2. Entrepreneur
• An entrepreneur is someone who organizes,
manages, and assumes the risks of a business
or enterprise.
• An entrepreneur is an agent of change.
• Entrepreneurship is the process of discovering
new ways of combining resources.
3.
4. • Andrew Carnegie kar-NAY-gee was a Scottish-
American industrialist, and philanthropist.
Carnegie led the expansion of the American
steel industry in the late 19th century and
became one of the richest Americans in
history. He became a leading philanthropist in
the United States and in the British Empire.
5.
6. • Walter Elias Disney was an American
entrepreneur, animator, voice actor and film
producer. A pioneer of the American
animation industry, he introduced several
developments in the production of cartoons.
7.
8. • Oprah Gail Winfrey is an American media
executive, actress, talk show host, television
producer, and philanthropist.s
11. • Entrepreneurial Environment
• Entrepreneurial Environment is a combination of
factors that play a role in the development of
entrepreneurship.
• First, it refers to the overall economic, socio-
cultural, and political factors that influence
people’s willingness and ability to undertake
entrepreneurial activities.
• Second, it refers to the availability of assistance
and support services that facilitate the start-up
process.
12. • The available literature on entrepreneurial
environments can be grouped into three
broad streams:
• general environmental conditions for
entrepreneurship; environmental conditions
of a particular country or region; and the role
of public policy in shaping the entrepreneurial
environments.
13. • Country/Region Specific Environmental
Conditions Countries that keep rules and
regulations at a minimum, offer tax and other
incentives, and provide training and counselling
services to start-up entrepreneurs increase the
likelihood of new venture start-ups.
• Furthermore, factors such as availability of
financial resources, large size urban areas, and
presence of universities for training and research
are found to be very important to increase the
rate of new venture creation
14. • Greatest Motivation…… Money But……… It is
not alone that inspire an entrepreneur
• Other motivating factors are:
• Internal
• External
15. • Internal factors -
• Family background
• Education background
• Training and work experience
• Desire for achievement
• Desire to head a unit
16. • External Factors –
• Availability of inputs or raw materials
• Demand of the product and large profits
• Availability of infrastructure and finances
• Availability of technology
• Short supply of the product
• Government initiative and assistance
• Ready availability of sick units
17. • The basic infrastructure at the place of the
project help in
• speedy implementation of the project
• Reduce costs
• Increase profitability
18. IDENTIFICATION OF
OPPORTUNITIES
• In general sense, the term opportunity implies
a good chance or a favourable situation to do
something offered by circumstances.
• In the same vein, business opportunity means
a good or favourable change available to run a
specific business in a given environment at a
given point of time.
19. • The term ‘opportunity’ also covers a product
or project. Hence, the identification of an
opportunity or a product or project is
identical.
• The Government of India’s “Look East Policy”
through North East is an example of
‘opportunity’ to do business in items like tea,
handicrafts, herbals, turmeric, etc.
20. • identification and selection of a suitable
business opportunity serves as the trite saying
‘well begun is half done.’
21. • To mention the important ones, the
entrepreneurs selected their products or
projects based on:
• a. Their own or partners’ past experience in
that business line
• b. The Government’s promotional schemes
and facilities offered to run some specific
business enterprises
• c. The high profitability of products
22. Which indicate increasing demand for them in
the market?
• e. The availability of inputs like raw materials,
labour, etc. at cheaper rates;
• f. The expansion or diversification plans of
their own or any other ongoing business
known to them;
• g. The products reserved for small-scale units
or certain locations.
23.
24. CONVERTING BUSINESS
OPPORTUNITIES INTO REALITY
• Draft a plan to turn your business idea into
reality-
It forms the foundation of every business, as it
essentially tells you the objectives of your
business, what your vision is, what strategies
you will take, and most specifically, how you
are going to get your business off the ground.
25.
26. Research the market
• What demand is there for your idea?
• If it is a product, who will buy it?
• If it is a service, who will use it?
• Who else in the INDIA does this already?
• Are they successful and, if so, why?
