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Accounting Finals Project Paper:

Ola-vee Advertising Corporation

Submitted by:

Jamie Mark
Czar Manglicmot
Aj Vicente
Sean Ronquillo

Submitted to:
Ms. Millie Laquindanum
Introduction

This paper aims to evaluate the chosen business, to compare and contrast the policies and
practices the researchers have learned in the classroom and apply what they have learned
throughout the course.

This will allow Ola-vee Advertising Corporation, our chosen business, to further develop our view
and perspective to the subject of basic accounting. This is also to evaluate how accounting is used
in the business industry and how we can apply the things that we have learned in the classroom to
the outside world when we are the ones eventually handling businesses in different industries. In
this report we learned that companies big or small use similar accounting practises we learned
inside the classroom but with some differences to find specific numbers.

Founded in 2000 by Mr. Odom Rodrigez, Ola-vee Advertising Corporation is one of the leading
advertising and printing solutions provider in the Philippines, as well as one of the industry’s most
recognizable brands capable of operating anywhere in the country.

Although the corporation was not built overnight, it was done from blood and sweat by founder
who was business minded and made a name for himself to make a splash in the big market. After
his success with tarps, he then ventured into the design, fabrication and installation of showrooms,
kiosk, display modules, booths, road signs, boards and murals. He is also into creating buildup
letters with LED or neon lights, standee signages and flier stands. His little printing business
evolved into a multifaceted corporation that provides top-notch Philippine-made products. Several
multi-million brands, including industry leaders such as Shangri La, San Miguel, SM Departments,
and Sonny Philippines all Advertise their products through Ola-Vee.

With a mission statement, “As a premiere advertising company our mission is to provide valuable
and timely advertising solutions to our clients by a high quality services.” Which they embody in
their work with every client they work with to ensure high quality delivery that each and every one
expects from them.

To further this study, we interviewed Ms. Ailene Magleo of Ola-vee Advertising Corporation. She
Graduated Bachelor of Science in Accounting at University of Nueva Caceres at 1995. From 1996
till this day she is still active in Ola-Vee and has been incharge of their accounting ever since.

The following pages will contain official company documents with accounting policies and
practices in them. Some of the final values will be blanked out for security purposes.

Corporation Accounting
In the Philippine’s setting, setting up a corporation needs to be accredited by Security and
Exchange commission (SEC), the Ola-vee Advertising Corporation was incorporated and
registered under (SEC) on October 6, 2011.

From what we’ve learned in school and the principles of accounting book, corporate
accounting includes cash dividends and stock dividends however based from our findings in Ola-
vee Advertising Corporation they don’t practice giving cash dividends and stock dividends to
shareholders because they don’t have shareholders. A dividend is a corporation’s distribution of
cash or stock to its stockholders on a pro rata basis. Since Ola-vee Advertising Corporation does
not have stockholders, this mean they don’t give out dividends. Based from my opinion, I always
thought that giving dividends to shareholders is mandatory in a corporation, but I’ve realized that
it’s only optional or when the company wants to give the dividends. I’ve also learned that not all
companies give out dividends because it should depend on the retained earnings and net income.

Ola-vee Advertising company implements share capital, and share capital is determined by
using the nominal value of shares that have been issued and fully paid.

What makes the practices of Ola-vee Advertising Corporation similar to the one’s in the
book is the income statement presentation, the reporting of income taxes. Ola-vee Advertising
Corporation reports income tax expense in a separate section of the corporation income statement,
before net income. Ola-vee Advertising record income tax expense and the related liability for
income taxes payable as part of the adjusting process.

Another interesting fact about the practices of Ola-vee Advertising Corporation is that they
make use of “Share Premium”. Share premium includes any premiums received on the initial
issuing of stock. Any transaction costs associated with the issuing of shares are deducted from
additional paid-in-capital. Net of any related income tax benefits.

Regarding retained earnings, Ola-vee Company follows the exact same methods that is
used in the books and from what we’ve learned in school.

