Financial Statement Preparation |
| GENERAL COMMENTS |
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The Dealer Financial Statement is designed for use by all dealers regardless of size. Preparation of the statement by the due date each month will be facilitated by systematic processing of accounting documents and recording of accounting entries in accordance with the instruction in the Dealer Accounting Procedures Manual. It is a primary goal of the dealership accounting process to furnish the dealer with prompt, accurate and useful information so that the dealer may evaluate the financial condition and operating results of the business as a whole and the profit contributions of its individual components. The dealer is then in a position to take any required corrective action on a timely basis. In addition, submission of accurate financial statements to Ford Motor Company by the due date of each month enables the Company to develop reliable dealer group operating averages of ruse by the dealer in comparing their results with those of comparable dealers as a further means of improving the profitability of the business. The financial statement submitted to Ford Motor Company must be prepared on a calendar-year basis, even though some dealerships have adopted a fiscal year ending other than on December 31. In addition, the month and year-to-date operating ratios should be entered on the statement. Conformity with these requirements will enable the dealer, as well as the Company, to make effective comparisons between the performance of the dealership and their group operating averages. The most efficient way for dealerships to submit the financial statement is through electronic submission by one of the C.D.S. approved vendors. Amounts reported on the financial statement would be rounded to the nearest whole dollar. Accounts recorded in the general ledger, however, should be posted in dollars and cents, and the trial balance should be in balance to the penny. Ledger balances are rounded to even dollars only when they are entered on the financial statement. Balances with penny amounts from $.50 to $.99 should be rounded upward, and penny amounts from $.01 to $.49 should be rounded downward. Thus, a ledger balance of $257.50 should be reported as $258, and a balance of $257.49 should be reported as $257. As a general rule, rounded amounts entered in the financial statement should be added, subtracted, multiplied and divided, as required, in their rounded form. As a result, totals and subtotals on the statement should equal the sum of their components as shown on the statement. Because of rounding, it is possible for totals and subtotals of amounts entered on the financial statement not to agree exactly with similar amounts derived from the general ledger where pennies are included. For example:
Minor differences of this nature on the financial statement ($5.00 or less) should be ignored. It is important, however, to make certain that the general ledger is in exact balance before preparing the financial statement. Minor differences appearing on the statement can then safely be attributed to rounding. Posting of cost of sales amounts to the financial statement is not required, and no lines are provided for these amounts. (Cost of sales can be determined by deducting gross profit from sales amounts.) The Sales and Cost of Sales ledger form has a gross profit column that may assist in determining gross profit amounts for posting to the financial statement. The four-digit account number system, described in detail in the Chart of Accounts of the Dealer Accounting Procedures Manual, provides the opportunity to add accounts as necessary to meet the needs of individual dealerships within the framework of basic accounting groups. The accounting system has been set-up to enable the dealership to create new accounts where necessary. In Departmentalization of the Dealer Accounting Procedures Manual, specific supplementary accounts are recommended. In some cases, the dealership may want to departmentalize accounts. This can be easily accommodated by changing the fourth digit of the root account number. Again, specific recommendations and examples are given in Departmentalization of the Dealer Accounting Procedures Manual. It is not necessary to add suffixes, either alphabetic or numeric, to the four-digit account number. In dealerships using electronic data processing, this system facilitates automatic print-outs of consolidated totals needed for the financial statement. The illustrated instructions on the following pages describe the preparation of the financial statement.
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