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= Accounting for a New Business 1 = | == Accounting for a New Business 1 == | ||
=== Accounting lesson 1 Double-entry bookkeeping, credit and debit === | |||
== Accounting | |||
* '''[[w:Double-entry accounting]]''' ( or '''double-entry [[w:bookkeeping]] system''' [[w:fi:Kahdenkertainen kirjanpito]]) is a set of rules for recording financial information in a [[w:financial accounting]] system in which <u>'''''every transaction'''''</u> or event <u>'''''changes at least two'''''</u> different nominal [[w:ledger]] <u>'''''accounts'''''</u>. ( Wikipedia ) | * '''[[w:Double-entry accounting]]''' ( or '''double-entry [[w:bookkeeping]] system''' [[w:fi:Kahdenkertainen kirjanpito]]) is a set of rules for recording financial information in a [[w:financial accounting]] system in which <u>'''''every transaction'''''</u> or event <u>'''''changes at least two'''''</u> different nominal [[w:ledger]] <u>'''''accounts'''''</u>. ( Wikipedia ) | ||
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:* '''Management accounting''' or '''[[w:managerial accounting]]''' is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. ( Wikipedia ) | :* '''Management accounting''' or '''[[w:managerial accounting]]''' is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. ( Wikipedia ) | ||
== | === Balances and flow statements === | ||
( [[w:fi:XYZ]] ) | |||
:*For every '''[[w:fiscal year|fiscal year]]''' ( [[w:fi:Tilikausi]] )a business must produce a '''[[w:annual report]]''' which contains ( in [[w:Finland]] ) | :*For every '''[[w:fiscal year|fiscal year]]''' ( [[w:fi:Tilikausi]] )a business must produce a '''[[w:annual report]]''' which contains ( in [[w:Finland]] ) | ||
:** the annual '''[[w:financial statement]]''' ( [[w:fi:Tilinpäätös]] ) which contains naturally | :** the annual '''[[w:financial statement]]''' ( [[w:fi:Tilinpäätös]] ) which contains naturally | ||
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:** Textform description of businesses activities ( [[w:fi:toimintakertomus]] ) | :** Textform description of businesses activities ( [[w:fi:toimintakertomus]] ) | ||
== Income statement or profit and loss statement == | ==== Income statement or profit and loss statement ==== | ||
:* '''[[w:Income statement]]''' (also referred to as '''profit and loss statement (P&L)''', '''revenue statement''', '''statement of financial performance''', '''earnings statement''', '''operating statement''' or '''statement of operations)'''is a company's '''[[w:financial statement]]''' that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). ( Wikipedia ) | :* '''[[w:Income statement]]''' (also referred to as '''profit and loss statement (P&L)''', '''revenue statement''', '''statement of financial performance''', '''earnings statement''', '''operating statement''' or '''statement of operations)'''is a company's '''[[w:financial statement]]''' that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). ( Wikipedia ) | ||
::<tt>Mnemonic:</tt> ''"The [[w:income statement]] describes the income possibilities of the [[w:entrepreneur]] with 100% of shares <u>not</u> the income of the business, that's called the [[w:top line]] and is only small part of the whole thing."'' | ::<tt>Mnemonic:</tt> ''"The [[w:income statement]] describes the income possibilities of the [[w:entrepreneur]] with 100% of shares <u>not</u> the income of the business, that's called the [[w:top line]] and is only small part of the whole thing."'' | ||
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== Balance sheet == | ==== Balance sheet ==== | ||
:* A '''[[w:Balance sheet]]''' or '''statement of financial position''' ( in [[w:financial accounting]] ) is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. [[w:Asset]]s, [[w:liability (financial accounting)|liabilities]] and [[w:ownership equity]] are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a ''"snapshot of a company's financial condition"''. ( Wikipedia ) | :* A '''[[w:Balance sheet]]''' or '''statement of financial position''' ( in [[w:financial accounting]] ) is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. [[w:Asset]]s, [[w:liability (financial accounting)|liabilities]] and [[w:ownership equity]] are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a ''"snapshot of a company's financial condition"''. ( Wikipedia ) | ||
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---- | ---- | ||
=== Accounting class week 9 === | |||
:* Team quiz on new terminology ( [[w:Category:Accounting terminology]] ) | |||
:* '''[[w:Assets]]''' | |||
:* '''[[w:Liabilities]]''' | |||
:* '''[[w:Equity (finance)]]''' ( [[w:fi:Oma pääoma]] ) | |||
---- | ---- | ||
