3920u9 - New Venture and Small Business Management UNIT 9...

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New Venture and Small Business Management 1 Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved UNIT 9 MODULE 1 The Accounting Function Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved AS MANY AS 45% OF ENTREPRENEURS LACK A BASIC UNDERSTANDING OF ACCOUNTING Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved JOURNAL (double-entry system) THE ACCOUNTING CYCLE CLASSIFYING TRANSACTION TOTALS SUMMARIZING DATA RECORDING TRANSACTIONS Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved THE SALE OF A HOT DOG... debit cash $2. 00 credit sales $2. 00 debit cost of sales $1. 00 credit inventory $1. 00 JOURNAL ENTRIES Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved THE ACCOUNTING CYCLE LEDGER CLASSIFYING TRANSACTION TOTALS SUMMARIZING DATA RECORDING TRANSACTIONS Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved FINANCIAL STATEMENTS balance sheet income statement statement of changes in financial position THE ACCOUNTING CYCLE CLASSIFYING TRANSACTION TOTALS SUMMARIZING DATA RECORDING TRANSACTIONS LEDGER JOURNAL
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New Venture and Small Business Management 2 Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved THE BALANCE SHEET A snapshot at a specific point in time of what a business owns and owes ASSETS LIABILITIES & OWNER’S EQUITY Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved CURRENT ASSETS Cash Accounts Receivable expected to be Inventory converted to cash Prepaid Expenses within one year TOTAL CURRENT ASSETS FIXED ASSETS OTHER ASSETS THE BALANCE SHEET ASSETS Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved CURRENT ASSETS FIXED ASSETS x Accumulated Depreciation - y z OTHER ASSETS THE BALANCE SHEET ASSETS FIXED ASSETS INCLUDE... land & buildings equipment vehicles computers & furniture leasehold improvements Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved CURRENT LIABILITIES Operating Bank Loan amounts owed Accounts Payable to third parties Accrued Payables and due within Current Portion of Long-Term Debt one year TOTAL CURRENT LIABILITIES LIABILITIES & OWNER’S EQUITY THE BALANCE SHEET Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved CURRENT LIABILITIES Operating Bank Loan Accounts Payable Accrued Payables Current Portion of Long-Term Debt TOTAL CURRENT LIABILITIES LONG-TERM DEBT OWNER’S EQUITY Paid-In Capital Retained Earnings THE BALANCE SHEET LIABILITIES & OWNER’S EQUITY Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved THE INCOME STATEMENT REVENUES $ COST OF GOODS SOLD GROSS PROFIT $ GENERAL & ADMIN EXPENSES SALES & MARKETING EXPENSES EARNINGS BEFORE INTEREST $ AND TAXES INTEREST EXPENSE EARNINGS BEFORE TAXES $ TAXES EARNINGS AFTER TAX (NET INCOME) $ OPERATING ACTIVITIES FINANCING ACTIVITIES } } TAXES PAID
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New Venture and Small Business Management 3 Copyright © 1999 Jon Kerr and Captus Press Inc. All right reserved TRANSACTIONS ARE RECORDED USING A ‘DOUBLE-ENTRY’ SYSTEM...
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