Payroll

This stage will focus on seeing the difference between the lesson we learned from
accounting 2 which is how we account for current payroll, or mainly the second half of chapter 11
of the book, we gathered data on the current payroll of the company and we were able to see some
differences on how our powerpoints, lessons and the book we study slightly differ from how the
company account their payroll. Just to provide a brief introduction on payroll, payroll pertains to
2 main terms and each term having their own significance on accounting principles and companies
as well, the first term we will tackle is “Salaries”, salaries is the main definition showing to the
managerial,administrative, and sales personnel, these personnel receive salaries based on their
positions and also for some other companies, salaries is based on performance, salaries are usually
give on either a weekly, monthly or yearly rate. The second term that defines payroll is “Wages”,
wages is for store clerks,factory employees,manual laborers e.t.c these employees usually are paid
by an hourly rate, that is what differentiates them from salaries, and it is mostly by the rates of
salary and the time it is given.

Some important terms that will also be coming along the paper will be terms like “gross
earnings”, this amount is the total compensation earned by an employee, through the hours that
she/she works and also by the rate per hour, also we add the days that the employee worked
overtime, for overtime rates, it is always higher than the normal rate,for the philippine setting it is
always 25%, and the amount we gain from the overtime rate is added to the regular time. The
equation for getting gross earnings is regular hours multiplied by the rate plus the overtime hours
multiplied by rate, after adding both of these we will come with our gross earnings. Our gross
earnings is never the real amount of money we are fully able to take home, employees have
deductions, and these deductions are the full responsibility of the employee to pay or else it

could lead to legal issues and problems, these deductions are the withholding income tax,social
security systems(SSS),philhealth and the pag-ibig contribution. To give a short description for
these deductions, withholding tax is the tax given by the BIR for employee who earn more the the
minimum wage here in the philippine setting, SSS funds the retirement benefits of
employees,philhealth funds the medical expenses of employees and pag-ibig funds the home loans
or extend home loans. For all of these deductions, the expense is shared by the employee and the
employer. Gross earning minus payroll deductions is equal to net pay, net pay is the final amount
of money an employee is able to take home at the end of the month or year. The payroll will be
recorded for all the employees, payroll is essential to see the current expenses per company. The
last topic that will cover is Value Added Tax(VAT), this is a form of sales tax, it is the tax
consumption from sales,trades exchange or lease of goods. The current rate in the philippine
setting for VAT is collectively 12%. Pertaining to VAT there are also different types of VAT, one
of them is output VAT, this is the VAT that businesses charge to their customers when they
purchase or lease goods and services from the specific company, a few terms that associate with
output VAT are VAT inclusive, VAT exclusive, VAT exempt and e.t.c. , next is input VAT, this
is the VAT that a business pays when goods and services are procured for its operators. These 2
kinds of VAT are what this paper will mainly focus on for this paper.

The data we received showed some hefty differences from our lessons, one is that they
record their payroll on a weekly basis, the data we received is from the date of May 13- May 19
2019, the records we got are very recent. Another difference they have from pur lessons is how
they categorize the rates per hour, and total days worked in a week which is usually 6 days but
since it was the elections last monday May 13, the workers did not receive pay and work days was
only 5 days for this week. The sheet also has an attendance sheet and also shows the reason of
absence or reason for no work, and for monday this week it was the elections, for some others it
the attendance sheet also shows if they worked for a special time like going to work earlier, this
show if they will receive lower pay for that day. For this company sundays are not a working

and an if they do work they receive a 30% up rate for their salary for that day. Another difference
is that they have a line for cash advances, and cash installs, there is also a line for “utangs” or in
english debts that are occured, the same sheet also includes a savings account for each employee
and the company holds this until the employee needs the cash for certain use. The company also
has a chart and separate sheet for their employees salaries, the chart includes the name, net pay
and a graph that has a y axis consisting of the amount of pay, ranging from 20,000,40,000 and
60,000. A separate sheet is also used for a employees accumulated cash advances, christmas bonus
and other bonuses. The main difference between OLAVEE and our learnings is how they dont
record or have a seperate sheet for salary deductions like philhealth, pag-ibig,SSS and withholding
tax, but all of this is not recorded due to the company giving pay every week instead of doing it
monthly, instead they have a different deduction every week labeled as CA,vale and savings, these
three are deducted from the gross earnings to equal to the net income of each employee.