= Accounting | === Accounting class week 10 === | ||
:*'''[[w:Accrual]]''' (''accumulation'') of something is, in [[w:finance]], the adding together of [[w:interest]] or different [[w:investments]] over a period of time. It holds specific meanings in [[w:accounting]], where it can refer to accounts on a [[w:balance sheet]] that represent liabilities and non-cash-based assets used in accrual-based accounting. These types of accounts include, among others, [[w:accounts payable]], [[w:accounts receivable]], [[w:Goodwill (accounting)|goodwill]], [[w:deferred tax]] [[w:liability (accounting)|liability]] and future interest expense. ( Wikipedia ) | |||
---- | |||
=== Accounting class week 11 === | |||
* '''[[w:VAT]] accounting''' ( [[w:fi:Arvonlisävero]] ) | |||
* [[w:VAT]] vs. [[w:sales tax]] ( not the same thing ) | |||
Course | ---- | ||
=== Accounting class week 12 === | |||
:Joint exam with [[#Business Math 1|Business Math 1]] | |||
---- | |||
== Accounting for a New Business 2 == | |||
Course consists of mostly '''[[w:Managerial accounting]]''' and '''[[w:cost accounting]]''' | |||
Topics covered: | Topics covered: | ||
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* Annual percentage rate of charge for [[w:loans]] and [[w:credits]] | * Annual percentage rate of charge for [[w:loans]] and [[w:credits]] | ||
== Accounting | ==== Accounting 2 class week 14 ==== | ||
Topics: Financial flows | |||
* '''[[w:cost-volume-profit analysis]]''' | * '''[[w:cost-volume-profit analysis]]''' | ||
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::Homework: ex. 4,5,6,7 | ::Homework: ex. 4,5,6,7 | ||
== Accounting | ==== Accounting 2 class week 15 ==== | ||
==== Accounting 2 class week 16 ==== | |||
* '''[[w:Pricing]]''' | * '''[[w:Pricing]]''' | ||
:: Long-run vs. short-run pricing approaches | :: Long-run vs. short-run pricing approaches | ||
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*'''[[w:Cost-plus pricing]]''' is a pricing method used by companies to maximize their rate of returns. ( Wikipedia ) | *'''[[w:Cost-plus pricing]]''' is a pricing method used by companies to maximize their rate of returns. ( Wikipedia ) | ||
== Accounting | ==== Accounting 2 class week 17 ==== | ||
* '''[[w:Operating leverage]]''' is a measure of how revenue growth translates into growth in '''[[w:operating income]]'''. '''[[w:Leverage (finance)|Leverage]]''', and of how risky (volatile) a company's operating income is. | * '''[[w:Operating leverage]]''' is a measure of how revenue growth translates into growth in '''[[w:operating income]]'''. '''[[w:Leverage (finance)|Leverage]]''', and of how risky (volatile) a company's operating income is. | ||
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* '''[[w:Return on investment]]''' ('''ROI''') is the concept of an [[w:investment]] of some resource yielding a benefit to the investor. As a performance measure, it is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ( Wikipedia ) | * '''[[w:Return on investment]]''' ('''ROI''') is the concept of an [[w:investment]] of some resource yielding a benefit to the investor. As a performance measure, it is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ( Wikipedia ) | ||
==== Accounting 2 class week 18 ==== | |||
== Accounting | |||
---- | ---- | ||
== Managerial Accounting == | |||
= Managerial Accounting = | |||
# lesson: '''Cost behaviour''' and '''[[w:cost object|cost object]]s | # lesson: '''Cost behaviour''' and '''[[w:cost object|cost object]]s | ||
# lesson: '''[[w:Job costing|Job costing]]''' and '''[[w:overheads|overheads]]''' | # lesson: '''[[w:Job costing|Job costing]]''' and '''[[w:overheads|overheads]]''' | ||
# lesson: '''[[w:Activity based costing|Activity based costing]]''' | |||
# lesson: '''[[w:Cost-volume-profit analysis|Cost-volume-profit analysis]]''' | # lesson: '''[[w:Cost-volume-profit analysis|Cost-volume-profit analysis]]''' | ||
# lesson: '''Master budgets''' and '''operational [[w:budget|budget]]s''' | # lesson: '''Master budgets''' and '''operational [[w:budget|budget]]s''' | ||
# lesson: NO LESSON | # lesson: NO LESSON | ||
# lesson: '''Short term business decisions''' | # lesson: '''Short term business decisions''' | ||
== | === Lesson 1 Cost behaviour and cost objects === | ||
* '''A [[w:Cost object|Cost object]]''' is a tangible input for a product manufactured/service provided, like labor or material. ( Wikipedia ) | * '''A [[w:Cost object|Cost object]]''' is a tangible input for a product manufactured/service provided, like labor or material. ( Wikipedia ) | ||