• What price can you put on your product or
service?
27. Consider your financing
• Of course, you can always get a loan from the bank, but
in times of economic downturn, their interest rates
may not be very friendly to upcoming small businesses.
You can also get funded by individual investors, but
make sure that theirs and your visions align.
• At the end of the day, many small businesses start with
minimal to no capital. Once you have a running,
functioning business, it will be considerably easier to
access finance to allow for growth.
28. Register your business
• In many countries, registering your business is
easy and doesn’t cost a lot of money, so you
should do that as soon as possible. This will
give you the freedom to start selling without
having to worry about the technical aspects of
it, like getting the bank to approve your
business bank account.
29.
30. Hire technical staff
• Take a look at your strengths and weaknesses
and how they affect your business. Accept the
fact that you can’t be good at everything.
• For example, keeping track of your finances
for tax and accounting purposes take a lot of
time, and so does organizing your paperwork.
You’re better off hiring someone to take care
of those things so you can focus on more
strategic tasks.
31. Advertise your business prior to
launch
• Don’t advertise only once you have launched.
Even before, it is important to let people know
about your product.
• Make sure to leverage the power of social
media and advertise your company to build up
excitement over your launch. Continue your
marketing efforts afterwards; your business
idea is not unique, and you have a lot of
competitors.
35. • A business incubator is a company that
helps start-ups and new businesses accelerate
their growth and success.
• Incubators do this by providing support in a
variety of areas including management
training, office space, capital, mentorship, and
networking connections.
36. • A business incubator is a company that helps new
and startup companies to develop by providing
services such as management training or office space.
• The National Business Incubation Association (NBIA)
defines business incubators as a catalyst tool for either
regional or national economic development.
• NBIA categorizes their members’ incubators by the
following five incubator types: academic institutions;
non-profit development corporations; for-profit
property development ventures; venture capital firms,
and combination of the above.
37.
38. Goals
• Successful incubation is a win-win situation both
for start-ups and incubators. But a working co-
operation needs common goals. That’s why it is
crucial to make it a priority from the beginning to
hold honest, open conversations with your
partner.
• You should not only share your strategic
objectives but also ensure that your partner
really understands them. If you pull together,
nothing can stop you from reaching the goal of
groundbreaking innovation.
39.
40. Resources
• The incubation equation should stand an investment in
resources: your company provides not only money, but
also information and know-how, as well as support by
your employees and equipment.
• This can seem like a tall order. But you need to make
the investment on your side of the equation in order to
get the desired outcome.
• The incubated start-up will provide its share in return:
the innovation and new business solutions your
company needs for a sustainable development.
41. Freedom
• Nevertheless, a business incubation should
always be a synergy of the best of both
worlds. Your know-how will be needed by the
startup to be a guide in difficult situations.
A study by our partner accenture found that
the most successful incubators had their CEOs
involved in the most important decisions.
Thus, it’s crucial to find a healthy balance
between freedom and guidance in the
incubation partnership.
42. Flexibility
• This does not only include financial flexibility for
investments. Even more important is the internal
flexibility. The challenges of big firm–small firm
collaboration mostly regard the mindset: different
cultures, different attitudes about sharing intellectual
property, different concerns about risk sharing, you
name it. In order to make successful incubation
possible, your company needs to open up and adapt to
a certain degree – otherwise the collaboration might
fail before it even begins. Also, your company has to be
able to implement new solutions, which requires a
willingness to change.
43.
44. Failure
• Willingness to change? Flexibility in your corporate
culture and workflow? Yes, successful business
incubation brings challenging transformations with it.
And yes, it can sometimes fail.
• But to strike a new path is always risky – yet the only
way to move forward. Therefore, it is important for
incubators to keep the possibility of failure in mind and
also to cover their backs.
• Still, readiness to change is crucial to incubation and
needs to be weighted out with the risks. Just keep in
mind: nothing ventured, nothing gained.
45. SETTING UPA SMALL
ENTERPRISE
• What is a Small Business?
Small business is basically a business that can
be started with low investment and doesn’t
require heavy man-force. Different new
business ideas in India with low investment
are gaining lots of prevalence these days,
thanks to the booming prevalence of Digital
India.
46. Best Small Business Ideas in India
• 1. Social Media Services
The most popular option that people choose is
Social Media Services. Every major company or
even a new company for that matter is trying
hard to gain an online presence.
In pursuit of an online appearance, these
companies have social handles that are to be
handled. In order to gain more profits and
increase sales, these companies rely on heavy
marketing.
47. 2. Online Print Shop
• This is one of the most considered ideas for small
businesses in India. Start with listing the products you
deal in on your website. Make a pact to go for the
products that have more margin and are also in
demand among the masses.
• Apart from this, there is merely something that needs
to be done. You may choose to indulge in offline
marketing by talking to other businesses about the
things they print. All these things make this a sure
inclusion in the list of small business ideas in India.
48. • 3. Blogging
• Blogging has evolved greatly from a mere
hobby. People are now taking up blogging as a
career option too. Having said that, blogging is
also a great option when we talk about small
business ideas in India.
• By mastering the technique of writing and
learning about the audience you can take your
business to great heights.
49. • You may indulge in options like
• (i) Rogue blogs that talk strongly in favour or against a topic.
• (ii) Guests host blogs that are primarily done by guests writers for a
website.
• (iii) Crash Test Dummy blogs which revolve basically around reviews.
• (iv) Niche blogs which mainly focus on a particular audience with
specific interests.
• (v) You may even gift free content with some posts. This is referred
to as Giver Blogs.
• (vi) Guide blogs that mainly relate to helping users to a new product
or a new concept.
• (vii) Enterprise blogs which are mainly written for an enterprise or a
company.
50. 4. Web Content Writing
• Relying on your knowledge about writing, you can
easily choose to set up a business that comes with low
investment. The only investment it demands is hard
work that you must be ready to put in.
• Most companies and writers are now looking for
people that can provide them with quality content.
• To start with you may talk with some writers or even
sign a contract with a brand or a website. You may
even set up your own site for your preferred niche or
start blogs.
51. 5. Domain and Hosting Services
• With technology taking over and most of the
businesses going online, domain and hosting
services have climbed their way up the ladder of
small business ideas in India.
• If you can attract the customers with your reliable
hosting and domain services, there is absolutely
no looking back for your business.
• The main advantage of this inclusion in the small
business ideas in India is you would never run out
of clients.
52.
53. 6. SEO Consultant
• In order to bring the odds of Search Engine
Optimization in their favour, every website or
a writer is looking for experienced SEO
consultants. This makes the option of an SEO
consultant an easy inclusion in the list of small
business ideas in India.
54. 7. Translation Services
• Globalization has increased to a growing extent. With
technology taking over, all the problems of globalization
have been tackled easily. With the aid of the internet,
influencers have become an important thing for the
audience.
• In today’s age, influencers provide aid in interpretation.
Blogging from international influencers runs a long way in
proving that language is surely not a barrier.
• All that is required in this member of small business ideas
in India list, is personnel with a stronghold of an
international language accompanied with a piece of
knowledge about corresponding regional Hindi languages.
55. • 8. Freelancer
• It would not be wrong to state that the 21st century has
been the breeding time for Freelancing. People are
choosing freelance work happily.
• The basic advantage that one can enjoy is the flexibility it
has to offer. With absolutely no headache about working
hours, style or even the place of working, being a
freelancer is something every person would fancy.
• Freelancing is one option that ranks amongst the toppers in
the list of new business ideas with low investment online.
Due to the options, one can choose from, freelancing is
undoubtedly one of the most successful small business
ideas in India.
56.
57. • 9. Education Services
• It is a common fact that the education system is only
growing to improve and the demand for highly skilled
professionals would thrive too.
• The list of new business ideas in India with low investment
allows you to consider the option of opening an Education
Service firm. You would be responsible for training students
to get jobs in there easily.
