{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chap013 - Chapter 13 Small Business Accounting Projecting...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance CHAPTER 13: SMALL BUSINESS ACCOUNTING: PROJECTING AND EVALUATING PERFORMANCE Chapter Summary The first chapter of several accounting chapters, this one covers the background of accounting and its importance and usefulness for making decisions for the small business. Common financial statements are explained and budgeting procedures are started. Learning Objectives After studying this chapter, the student should be able to: 1. Review the basic concepts of accounting. 2. Understand the requirements for a small business accounting system. 3. Be comfortable with the content and format of common financial statements. 4. Understand how accounting information can help you manage your business effectively. 5. Learn how to craft budgets for your business. 6. Gain understanding of how people make decisions. Focus on Small Business: Tracy and Brad Butler and Acropolis Computers The Butler brothers were computer whizzes but knew little about accounting – an oversight that cost them profit. Basically, there were a number of little things that they were not charging their customers, little things that added up to $40,000 a year in lost income. Discussion Questions 1. What is the nature of the "…relationship between costs, revenues, and profits…" that Tracy and Brad Butler did not understand? a. They did not understand that buying and holding inventory has costs that must be recovered through markups when it is sold. a. They did not understand that all of the time used in the business has a cost that must be recovered if the business is to succeed. b. They did not understand the concepts of fixed costs, such as the cost of owning a service van, and variable costs, such as the cost of operating the van. c. They did not understand that there is a cost to providing service to customers, and some customers cost more than others. 13-1
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance 2. What do you infer about Acropolis' accounting system during the years leading up to this crisis? a. It seems that at best, the brothers had only a record keeping system. b. It is certain that they were not doing any effective business planning and budgeting. 3. Why was it important for Acropolis to begin marking up the price of computer parts over their cost? Buying, holding, securing, and accounting for inventory, all cost the business. If the business is to make a profit, the cost must be recovered from customers through markups over total costs. 4. How is it possible for a business to succeed by deliberately getting rid of loyal customers? a. Some customers cost more than can be recovered. Customers who pay promptly, who can be serviced efficiently are usually the most profitable.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern