informed a day-to-day consumer. The industry is segmented into wireless, telecasting, wireless broadcast medium, etc. The competition in the media and amusement infinite is increasing twenty-four hours by twenty-four hours.
To be on the top or even to last in this extremely competitory market one has to be really efficient in pull offing the information systems.
Finance and Accounting
Relationship to Accounting: There is really small difference between finance and accounting. Both autumn under the legal power of main fiscal officer who uses a peculiar MIS to function the intent of both.
The difference lies in the sense that in finance the intent is to maximise the net income whereas the intent of accounting is score maintaining so that a base for revenue enhancement payment is prepared.
A fiscal director analyses the natural information ( provided by the comptroller about the company ‘s yesteryear, present and future ) as inputs to MIS for doing of import determinations.
Accounting is non concerned with hard currency flows. It is merely based on the recognized grosss when sale occurs. Finance is merely concerned to hard currency flows. The magnitude, timing and hazard of hard currency flows are the focal point of finance director.
Finance involves determination doing under unsure conditions and is concerned with future whereas accounting is concerned with the past records.
WHY MIS IS USED?
Large organisations have a batch of information. This aggregation of informations can non be of any usage if it is non streamlined so that informations can be retrieved easy.
MIS would assist in commanding, tracking and monitoring of informations.
Segregation of informations into faculties would ensue in faster determination devising.
Would assist in traveling paper free.
Use of MIS would guarantee the consequence as per the outlook and analysis of informations would be done easy.
SAP FOR FINANCE IN MEDIA AND ENTERTAINMENT
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Reliance Mediaworks uses SAP for functioning its fiscal jobs. SAP for Media provides trim solutions to maintain up with rapid alterations driven by the Internet, on-line publication, and digital broadcast medium.
License acquisition and surpassing royalties – Reports on accurate royalty statements are prepared utilizing SAP.
Core accounting and coverage capablenesss
Fiscal supply concatenation direction
Supply Chain Management
In 2005 Reliance ventured into this infinite and rapidly adopted the criterions required to last in this market. The twelvemonth 2005 saw the entry of new participants across all sections of the E & A ; M industry. Reliance made its manner into amusement by purchasing out ‘Adlabs ‘ and besides acquired a wireless station known as BIG FM 92.7after command for 50 FM wireless Stationss across with aggregative commands of over INR 1.5 billion. In this M & A ; E industry one can non bury the function of finance and accounting in the success way of these companies. Finance and accounting should be really efficient so that there are no statistical errors/delays. The presence of trust mediaworks is felt in Film Services: Motion Picture Processing and DI ; Visual Effects ; Film Restoration and image sweetening ; Digital Mastering: Studios and Equipment leases with installations located at US and India.
Most companies that fail in this industry have no or hold a weak information system for finance and accounting system. Finance holds the key for company ‘s success. Reliance Media works adopted a really good MIS every bit shortly as it entered the infinite. It implemented a ‘SAP ‘ made MIS and rapidly got the positive consequences of utilizing it.
Use of SAP in Reliance Mediaworks
Used for accounting intents.
Used for revenue enhancement intents.
Used for organizing general legers.
Keeping collectible and receivable histories.
Besides used for computation of assorted ratios and analyzing them.
Used for preparation of one-year and quarterly studies.
Used for puting up a fixed budget.
Fiscal accounting consists of: –
General ledger – Sap helps in pull offing a general leger for the company.
General leger keeps an history of the assets, grosss, disbursals and the liabilities of the company. At the bosom of the Financials faculty, the General Ledger constituent automates the integrating of all your fiscal information and poster to your histories – supplying the terminal point for all drumhead information in the system. From the General Ledger all the cardinal direction studies of your concern ‘ are generated, including the balance sheet, gross statement, trading history and test balance. Comprehensive bore down capablenesss and graphical coverage makes job designation and declaration simple in the extreme. The General Ledger shops information on all of your histories, including all minutess – supplying the ability to update work-in advancement, stock values, foreign currency fluctuations, debitors and creditors, so that an accurate representation of the concern ‘ fiscal state of affairs is ever presented. Flexibility is provided in the set up of your chart of histories, which can be standard of customised to accommodate the alone demands of you concern. Full integrating from the full Prism system ensures the General Ledger presents dependable, accurate and timely direction information.
Treasury Management of Assetss
Reliance has a separate faculty for the intent of exchequer direction.
This faculty invariably manages the assets and the investings that have been made by the company.
Reliance Mediaworks is invested in many bonds and common financess. The list of these investings every bit good as such other investings is maintained by SAP. New investings to be made are besides analysed by the MIS. A proviso for decline is made to recognize a diminution, other than impermanent, in the value of long-run investings and is determined individually for each single investing.
Fixed assets and depreciation / amortization
Assetss that can be equated in footings of money are known as touchable assets. Expenses incurred for up maintaining of the assets are taken into history. Depreciation on fixed assets is provided on the consecutive line method, .
