ACCOUNTING &
Learning Objectives: -determine the difference between financial accounting and managerial accounting - explain the sources of business finance in an organization - appreciate the need for effective financial management in business
Learning Outcome: After studying this chapter successful student should be able to; -Differentiate financial accounting and managerial accounting. - State the various financial statements and its importance. -Understand purpose of budget -Identify five types of short-term and five types of longterm financial sources
Chapter Outline
8.1 Define accounting and finance 8.2 Differentiate between financial accounting vs managerial accounting 8.3 Financial statements Balance sheet, Income Statement, Cash Flow Statement, Budget 8.4 Sources of funds Short term (operating expenditure) and long-term (capital expenditure)
- using balance sheet, profit & loss statement, cash flow report to cover certain financial period. Eg: Balance sheet for the year ending 2010 of the company is printed in the shareholders annual report.
1. Balance sheet
Supply detailed information about:
Assets Current assets: Cash/assets that can be converted into cash within a year Fixed assets: Capital that has long-term use or value Intangible assets: Patents, trademarks, copyrights, etc. Liabilities Current liabilities: Debts that must be paid within one year, including accounts payable Long-term liabilities: Debts not due for at least a year Owners Equity Paid-in (invested) capital Retained earnings (net profits)
1. Balance sheet
Income Statement
Microsofts Cashflow
Examine the cash flow of the company for each year. What information does this provide for the company?
Purpose of Budget:
-Predictions about the future enable an organization to
4. Sales Budget
Examine the cash position of the company by month in terms of total cash receipts. What information does this provide for the company?
An income statement provides information about a firms profitability. Cash-generating ability information is provided by the Statement of Cash Flows. Major purposes of a budget is to make predictions, To set targets and to control financial performance.
Group Discussion
Assume you and your friends have started your own business using the training that you have received at college and the experience you and your friends have gained while working part time in a small business organization. Now the business is doing well and you and your friends plan to expand the business. Find a suitable sources of funds to finance your business expansion.
Example
Examples- Bonds
- usually issued by commercial banks. (Eg: CIMB, RHB etc) - financial managers try to time their borrowing to take advantage of drops in interest rates. - I/R is negotiated between borrower & lender. Some banks have fixed rate/ floating rate.
ii.
THE END