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* '''[[w:Working capital|Working capital]]''' or '''operating capital''' is a financial metric which represents [[w:Accounting liquidity|operating liquidity|]] available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Net working capital (NWC) is calculated as [[w:current assets|current assets]] minus [[w:current liabilities|current liabilities]]. ( Wikipedia ) | * '''[[w:Working capital|Working capital]]''' or '''operating capital''' is a financial metric which represents [[w:Accounting liquidity|operating liquidity|]] available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Net working capital (NWC) is calculated as [[w:current assets|current assets]] minus [[w:current liabilities|current liabilities]]. ( Wikipedia ) | ||
== | === Lesson 2 [[w:Job costing|Job costing]] and [[w:overheads|overheads]] === | ||
* In [[w:Production (economics)|production]], [[w:research|research]], [[w:retail|retail]], and [[w:accounting|accounting]], a '''[[w:cost|cost]]''' is the value of [[w:money|money]] that has been used up to produce something, and hence is not available for use anymore. ( Wikipedia ) | * In [[w:Production (economics)|production]], [[w:research|research]], [[w:retail|retail]], and [[w:accounting|accounting]], a '''[[w:cost|cost]]''' is the value of [[w:money|money]] that has been used up to produce something, and hence is not available for use anymore. ( Wikipedia ) | ||
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* [[w:Direct materials cost|Direct materials cost]] + [[w:direct labor cost|direct labor cost]] + [[w:manufacturing overhead|manufacturing overhead]] -> [[w:work in progress|work in progress]] -> [[w:finished goods|finished goods]] -> [[w:cost of goods sold|cost of goods sold]] | * [[w:Direct materials cost|Direct materials cost]] + [[w:direct labor cost|direct labor cost]] + [[w:manufacturing overhead|manufacturing overhead]] -> [[w:work in progress|work in progress]] -> [[w:finished goods|finished goods]] -> [[w:cost of goods sold|cost of goods sold]] | ||
=== Lesson 3 Activity based costing === | |||
== | |||
'''[[w:Activity based costing|Activity based costing]]''' ('''ABC''') is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more [[w:indirect costs|indirect costs]] ([[w:overhead (business)|overhead]]) into [[w:direct costs|direct costs]] compared to conventional costing. ( Wikipedia ) | '''[[w:Activity based costing|Activity based costing]]''' ('''ABC''') is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more [[w:indirect costs|indirect costs]] ([[w:overhead (business)|overhead]]) into [[w:direct costs|direct costs]] compared to conventional costing. ( Wikipedia ) | ||
:::CIMA (Chartered Institute of Management Accountants) defines ABC as | :::CIMA (Chartered Institute of Management Accountants) defines ABC as | ||
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::::Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. ( Wikipedia ) | ::::Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. ( Wikipedia ) | ||
=== Lesson 4 Cost-volume-profit analysis === | |||
'''[[w:Cost–volume–profit analysis|Cost–volume–profit analysis]]''' ('''CVP'''), in [[w:managerial economics|managerial economics]], is a form of [[w:cost accounting|cost accounting]]. It is a simplified model, useful for elementary instruction and for short-run decisions. ( Wikipedia ) | |||
=== Lesson 5 Master budgets and operational budgets === | |||
* A '''[[w:budget|budget]]''' is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. ( Wikipedia ) | |||
== | === Lesson 6 NO LESSON === | ||
=== Lesson 7 Short term business decisions === | |||
'''Short term business decisions''' | '''Short term business decisions''' | ||
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:::*'''''short-term''''' usually under 1 year. ( Wikipedia on [[w:Term (time)|Term]] ) | :::*'''''short-term''''' usually under 1 year. ( Wikipedia on [[w:Term (time)|Term]] ) | ||
---- | ---- | ||
= Further reading = | == Further reading == | ||
* | * [[Finance]] | ||
---- | ---- | ||
= Learn | == Learn in Wikipedia == | ||
:* '''[[w:Category:Accounting terminology]]''' | :* '''[[w:Category:Accounting terminology]]''' | ||
---- | |||
== Further learning == | |||
: '''[[w:analysis#Business|Business and investment analyses]]:''' | : '''[[w:analysis#Business|Business and investment analyses]]:''' | ||
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:build upon understanding of accounting and business math terminology and procedures. | :build upon understanding of accounting and business math terminology and procedures. | ||
= Navboxen = | = Navboxen = | ||
== Accounting software == | == Accounting software == | ||
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== Financial ratios navbox == | == Financial ratios navbox == | ||
{{Financial ratios}} | {{Financial ratios}} | ||