2. 1. Introduction
2. External environment of an organization and its stakeholders
3. Types of organizations
4. Steps for setting up a company
5. Organizational structures (AT Kearney presentation)
6. Branding (guest speaker – Paul Markovits)
7. Marketing
8. Human resource department
9. Sales department (AT Kearney presentation)
10. Management functions
11. Production, acquisition and logistics (AT Kearney presentation)
12. Accounting
13. Finance, Investments, Controlling function within an organization Other departments
14. Exam recap
3. • To understand what is accounting and why it is important
• To describe what accountants do
• To state and explain the basic accounting equation
• To explain the purpose of double entry bookkeeping
• To identify and explain some of the main financial statements
4. Accounting = system of measuring, interpreting and communicating financial information to support internal and external decision making
Important for:
•Creditors
•Potential investors and shareholders
•Government agencies
•Managers
Financial accounting- preparing financial reports for outsiders
Managerial accounting- preparing financial statements for internal stakeholders (e.g. cost analysis, profitability reports, etc.)
5. Accounting goes beyond bookkeeping (clerical function of recording the economic activities of a business)
Activities performed by accountants:
•Design of accounting systems
•Prepare financial statements
•Analyze financial statements and help in the decision making process
•Analyze profitability
•Prepare financial forecasts and budgets
•Prepare tax returns
•Analyze costs (cost accounting)
•Tax preparation and planning (tax accounting)
Audit = formal and independent evaluation of a company’s accounting records and processes to ensure the integrity and reliability of its financial statements.
Audit report
Internal and external auditors
6. Assets- Liabilities = Owners’ equity
Assets= any things of value owned or leased by a business (e.g. equipment, cash, land, buildings, inventory etc.)
Liabilities= claims against the assets = what the business owes to its creditors (e.g. banks, suppliers etc.)
Assets = Liabilities + Owners’ equity
Either creditors or owners provide all the assets in a company
The equation must always be in balance
7. In order to keep the accounting equation in balance companies use double entry bookkeeping
Double entry bookkeeping = system that requires two entries for every transaction. Each transaction affects assets, liabilities or owner’s equity
Example:
Buying of a 50.000 Euro building on bank credit
Assets 50.000 Euro
Liabilities 50.000 Euro
Buying of a 50.000 Euro building cash
Assets and liabilities remain equal; the company would just be switching assets- cash for building
Depreciation- accounting procedure for systematically spreading the cost of a tangible long term asset over a period of time
8. Calendar year- 1st Jan-31st Dec
Fiscal year – any 12 consecutive months used as an accounting period
Balance Sheet- snapshot of a company’s financial position on a particular date
Assets (current assets + fixed assets)
Liabilities (current liabilities + long-term liabilities)
Shareholders’ equity
Income statement
•Shows an organization profit performance over a specific period of time
•It summarizes all revenues (amount earned from sales of goods or services and inflow from other sources- royalties, interest, rent etc.) and all expenses (the costs)
Statements of cash flow
