LESSONS ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 RECORD-KEEPING AND ACCOUNTING Set Up a Record-Keeping System Understand Basic Accounting Track Your Inventory

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 2 Lesson 11.1 SET UP A RECORD-KEEPING SYSTEM Keep journals, ledgers, and other types of important business records. Learn about electronic record-keeping. GOALS

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 3 TYPES OF RECORDS Journals Ledgers Bank statements Payroll records Tax records

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 4 TYPES OF JOURNALS Sales journal Cash payments journal Cash receipts journal Purchases journal General journal

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 5 LEDGERS Subsidiary ledgers Aging tables

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 6 BANK STATEMENTS A check register is a book in which you record the dates, amounts, and names of people or businesses to whom you have written checks.

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 7 PAYROLL RECORDS A payroll is a list of people who receive salary or wage payments from a business. A payroll register includes the following information: Employee’s name Number of hours worked Regular and overtime earnings Federal, state, and local taxes deducted Social security and Medicare contributions deducted Other deductions

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 8 TAX RECORDS Income tax Payroll deductions Sales tax

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 9 COMPUTERIZED RECORD-KEEPING Advantages of computerized record-keeping Store and analyze data Link records Reduce errors Correct errors Disadvantages of computerized record-keeping Staff resistance Unauthorized access Computer problems

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 10 Lesson 11.2 UNDERSTAND BASIC ACCOUNTING Demonstrate understanding of balance sheets, income statements, and cash flow statements. Determine whether you need a professional to help you with your record-keeping and accounting. GOALS

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 11 TYPES OF FINANCIAL STATEMENTS The balance sheet The income statement The cash flow statement

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 12 THE BALANCE SHEET A balance sheet lists what a business owns, what it owes, and how much it is worth at a particular point in time. Assets = Liabilities + Owner’s equity

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 13 THE INCOME STATEMENT Revenue Cost of goods sold Operating expenses Net profit before taxes

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 14 THE CASH FLOW STATEMENT Net cash flow is the difference between cash receipts and disbursements. Cash receipts – Disbursements = Net cash flow Positive or negative cash flow Economic effects on cash flow

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 15 USE PROFESSIONALS Accounting assistants Certified public accountant

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 16 Lesson 11.3 TRACK YOUR INVENTORY Track your inventory using a perpetual inventory method and a periodic inventory method. Determine how much inventory to keep in stock. GOALS

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 17 TRACK YOUR INVENTORY Perpetual inventory method Take a physical inventory Periodic inventory method

ENTREPRENEURSHIP: Ideas in Action© SOUTH-WESTERN PUBLISHING Chapter 11 Slide 18 MANAGE YOUR INVENTORY Costs of carrying inventory Obsolescence Deterioration Interest fees Insurance Storage Costs of being out of stock Turnover rates