Cost of movie rights comprises original purchase monetary value / minimal warrant. Cost is ascertained on specific designation footing where possible. In instance multiple movies / rights are acquired for a amalgamate sum, cost is allocated to each movie / right based on direction ‘s best estimations.
The single movie prognosis method is used to amortize the cost of movie rights acquired. Under this method, costs are amortised in the proportion that gross grosss realised bear to direction ‘s estimation of the entire gross grosss expected to be received. If estimations of the entire grosss and other events or alterations in fortunes indicate that the realisable value of a right is less than its unamortised cost, a loss is recognised for the surplus of unamortised cost over the movie right ‘s realisable value.
Liabilitiess illustrations of liability histories include histories collectible and long term debt.
Gross is recognised to the extent that it is likely that the economic benefits will flux to the Company and the gross can be faithfully measured.
Advertisement / sponsorship gross
Reliance generates its grosss from advertizements and sponsorships that it offers to assorted companies. Large Frequency modulation every bit good as some other subordinates of ‘Reliance Mediaworks ‘ like the ‘Adlabs ‘ generates grosss through advertisement offerings.
Film production and related income
The twenty-four hours the movie rights are sold, the income/revenue from movie production is registered in the book of histories.
Income from movie distribution activity
Distribution rights for a movie produced by Reliance Mediaworks, abroad rights, picture, music or orbiter rights are sold and the grosss are registered by SAP.
Film production services
Gross from treating / printing of cinematographic movies is recognised upon completion of the related processing / printing.
Theatrical exhibition and related income
Grosss are besides generated by the sale of tickets at Big Cinemas. The amusement revenue enhancement is exempted from the gross.
Interest income / income from movie funding
Grosss may besides be generated from financing a peculiar movie and so finally purchasing the movie.
Foreign currency minutess
Due to operations in assorted states, Reliance has the grosss in assorted currencies which is converted into rupees at the terminal of the twelvemonth. The difference in exchange rates may do extra gross for the company.
Expense or cost can specify as escapes from the company.
Wages, rewards, fillips, PPF, staff public assistance disbursals
Advertisement, bank charges, rent, insurance, labor charges, loss on sale, bad debts, printing and communicating, other assorted disbursals.
Other costs include involvement payment on the loans, fiscal charges etc.
Receivable accounts- : Pull offing a list of receivable histories can be really boring if done manually. This job is solved utilizing SAP which records and manages such histories. The Accounts Receivable constituent of the Prism Financials faculty reveals a 360A° position of gross revenues public presentation – the footing for accurate and effectual decision-making. Histories Receivable shops all client information, footings, minutess and balances, streamlining dayto- twenty-four hours disposal. It provides direction with full and accurate graphical analysis, projections of gross revenues, grosss and hard currency flow. Credit control installations with comprehensive diary notes and gross revenues history facilitate easy client direction. Full integrating is provided from Histories Receivable to the General Ledger and Cash Book constituents of the Financials faculty, every bit good as the Job Costing and Inventory faculties on a existent clip footing.
Collectible accounts- : Merely as we have receivable histories to enter the income so besides a record should be maintained for the outgoing payments that are to be made.
With the Histories Collectible constituent of the Prism Financials faculty you ‘ll accomplish efficiencies throughout your bill and payment procedure. By hive awaying all your provider information, minutess and balances, and supplying elaborate analysis of your purchases, Accounts Payable will turn out an priceless tool within your histories section. Staff can automatically make payment tallies and print computerised cheques and remittals, in add-on to leting multiple currencies by creditor. Extensive graphical coverage on all disbursals incurred provides direction with critical determination doing information.
Taxation- : Calculation of revenue enhancements ( gross revenues and purchases ) and coverage of the same is easy done utilizing SAP.
Income-tax disbursal comprises current revenue enhancement disbursal computed in conformity with the relevant commissariats of the Income revenue enhancement Act, 1961 and deferred revenue enhancement charge or recognition.
Deferred revenue enhancement charge or recognition and the corresponding deferred revenue enhancement liability or plus is recognised for clocking differences between the net incomes / losingss offered for income revenue enhancements and net incomes / losingss as per the fiscal statements. Deferred revenue enhancement assets and liabilities are measured utilizing the revenue enhancement rates and revenue enhancement Torahs that have been enacted or substantively enacted at the balance sheet day of the month.
Entertainment revenue enhancement is besides levied as a signifier of revenue enhancement.
Accrual accounting- : Accrual means entering gross or cost every bit shortly as they are earned and non wait for the clip when they would be settled. SAP helps in pull offing collectible and receivable histories harmonizing to accrual accounting.
Benifits to Reliance Mediaworks
The operating costs have reduced and the efficiency has been increased thereby increasing the entrance royalties.
The dealing and communicating charges have gone down drastically thereby increasing the net income borders for the company.
The cost of integrating with finance and accounting direction has cut downing and has resulted in incremental gross for the company.
Replacing manual accounting with the new system has improved the transparence and simpleness of pull offing histories.
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