section 1 exploring the world of business (cont'd.) key terms free enterprise system profit ...

Section 1 Exploring the World of Business (cont'd.)Section 1 Exploring the World of Business (cont'd.)

Key Terms free enterprise system profit loss entrepreneur capital service business merchandising business manufacturing business sole proprietorship partnership corporation

Key Terms free enterprise system profit loss entrepreneur capital service business merchandising business manufacturing business sole proprietorship partnership corporation

The Environment of Business

In a free enterprise system people are free to produce the goods and services they choose.

The Environment of Business

In a free enterprise system people are free to produce the goods and services they choose.

Nike Outlet Store

Dell Computer Corp.

Dan’s Lawn Care

Silverado Theatres

Kroger

Rose’s Nail Salon

Bethlehem Steel

Nike Outlet Store

Dell Computer Corp.

Dan’s Lawn Care

Silverado Theatres

Kroger

Rose’s Nail Salon

Bethlehem Steel


GM Motors

Visible Changes

Hollywood Video

The Gap

Mrs. Baird’s Bakery

Century 21 Real Estate

Macy’s

GM Motors

Visible Changes

Hollywood Video

The Gap

Mrs. Baird’s Bakery

Century 21 Real Estate

Macy’s

The Need for Profit

• The amount of money earned over

and above the amount spent to keep the

business operating is called profit.

• Business that spend less money they

than earn operate at a profit.

• Businesses that spend more money than

they earn operate at a loss.

The Need for a Risk-Taker

Entrepreneurs transform ideas for products

or services into real-world businesses.


Entrepreneurship: Who Me?

Have you ever considered owning a business?

Entrepreneurship: Who Me?

Have you ever considered owning a business?

Pros You are your own boss

You create opportunities for earning money.

You create and control your work schedule.

You choose the people you serve.

You select the people who work with you.

You benefit from the rewards of your own hard work.

You choose your own work hours.

Cons You probably need to work

long hours.

You lose the security of steady wages and medical benefits an employer provides.

You market your own services or products.

You pay for your own operating expenses.

You must be motivated and energetic each day.

You face the possibility of losing money.


Types of Business Operations

What is a Service Businesses

operate to provide a needed service

What is a Merchandising

buys finished products and resells them

What is a Manufacturing Businesses

buys raw materials and transforms them into finished product


Forms of Business OrganizationsForms of Business Organizations

Sole proprietorship

Partnership

Corporation

Sole proprietorship

Partnership

Corporation


Sole ProprietorshipSole Proprietorship

A business owned by one person.


Advantages:

Easy to set up

All profits go to owner

Owner has total control

Few regulations to

follow

Disadvantages:

Limited expertise

Hard to raise money

Owner has all the risks

Hard to attract talented

employees


Sole ProprietorshipSole Proprietorship

PartnershipPartnership

A business owned by two or more

persons, who agree to operate the

business as co-owners.


PartnershipPartnership

Advantages:

Easy to start

Skills and talents are pooled

More money available

Disadvantages:

Conflicts between partners

Profits must be shared

Owners share all risks


CorporationCorporation

A business organization that is

recognized by law to have a life of its

own.


CorporationCorporation

Advantages: Easier to raise money

Easy to expand

Easy to transfer ownership

Losses limited to investment

Disadvantages: Costs more to start

up

Complex to organize

More regulations

Higher taxes


Partner Work• Problem 2-4 – 40• Problem 2-7 – 41• Problem 2-8 – 41• Due when you get to class.

First homework check –Stamp

• Bonus problems (+5pts on stamp)p. 35 Computing in the Business World.p. 40-41 Problem 2-6 Show all you math calculations to receive any bonus points!!! Put on a separate sheet of paper – this will be turned in individually.

Stamp 1

Section 2 Accounting: The Universal Language of Business

Section 2 Accounting: The Universal Language of Business

Key Terms accounting system

manual accounting system

computerized accounting system

GAAP

Key Terms accounting system



GAAP

financial accounting

managerial accounting

business entity

accounting period

going concern

financial accounting

managerial accounting

business entity

accounting period

going concern

The Accounting System

Designed to collect, document, and

report on financial transactions affecting

the business.

The system will utilize:

Section 2 Accounting: The Universal Language of Business (cont'd.)




generally accepted accounting principles

(GAAP)

financial reports

How the Accounting System WorksHow the Accounting System Works



Inputs

SourceDocuments

Inputs

SourceDocuments

Processing

Tasks

Processing

Tasks

OutputsFinancial and Management Accounting

Reports

OutputsFinancial and Management Accounting

Reports Financial

condition

Results of operations

Investments by and distributions to owners

Financial condition

Results of operations

Investments by and distributions to owners

Analyzing

Classifying

Recording

Analyzing

Classifying

Recording

Checks

Invoices

Sales Slips

Receipts

Checks

Invoices

Sales Slips

Receipts

Using Accounting Reports for Making Business Decisions

There are two groups that use

accounting reports:

Using Accounting Reports for Making Business Decisions

There are two groups that use

accounting reports:



individuals outside the business

who have an interest in the

business

individuals inside the business

Financial Accounting

Financial accounting focuses on

reporting information to external users.



