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BUSN104 Money Matters – 27/02/2018 [email protected] teachers’ email ENTREPRENEURSHIP AND SOURCES OF CAPITAL -All business’ require capital to begin to operate. Entrepreneurs can raise capital by INVESTING their own money, or BORROW money from a bank or another external source. PRIVATE ENTERPRISE Individuals’ own business’ that produce and sell services and/or goods for a profit. -Generally fall into three categories, service, merchandising and manufacturing. SERVICE BUSINESS’ Performs services or activities that benefit individuals or business customers. Professional practices such as accounting, law and medicine. Companies such as Qantas airlines and LJ Hooker Real Estate. MERCHANDISING BUSINESS’ Purchase goods for resale to their customers. Some are wholesalers; they sell their goods to retailers or other commercial users. Companies such as Woolworths, Toys R Us and Myer. MANUFACTURING BUSINESS’ Make their products and then sell them. Manufacturers has no goods to sell until they are manufactured. Companies such as Ford Australia, Black and Decker, BHP Steel THE FORMS THAT BUSINESS’ TAKE Sole Proprietorship or sole trader – owned by one person who is the sole investor of capital Partnership – owned by 2 or more individuals who each invest capital into the business Company or corporation – a separate legal entity independent of its owners and run by a board of directors. REUGLATORY ENVIRONMENT OF BUSINESS Many different laws and authorities regulate the business environment, covering issues such as; consumer protection, environmental protection, employee safety, hiring practices, taxes Companies must comply with different sets of regulations depending on the nature of their business. Regulations are imposed by local, state and federal government. When a business conducts business

internationally, it also must abide by the laws and regulations of the other countries in which it operates. IMPORTANCE OF ACCOUNTING Accounting is the language of business; if you don’t have some understanding, you’re not in the conversation. Accounting is a service activity; its function is to provide and interpret financial information to assist in decision making. An accounting system allows users to identify, measure, record and summarise information about the activities of a business.

Accounting is used in a range of organisations; business, government, charities and not-for-profit. THE ACCOUNTING ENVIRONMENT Accounting evolves as society and businesses change. Some of these changes include; Rapid developments in information and communication technologies, increasing demand for a range of information about organizational impact AREAS OF ACCOUNTING Management account; Internal – Planning, controlling, decision making – Cost behavior – Budgeting – Strategy Financial account: External focus BASIC FINANCIAL STATEMENTS Summaries and communicate financial information to external uses. Three major financial statements, the income statement, the balance sheet, the cash flow statement. INCOME STATEMENT Summarises the results of a business’ operating activities for a specific time period. Revenues and expenses appear in the income statement. BALANCE SHEET Shows the financial position of a business on a given date. Assets, liabilities and owners equity appear in a balance sheet. STATEMENT OF CHANGES IN OWNERS EQUITY Provides information about the amount shown in the owners equity section of the balance sheet. CASH FLOW STATEMENT Summarises cash receipts, cash payments and net change in cash for a specific time period. Cash flows from investing, operating and financing activities. ETHICS IN BUSINESS AND ACCOUNTING A business’ financial statements should convey information about the business to internal and external users in order to facilitate decision making. // If this information does not convey a realistic picture, the decisions may have a disastrous consequences. // For this purpose, it is important that accountants maintain high ethical standards....