Exam 2 Flashcards
Accounting
System to gather, compile and
present all of the company’s
financial information to help
managers make business decisions.
Double-Entry Accounting
- every transaction is entered twice – First in an Asset account – then in either a Liability or Owner’s Equity account
Owner’s Equity
Assets – Liabilities
Profit
Revenue – Expenses
Types of Accounting Methods:
Cash Basis, Accrual Basis
Cash Basis
– income and expenses are recorded at the time they
are received/paid
Accrual Basis
income and expenses are recorded at the time
they are earned/incurred
Key Financial Statements
Income Statement, Balance Sheet, Statement of Cash Flow
Revenue Model
the strategy the company uses to
generate cash from each customer
segment
Pricing Model
the tactics you use to set the price in
each customer segment
Common approaches to pricing
Cost based, value based
Single-sided markets
care about revenues
Multi-sided markets
may care about users
first, revenues second
Often Web-based
“Direct” revenue models
- Sales: Product, app, or service sales
- Subscriptions: SAAS, games, monthly subscription
- Freemium: use the product for free: upsell/conversion
- Pay-per-use: revenue on a “per use” basis
- Virtual goods: selling virtual goods
- Advertising sales: unique and/or large audience
“Ancillary” revenue models
Referral revenue: pay for referring traffic/customers to other
web or mobile sites or products.
• Affiliate revenue: finder’s fees/commissions from other sites
for directing customers to make purchases at the affiliated site
• E-mail list rentals: rent your customer email lists to
advertiser partners
• Back-end offers: add-on sales items from other companies as
part of their registration or purchase confirmation processes, or
“sell” their existing traffic to a company that strives to monetize it
and share the resulting revenu3
Asset Sale
Sale of ownership right to a physical
product
Usage Fee
Usage of service. Fee is proportional to
the usage of the service.