• With a network of trained professionals, you can easily
grow your business over a short period of time. This
member of the small business ideas in India list is an option
that is growing rapidly as compared to the other available
fields.
58. 10. Career Guidance
• Owing to the cut-throat competition
accompanied by luring fields, choosing the right
career option has become a tough task in today’s
time. Due to this, this first thought that pops up
in the minds of students and parents is
professional advice.
• With the aid of counsellors and professional, you
can start earning fast. This option is growing
rapidly owing to the stress that every individual
goes through when we talk about career.
59. 11. Cyber and IT Security
• The cases of cyber and IT crime have been on the rise in
recent times. Due to the number of crimes increasing day-
by-day, all companies are in search of people who can
assure them of security. This justifies the fact that why
cyber and IT security experts are in such demand these
days.
• If you possess knowledge about IT security systems or just
having a network of IT security professionals, you can make
it big in a matter of a few months. This option of small
business ideas in India would help you to work with big
names in the market and gain unmatched exposure for
your future endeavours.
60. 12. Financial Planning and Management Services
• Most people these days face a shortage of time in order to
keep a proper track of their money. This also leaves them
with meagre time to plan about investments.
• Owing to this reason, many people turn to financial
planning and management services which allow them to
not only keep a track but also manage future investments.
You are supposed to be a certified financial partner if you
choose to go with this option of small business ideas in
India.
61. • 13. Franchise Store
• Starting your own franchise is an idea that has
been underrated for quite long. This option is a
great way to create a big business and that too
around a small idea.
• Simply by online promotion and a creative
product or idea, you can start a franchise.
Fortunately, if you succeed, all you have to do is
indulge in the operations at a larger scale. This
way you’d have a big business ready in no time.
62.
63. 14. Photography
• The need to capture moments never makes
photographers go out of fashion. With options
like working with an organization or as a
freelancer, you have a variety of stuff to choose
from. Your talent for clicking photographs is more
than enough to help you make a big business.
• The only investment that is done, is for the
gadgets and portfolios. You may choose to start
own business and deploy photographers to cover
events.
64. 15. Advertising Agency
• No company would ignore offline promotions just
because they have a strong online appearance.
An advertising agency is one such option of the
small business ideas in India list that allows you
to start your work at a minimal cost.
• Hoardings are something that would surely catch
your attention and stay with you most of the
times. You simply take an order and start doing
the advertising. That is all it takes to start your
own small business and make it large.
65. 16. Advertisement Making
• Simply with the possession of a creative mind, you can start
your business in the field of Advertisement Making. All the
companies are always on the lookout for people who are
expressive and creative at the same time.
• The simple Mayra for success is to convince the clients that
you can add value to their advertisements. You can easily
learn different strategies of online advertisements and they
can take this to the next level by advertising some of the
businesses in your local area.
• This way, you can slowly establish yourself as an efficient
advertising company in your are.
66.
67. 17. Animation
• Animation is an option that has claimed up its
way in the list of small business ideas in India
rapidly. With the advancement in technology,
Animation is growing as a profession.
• You may choose to start an online business or
simply go offline and train budding aspirants to
take animation as a career. This field would also
allow you to work with corporations who always
require animated visual and audio content. This
way you can earn handsomely too.
68. 18. Online Tutorials
• If you have the spark to teach people, this option is just
for you. With the advancement in technology, people
are now interested in studying from the comfort of
their homes.
• You may sign up with a website or start your own
platform and teach people. If you have expertise in a
particular field, and you know that your tutorials can
benefit many that are looking for the guidance, this is
the right time for you to opt for Online Tutorials as
your small startup business ideas in India.
69. 19. Consultancy and Green Store
• The need to protect the earth is something that
has made people more eco-friendly as compared
to the past.
• Keeping this in context, you can start a store to
market your wok green products and even start a
green consultancy.
• This is the one field, where you can also get lots
of support for the government and organization
that are keen on promoting eco-friendly new
business ideas with low investment online.
