Class 6- October 14,2015
Class 6- October 14,2015 BA 101
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This 3 page Class Notes was uploaded by Jillian Rogers on Wednesday October 14, 2015. The Class Notes belongs to BA 101 at University of Oregon taught by Tom Durant in Fall. Since its upload, it has received 21 views. For similar materials see Business 101 in Business at University of Oregon.
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Date Created: 10/14/15
Class 6 Introduction to business 101 October 13 2015 mg t is just about concepts represented by numbers It serves as a way to quotkeep score for your company The goal of business To create wealth Competing for transactions in the market How can you tell how well you are doing Measure individual transactions Put them all together How much acquired wealth do you have and where did it come from Assets Liabilities Owners Equity How much new wealth are you creating with it Revenue Expense Pro t Three primary accounting documents The Balance Sheet The Income Statement The Cash Flow Statement Balance Sheet A nancial statement that summarizes a company39s assets liabilities and shareholders39 equity at a speci c point in time Assets An asset is a resource controlled by a company as a result of past events and from which future economic bene ts are expected to ow to the company Liabilities Obligations of a company or organization amounts owed to lenders suppliers and employees Owners Equity The amount of ownership a company has in an asset Balance sheets tells you about Assets 0 Loans Retained Earnings Owners Equity 0 Inventory value 0 Plant amp Equipment 0 Accounts Receivable Accounts Payable BIG CATEGORY QUESTIONS What is the value of all of the resources that you have at your control to use in this business to create more wealth How much of that value came from loans How much of that value is the owners Income Statement The story of transactions over a speci c time period 0 Revenue sales transactions Business and its customers Expense transactions Business and its suppliers such as resources people and capital 0 Net Income is also Pro t Loss The difference between revenue and eXpense Expenses Variable costs Cost of Goods Sold COGS The more you make the greater the cost Labor used to make product or service Material to make product or service Cost of keeping inventory Period or Fixed Costs Operating Expense The cost of being in business that month Sellingpromotion expenses Administrative expenses RampD expenses Depreciation expense Income Statement Information Among other things the income statement tells you about 0 Sales or Revenue 0 Fixed or Period Costs 0 Contribution Margin Cost of Goods Sold or COGS Depreciation Expenses Interest and Taxes Net Income Whose pro t is it o If the company reinvests the income Retained Earnings If the company gives it to owners Dividend to stockholders Income to partners or a sole proprietor Income Statement Revenue Funds from the sale of product either cash or onaccount Variable costs more products you make the greater the total cost Material costs cost of the materials in the products you sold Labor costs cost of the labor for the products sold Total variable cost the Cost of Goods product Sold COGS Contribution Margin difference between the revenue and the cost of goods sold Period Costs xed over a period of time Do not vary With activity Depreciation value that operating uses up the factory and equipment RampD Money spent developing new products improve existing Marketing expense Money spent advertising selling and distributing products Admin expense The cost of legal expenses accounting services etc Total period costs The costs of operating your business over a period of time Earn Before Interest Tax Revenues variable costs contribution margin period costs Net margin Interest expense The rent you pay to use other people s wealthmoney Taxes The tribute you pay to the government as a citizen of a society Net Income Revenues variable cost period costs interest taxes Pro t Earnings Return Bottom Line