Exams Flashcards
What are the 3 management activities and what accounting support is provided
Planning - budgets
OPerating - cost analysis
Evaluation - cost reports
Parts of a business plan (5 parts)
- Description of business plan
- Marketing plan
- Operating plan
- Environmental/sustainability plan
- Financial plan
Sources of capital (3)
- Grants
- Short term capital
- Long term capital
Contribution margin
total sales rev - total variable costs
Contribution margin per unit
rev per unit - variable cost per unit
Profit (cont. marg.)
contribution margin - FC
Conbtibution margin %
COntribution margin/total sales revenue
What is included in the master budget (7)
Sales budget
Purchases budfet
Selling expenses budget (operating expenses budget for service business)
General admin/expenses budget
Cash budget + projected cash flow statement
Projected income statement
Projected balance sheet
Cash budget (3 sections)
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Historical cost concept
Business records its transactions based on dollars exchanged at the time REGARDLESS off whether the value has changed
Entity concept
When business and owners are kept separate eg. in accounting system/records
Process to prepare financial information (4 steps)
- Identofy and measure the transactions
- Record the transactions
- REport the transactions
- Analayse and interpret the transactions
Expanded accounting equation
Assets = liabilities + owners capial + net income (Rev-exp)
Going concern
Assumption that an entity is able to continue as a viable entity for the fprseeable future
accrual accounting
Recordining revenue and expenses in the same accounting period that G/S are provided, regardless of when cash is rewceived/paid
working capital
current assets - current liabilititesd
bank reconciliation causes of difference (5)
- Deposits in transit
- Outstanding payments/cheques
- Deposits made by bank
- Charges made by bak
- Errors
Net sales
Initial reevenue - sales returns - allowances - discounts
cost of goods sold
(beginning inventory cost + inventory ourchases) - cost of ending inventory
Accounts included in income statement (4)
- Rev
- Exp.
- Loss
- AGain
Profit margin
net income/net sales
Gross profit margin
Gross profit/net sales
net income
Sales revenue - expenses
current ratio
current assets/current liabilities
quick ratio
quick assets/current liabilities
debt ratio
total liabilities/total assets
return on total assets
net income + interest paid/average total assets
return on OE
net income/average OE
invetory turnover
COGS/average inventory
accounts receivable turnover
net credit sales/average accounts receivable
Sections of cash flow statement
- Operating
- Investing
- Financing
Operating cash flow margin
Net cash operating/net sales
Cash return on total assets
Net cash operating + interest paid/ave. total assets
Purose of business plan
- Organuse
- Benchmark
- Assist in getting funding
