Accounting and Cash Managment

Accounting and Cash Managment - Entrepreneurial Accounting...

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Copyright Atomic Dog Publishing, 2006 Copyright Atomic Dog Publishing, 2006 Entrepreneurial Accounting and Cash Management
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Copyright Atomic Dog Publishing, 2006 Components of business process: revenue, costs, and capital. 1. Analyzing the feasibility of a start-up venture—by analyzing the venture’s ability to produce revenue. 2. Determine how to achieve that revenue in a cost- effective manner. 3. Fundamental purpose of any business: produce profit; the equation is to be memorized: The first step in estimating profit is to estimate revenue.
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Copyright Atomic Dog Publishing, 2006 What Is Accounting? “the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.” (defined by the American Accounting Association) Accounting practices are essential to business confidence. keep track of items of value, in their current state and in their flow or change over time make reports that are useful in management decisions.
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Copyright Atomic Dog Publishing, 2006 What Is Accounting? (cont.) Accounting practitioners adhere to generally accepted accounting principles , or GAAP. GAAP Principles are developed by the Financial Accounting Standards Board, or FASB. Two Types of Accounting: Financial accounting: Intended primarily for use by external decision makers. Managerial accounting: Used by internal decision makers, such as the entrepreneur.
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Copyright Atomic Dog Publishing, 2006 What Is Accounting? (cont.) Accounting information- used by business managers, investors, creditors, governmental organizations and others. Creditors examine financials and evaluate credit applications and to make decisions about loans. Lenders focus on cash flow when making loan decisions for new ventures. Larger firms that have accumulated assets can also be approved for so-called asset-backed loans. Entrepreneurs and the venture’s top management team are the most frequent users of accounting information.
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Copyright Atomic Dog Publishing, 2006 Users of New Venture Accounting Information
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Copyright Atomic Dog Publishing, 2006 The Accounting Equation Memorize this accounting equation: - Assets: Anything of value owned by business and used in conducting its operations - Liabilities: Debts owed by the business to its creditors,
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