70. 20. Estate Agents
• With an increase in the population and the need
for shelter, there is a never-ending demand for
real estate advisors. Be it renting and
accommodation or purchasing it, people always
tend to take the advice of Estate agents.
• Most of the people readily invest in properties
and this is one of the main advantages of this
business. Make sure to stay alert as you might
encounter some fraud offers too.
71.
72. 21. Human Resource Management
• You can earn highly through commissions
simply by referring a candidate to a company
that his performance matches. All this makes
it a promising part of the small business ideas
in India.
73. 22. Meal Services
• The main reason for every work is eating for food. A
business that indulges in providing food is always a
good idea. To start on a small scale, you can initially
start by providing meal services to corporations.
• With a wide variety of Food Delivery Startups like
Zomato, Swiggy, Uber, etc, Meal services can easily be
optimized to meet their target audiences. And if you
offer great quality foods, slowly and steadily, you will
get established yourself in the market.
74. 23. Babysitting
• With many parents choosing to work even after a
child, the demand for babysitters has risen up.
• You may choose to become a babysitter yourself
or simply start your business of proving baby
sitters. Make sure to have trustworthy employees
to establish your name. You may later start a
daycare centre too.
75. 24. Pet Care
• Every pet owner treats their pet like a family
member. Owing to some circumstances, they
have to leave their pets at home or with
neighbours.
• This makes them realize the importance of pet
care. With a pet care centre, you can earn
handsomely by taking care of pets and even
fulfil your wish of staying with different pets.
76. 25. Party Services
• If you have a creative mind and can make people
enjoy, this is just for you.
• By offering part services, you can deal in
decorations, organizing events, organizing games
and what not!
• Slowly and gradually you can increase the scale
and establish your own event management
company.
78. • Demographics
There are two important angles to the issue of
demographics. One is your customers; the other
is your employees. First, consider who your
customers are and how important their proximity
to your location is. For a retailer and some service
providers, this is critical; for other types of
businesses, it may not be as important. The
demographic profile you've developed of your
target market will help you make this decision.
79. • Foot Traffic
For most retail businesses, foot traffic is
extremely important. You don't want to be tucked
away in a corner where shoppers are likely to
bypass you, and even the best retail areas have
dead spots. By contrast, if your business requires
confidentiality, you may not want to be located in
a high-traffic area. Monitor the traffic outside a
potential location at different times of the day
and on different days of the week to make sure
the volume of pedestrian traffic meets your
needs.
80. • Accessibility And Parking
Consider how accessible the facility will be for
everyone who must use it-customers, employees and
suppliers. If you're on a busy street, how easy is it for
cars to get in and out of your parking lot? Is the facility
accessible to people with disabilities? What sort of
deliveries are you likely to receive, and will your
suppliers be able to easily and efficiently get materials
to you? Small package couriers need to get in and out
quickly; trucking companies need adequate roads and
loading docks if you're going to be receiving freight on
pallets.
81. • Competition
Are competing companies located near your
business? Sometimes competition can be good,
such as in industries where comparison shopping
is popular. (That's why competing retail
businesses, such as fast-food restaurants, antique
shops and clothing stores tend to cluster
together.) You may also catch the overflow from
existing businesses, particularly if your company
is located in a restaurant and entertainment area.
But if a nearby competitor is only going to make
your marketing job tougher, look elsewhere.
82. • Proximity To Other Businesses
Take a look at what other businesses and
services are in the vicinity from two key
perspectives. First, consider whether you can
benefit from nearby businesses, either by the
customer traffic they generate, or because
those companies and their employees could
become your customers, or because it may be
convenient and efficient for you to be their
customer.
83. • Ordinances
Find out if any ordinances or zoning restrictions could
affect your business in any way. Check for the specific
location you're considering as well as neighboring
properties-you probably don't want a night club
opening up next to your day-care center. The Building's
Infrastructure Many older buildings do not have the
necessary infrastructure to support the high-tech
needs of contemporary operations. Be sure the
building you're considering has adequate electrical, air
conditioning and telecommunications service to meet
your business's present and future needs
84. • Utilities And Other Costs Rent is certainly the
major portion of your ongoing facilities expense,
but it's not all. Consider extras such as utilities-
they're included in some leases, but not in
others. If they're not included, ask the utility
company for a summary of the previous year's
usage and billing for the site. Also, find out what
kind of security deposits the various utility
providers require so you can develop an accurate
move-in budget; however, you may not need a
deposit if you have an established payment
record with the company.
