Business Mentor Perth Business Basics Presentation 1.4
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Business Basics is all about business. A business, also known as an enterprise or a firm, is an organisation involved in the trade of goods, services, or both to consumers. Businesses are prevalent in capitalist economies, where most of them are privately owned and provide goods and services to customers in exchange for other goods, services, or money. Businesses may also be not-for-profit or state-owned. www.executivementors.com.au
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Business Mentor Perth Business Basics Presentation 1.4
- 1. Understanding Financial Terms The Finance Cycle Accounting Terminology
- 2. Understanding Financial Terms ⢠Bookkeeping is the exercise of identifying, categorizing, and recording all the transactions that take place in a business. ⢠Accounting, on the other hand, is the methodology used to record the transactions and prepare financial statements and reports. Accounting Terminology
- 3. Understanding Financial Terms Generally Accepted Accounting Principles Accounting Terminology
- 4. Understanding Financial Terms The Income Statement â˘AKA profit and loss/operating statement â˘Summary of income (service/sales) and expenses of a business during a certain period Key Reports
- 5. Understanding Financial Terms Income Statement Equation Key Reports
- 6. Understanding Financial Terms Sample Income Statement Key Reports Acme Widgets Inc. Income Statement For the Month Ended February 28, 20xx    REVENUE   Widget Sales  $20,000 Widget Installation  $1,500 Interest Income  $500 Total Revenue $22,000    EXPENSES   Rent $4,500  Utilities $1,200  Advertising $8,000  Wages $5,000  Total Expenses $18,700    NET INCOME (LOSS)  $3,300
- 7. Understanding Financial Terms The Balance Sheet â˘Shows what a company owns and owes as of a specific date â˘Lays out the value of the assets and the liabilities of the business â˘Must balance! Key Reports
- 8. Understanding Financial Terms Balance Sheet Equation Key Reports
- 9. Understanding Financial Terms Accounts typically reported on the balance sheet: â˘Accounts receivable â˘Cash â˘Equipment â˘Accounts and notes payable â˘Prepaid items â˘Unearned revenue â˘Vehicles, land, and buildings and depreciation Key Reports
- 10. Understanding Financial Terms Current vs. Fixed Assets â˘Current assets are anything that will be converted into cash within one year â˘Fixed assets are more permanent in nature â˘Liquidity measures how quickly a company can convert its assets into cash Key Reports
- 11. Understanding Financial Terms Key Reports
- 12. Understanding Financial Terms Cash Flow Statement â˘Bridge between cash and accrual accounting methods â˘Sections for operating, investing, and financing Key Reports
- 13. Understanding Financial Terms Statement of Retained Earnings Key Reports Statement of Retained Earnings for Acme Widgets Inc. As At February 28, 20xx Opening retained earnings 0 Add net income for the period $3,300 Total Retained Earnings $3,300 Minus dividends paid (300) Retained earnings $3,000