Chapter 15 Business Financial Records 1 Chapter 15 Business Financial Records ©2008 Thomson/South-Western

Chapter 15 Business Financial Records 2 Lesson 15.1 Types of Financial Records Goals Describe why businesses need to maintain financial records. Identify and discuss the purpose of several types of business financial records.

Chapter 15 Business Financial Records 3 Financial Records Financial records — organized summaries of a business’s financial information and activities Small-scale record systems — manual records systems, cash register information, accounting software Large-scale record systems — accounting software, accounting departments, POS terminals, outsourcing

Chapter 15 Business Financial Records 4 Types of Financial Records Cash records Credit records – Accounts receivable record – Accounts payable record Depreciation records Special asset records Tax and payroll records

Chapter 15 Business Financial Records 5 Lesson 15.2 Budgets and Budgeting Goals Describe the uses of several types of business budgets. Discuss the reasons managers prepare more than one budget estimate.

Chapter 15 Business Financial Records 6 Types of Budgets Start-up budget Operating budget Cash budget Capital budget Sales budget

Chapter 15 Business Financial Records 7 Lesson 15.3 Financial Reports Goals Describe the information contained in a balance sheet statement and the importance of that information to a business. Explain how an income statement is different from a balance sheet and the value of the income statement to a business.

Chapter 15 Business Financial Records 8 The Balance Sheet Balance sheet — financial statement that reports a business’s assets, liabilities, and capital on a specific date Assets — anything of value owned Liabilities — claims against assets (debts) Capital — value of owner’s investment after subtracting liabilities from assets

Chapter 15 Business Financial Records 9 The Income Statement Income statement (profit and loss statement) — financial statement that reports information about revenues and expenses for a specific period Revenue Expenses Profit or loss

Chapter 15 Business Financial Records 10 Lesson 15.4 Analyzing Financial Data Goals Describe several types of financial analysis that help in the understanding of a business’s financial condition. Identify where business owners and managers can turn to get help with understanding and using financial information.

Chapter 15 Business Financial Records 11 Using Financial Information Cash flow — movement of cash into and out of a business Working capital — difference between current assets and current liabilities Financial ratios — used to identify possible problems needing correction; examples are return on sales, inventory turnover, current ratio, return on investment

Chapter 15 Business Financial Records 12 Cash Flow

Chapter 15 Business Financial Records 13 Sources of Financial Information Accountants Bankers Consultants Government – Small Business Administration (SBA)