85. • Room For Growth
Look at the facility with an eye to the future.
It's generally unwise to begin with more space
than you need, but if you anticipate growth,
be sure the facility you choose can
accommodate you.
87. • Industrial policies and Regulations for
entrepreneurship development; The
term industrial policy refers to the
governments policy towards industries-the
establishment, functioning, growth and
management. The policy will indicate the
respective areas of large, medium and small-
scale sectors. It also spell of Govt.
88. • What is Industrial Policy?
• The role played by the government in the process of
developing industries are defined as a set of
statements known as Industrial policy. The policy also
defines the role played by different large and small
scale industries and the level of public and private
intervention.
• The set of objectives for industrial development along
with the steps for achieving these objectives is
Industrial policy. Therefore Industrial policy mainly
defines the roles and activities of the different public
and private sectors.
89. What are the different Industrial Policy Measures?
• Liberalization of Industrial Licensing Policy
Restrictions that are being imposed and the licensing that is made
compulsion is made on some of the goods. The list of these goods is
reviewed from time to time. At present, six industries come under
the category of compulsory licensing in order to take care of the
environmental, safety and strategic conditions are to be taken care.
• Introduction of Industrial Entrepreneurs' Memorandum (IEM)
For some of the companies, compulsory licensing is not mandatory
and those companies need to file the said Industrial Entrepreneurs'
Memorandum (IEM) with the Secretariat for Industrial Assistance
(SIA). Many amendments are made to this memorandum also.
90. • Liberalization of the Locational Policy
The locational policy is being liberalized. Prior
government approval is not required for the
industrial locations which are planned to be
located within 25 kms range of the cities with
population of more than one million. This policy
is for those companies for which licensing is not
mandatory. The companies which come under
this category are mostly the non-pollution
companies such as software companies,
electronics, etc.
91. • Policy for Small Scale Industries
The small scale industries can be protected by reserving
manufacturing of some of the specific goods only by the small scale
industries. After the amendments taken place on 24th December
1999, any business which has a maximum investment of one crore
rupees come under the category of small scale industries.
• Non-Resident Indians Scheme
All the policy regulations and provisions made by the industrial
policy with respect to Foreign Direct Investment are applicable to all
the NTRIs. Some concessions have been facilitated to the NRIs and
to all the corporate bodies which have more than 60% stake by
NRIs. Even the NRIs are given permission to invest completely upto
100% except for few of the sectors or items.
92. • EHTP vs STP Scheme
• Two different schemes, Electronic Hardware
Technology Park (EHTP) and Software
Technology Park (STP) are facilitated for
setting up the electronic companies and thus
modify the exports of the electronics. This
scheme enables to procure the inputs without
any duties being levied on them.
93. • Policy for Foreign Direct Investment (FDI)
• One of the most important aspects of the
economic policy of India is to enhance FDIs into
country. FDI leads to boost the economic growth
of the country by infusing latest technology, more
capital and the latest activities with respect to
management. In relation to these benefits
associated, limit is not framed for the foreign
ownership and the companies are open to
foreign investment without any permits and
restrictions.
94. IDENTIFYING BIG IDEA
1. Find opportunities in your own community
Though cultures and languages may vary,
many of the challenges facing our world are
similar across many parts of the globe. As
such, one of the best ways to identify world-
changing ideas is to start locally: Look for
issues that concern your local community.
95. 2. Draw upon your own personal experiences.
• Many of the most powerful world-changing
ideas come from the experiences and
challenges an entrepreneur has faced in his or
her own life. Take a moment to consider the
problems you’re currently dealing with. These
problems could be affecting your current
business endeavors, your personal life or your
home.