Mainly OLAVEE ADVERTISING CORPORATION has almost the same process as how
we do it here in school, they just use different terms or words for their salary deductions, they use
graphs to see the salary output, they record debts of employees, savings of the employees and also
the attendance per week. OLAVEE also records payroll weekly instead of monthly which made
the analysis a bit easier as the values are smaller, but the sheets and pages had more information
that we learn here and school.

Financial analysis

Having a financial statement analysis allows you to understand the a business’s or


organization’s financial situation though financial ratios and reviewing financial reports done by
the company. The results of these reports can be used to make important financial decisions such
as investment and lending decisions. This review involves identifying the trends and proportion
analysis over a series of reporting periods. Financial analysis can also be used by creditors,
investors, management, and regulatory authorities.
In terms of Ola-vee Advertising Corporation, this allows the executive to see specifically
how the company is performing financially this would also help the management to see if their
decisions were positive for the company or not. This also allows investors to clearly see what they
are investing in and if it would be a good company to invest their money in.

There are two key methods to analyze financial statements. The first method is by viewing
the financial statement through the use of horizontal and vertical analysis. horizontal analysis is
the review of the results of multiple time periods, while vertical analysis is the review of the
proportion of accounts to each other within a single period. The second method to view financial
analysis would be the use of many kinds of ratios.

These would include; Liquidity ratios. This is the most fundamentally important set of
ratios, because they measure the ability of a company to remain in business. Activity ratios. These
ratios are a strong indicator of the quality of management, since they reveal how well management is
utilizing company resources. Click the following links for a thorough review of each ratio. Leverage
ratios. These ratios reveal the extent to which a company is relying upon debt to fund its operations,
and its ability to pay back the debt. Click the following links for a thorough review of each ratio. And
finally Profitability ratios. These ratios measure how well a company performs in generating a profit.
Click the following links for a thorough review of each ratio.

As requested by Ola-vee Advertising Corporation, we can not include these ratios and analysis in
our paper but through the interview with the accountant, these are the main tools of their CEO to
see how the business itself is performing generally. As what numerous business movies says
“money talks” and through the Financial analysis, this is how money talks back at us. To tell us if
we loss or gain.
Accounting for receivables

Accounting for receivables, property, plant and equipment basically is the amount is the amount owed
to a company resulting from the company providing goods and/or services on credit The estimated
amount is reported as a credit balance in a contra receivable such as Allowance for Doubtful
accounts. Specially in OLA-VEE advertising corporation provides service to other companies as
well as installation of billboards, and signages, floor numbers, building signs, and tarpaulin and
etc….

Accounts receivable is a current asset of a company’s account that keep tracks of money that
other companies owe not just companies people or banks. A good example of this accounts
receivable is a interest receivable that some individuals usually get from making investments.

How to record accounts receivable? Based on our gathered data OLA-VEE ADVERTISING
CORPORATION during 2016 the company bought office supplies worth of 399,907.00 so you
should write that amount of 399,907.00 on the credit side of the balance sheet because its paid
credit so OLAVEE ADVERTISING CORPORATION accounts receivable increased by
399,907.00 and the company’s office supplies account decreased by 399,907.00

2017 OLA-VEE ADVERTISING CORPORATION decreased its expenses from last year’s
expenses from 399,907.00 now 255,389.00 according to the STATEMENT OF INCOME OF
DECEMBER 3. To record that expense put the amount of 255,389.00 on the credit side of the
balance sheet because it’s still paid in credit and OLA-VEE ADVERTISING CORPORATION
accounts receivable increased by 255,389.00 and the company’s office supplies account
decreased by 255,389.00.
Now by studying this its a good lesson of budgeting if you want to have a good business, yeah
owning a business like OLA-VEE ADVERTISING CORPORATION is no joke you have to make
certain sacrifices and getting new deals from every future or past clients out there because
maintaining a good business is all about paying your workers, paying your supplier, paying your
debts to other companies.

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