Who Uses Financial Accounting Reports? potential investors

individuals and institutions, such as banks, that loan money to a business

local, state, and federal governments (taxing authorities and regulatory agencies

workers, consumers, union leaders, and competitors, customers, suppliers

Managerial Accounting

Managerial accounting focuses on

reporting information to management.



Managers

Owners

Supervisors

Board of Directors

Officers of the business

Who Uses Managerial Accounting Reports?

Financial Accounting Management Accounting

Planning and control:

Financial accounting helps in making investment decision, credit rating.

Management Accounting helps management to record, plan and control activities to aid decision-making process.

Focus: Financial accounting focuses on history.

Management accounting focuses on future & present.

Reporting frequency and duration:

Well-defined - annually, semi-annually, quarterly

As needed - daily, weekly, monthly.

Optional?: Preparing financial accounting reports are mandatory especially for limited companies.

There are no legal requirements to prepare reports on management accounting.

Objectives: The main objectives of financial accounting are :i) to disclose the end results of the business, and ii) to depict the financial condition of the business on a particular date.

The main objectives of Management Accounting are to help management by providing information that used by management to plan, evaluate, and control.

Segment reporting:

Pertains to the entire organization or materially significant business units.

May pertain to smaller business units or individual departments, in addition to the entire organization.

Nature of information:

Focus on quantitative information Focus on both qualitative and quantitative information

Comparison

Accounting AssumptionsAccounting Assumptions



business entity

The business exists independently of its owner’s personal holdings

accounting period

The period of time covered by accounting reports; monthly, quarterly, yearly

going concern

The business is expected to continue

1. The business has been in business for 12 years.

2. The personal residence of the owner of the business, valued at $200,000, is not reported in the accounting records of the pet store. Buildings owned by the business are included in the financial records and reports of the pet store.

3. The business provides grooming for domestic animals.

4. The business prepares financial reports every three months; quarterly.

5. The business has a name: Siera Pet Grooming

6. The business has a single owner: Randy Moke

7. The owner has a family that is employed at the business

What number or numbers:

• Identifies the type of business?

• Identifies the form of business ownership?

• Identifies accounting assumptions for:

• business entity

• going concern

• accounting period

1. The business has been in business for 12 years.

2. The personal residence of the owner of the business, valued at $200,000, is not reported in the accounting records of the pet store. Buildings owned by the business are included in the financial records and reports of the pet store.

3. The business provides grooming for domestic animals.

4. The business prepares financial reports every three months; quarterly.

5. The business has a name: Siera Pet Grooming

6. The business has a single owner: Randy Moke

7. The owner has a family that is employed at the business

What number or numbers:

• Identifies the type of business? #3, #5

• Identifies the form of business ownership? #6

• Identifies accounting assumptions for:

• business entity #2, #5

• going concern #1

• accounting period #4

Partner Work• Problem 2-5 – 40• Problem 2-3 – 35• Problem 2-2 – 35

There are many possible responses for 2-2

• Due when you get to class- 1 Stamp

Stamp 2

Check Your UnderstandingCheck Your Understanding

Assignment:

•Chapter 2 Review – or PDF

On-line connect in class

Assignment:

•Chapter 2 Review – or PDF

On-line connect in class

Partner Class Work:1.Create a business of your own – it must

be a service business – a sole proprietorship. One of you is the owner, the other will be an employee of the business.

2.Decide what the name of the business will be. The name of the business must insinuate what type of service you provide. Include a description of the services your business will provide.

3.Make a list of the things of value (including cash) you will need to start the business. Indicate where you will get these things (from yourself, a loan from the bank or have the business buy it on credit). Assign a dollar value to all of the things you list.

Partner Class Work:1.Create a business of your own – it must

be a service business – a sole proprietorship. One of you is the owner, the other will be an employee of the business.

2.Decide what the name of the business will be. The name of the business must insinuate what type of service you provide. Include a description of the services your business will provide.

3.Make a list of the things of value (including cash) you will need to start the business. Indicate where you will get these things (from yourself, a loan from the bank or have the business buy it on credit). Assign a dollar value to all of the things you list.

section 1 exploring the world of business (cont'd.) key terms free enterprise system profit ...

Documents

world of business

environment of business

business operating

types of business operations

free enterprise system

money owner

sole proprietorship

service businesses