96. 3. Look for ideas that get other people
involved.
• Many of the most successful world-changing
ideas don’t just offer a new product or service.
They seek to change the way people approach
their day-to-day living. Changing someone’s
mental outlook will have a far greater reach
and impact in the long run.
97. 4. Go out of your way to ask others how you can
help.
• Coming up with ideas on your own isn’t always
easy. That’s why brainstorming has consistently
been found to be such a powerful tool. You may
be struggling to come up with a world-changing
idea. But there could be plenty of people around
you who have great insights that can lead you in
the right direction.
98. 5. Give back through meaningful
philanthropical work.
• Your initial business idea doesn’t necessarily
need to be world-changing in and of itself. But
when you pair it with a properly aligned
philanthropic effort, you can become a true
force for good.
100. • It Is the formal written expression of
the entrepreneurial vision, describing the
strategy and operations of the proposed
venture. • A business plan is a document that
brings together the key elements of
a business that include details about the
products and services, the cost, sales and
expected profits.
101. How is a business plan prepared?
• Research, research, research.
• Determine the purpose of your plan.
• Create a company profile.
• Document all aspects of your business.
• Have a strategic marketing plan in place.
• Make it adaptable based on your audience.
• Explain why you care.
102. What are the 8 components of a
business plan?
• Executive Summary. Your executive summary
should appear first in your business plan.
• Company Description.
• Market Analysis.
• Competitive Analysis.
• Description of Management and Organization.
• Breakdown of Your Products and Services.
• Marketing Plan.
• Sales Strategy.
103. Accounting for Small Business
Analyzing Financial Transactions
• The process of accounting starts with analyzing
financial transactions and entering the ones
pertaining to the business entity into the
accounting system. For example, loans taken for
personal reasons are not included in the business
documents
• The first step of the accounting process involves
the preparation of source documents. A source
document or business document serves as the
foundation for recording a transaction.
104. Journal Entries
• Business transactions are recorded in a journal (also
known as Books of Original Entry) in a chronological
order using the double-entry bookkeeping system.
The journal entries include two accounts – debit and
credit.
• To make this process easier, accountants use a special
journal to record recurring transactions such as
purchases, sales, cash receipts etc. the transactions
that cannot be included in the special journals are
recorded in the general journal.
105. Ledger
• The general ledger is a collection of accounts that display the
changes made to each account based on past transactions, along
with the current balances in each account. It is also known as the
Books of Final Entry.
Unadjusted Trial Balance
• A trial balance is prepared to test if the total debits equal total
credits. The accounts are extracted from the ledger and arranged in
a report. The balances of the debit and credit columns should be
equal.
• If not, the trial balance contains errors which need to be located
and rectified with correcting entries. It’s important to note that
some errors may exist despite the debits equaling credits, such as
errors caused by double posting or due to the omission of entries.
106. Adjusting Entries
• At the end of the accounting period, the
accountant must prepare the adjusting entries
to update the accounts that are summarized
in the financial statements. For example,
income earned but not recorded in the books.
• Adjusting entries are made for accrual of
income and expenses, depreciation,
allowances, deferrals and prepayments.
107. Adjusted Trial Balance
• Once the adjusting entries are made, an adjusted trial
balance must be prepared. This is done to test if the
debits match the credits after the adjusting entries are
made. This is the final step before the preparation of
the business’ financial statements.
Financial Statements
• The financial statements which include the income
statement, statement of changes in equity, balance
sheet, statement of cash flow and notes are the end
products of the accounting system.
108. Closing Entries
• To prepare the system for the next accounting, temporary
accounts that are measure periodically, including the
income, expense and withdrawal accounts, are closed. The
balance sheet accounts also called the permanent
accounts, remain open for the next accounting cycle.
• The last step of the accounting cycle is to prepare a post-
closing trial balance to test the equality of the debits and
credit amounts after the closing entries are made. This trial
balance contains real accounts only as the temporary
accounts are closed this accounting cycle.
