Introduction to Financial Management

Financial Management  Conducting all financial matters of the organization in a way that ensures that funds are used in a proper and efficient manner

Financial Management System Budgeting Record Keeping – Accounting Reporting – Income Statement, Balance Sheet, Cash Flow

Budget Foundations  strategic plan  numerical representations  benchmark Done on a yearly cycle  Bottom-up/Top Down Budgeting  Coordination/control

Methods of Budgeting  (  Program-Planning-Budgeting System (PPBS )   Line Item   Incremental   Zero Based

Record Keeping: The General Leger (GL) Purpose:   Income/expenses   sources

Components of a General Ledger   Assets   Liability   Revenue   Expense   Gain   Loss

General Leger

Two Types of Accounting   Management Accounting   Financial Accounting

Reports : Financial Accounting Financial reports include the following components:  Balance Sheet  Income Statement  Statement of Retained Earnings  Statement of Changes in Financial Position

Balance Sheet  The financial position of an entity  Assets

Reporting – Balance Sheet Assets = Liabilities (debt) + Owners Equity Assets (has $ value)Liabilities (debt) Current AssetsCurrent Liabilities Fixed Assets = Long Term Liabilities Other Assets + Equity value of investment of owners plus profit left to accumulate

Income Statement  an organization’s operations  personal Income statement

Income Statement Sample - Sorority Swimwear Sales Direct (cash) Retail Internet Cost of Goods Sold Royalties Expenses Salaries Payroll Taxes Depreciation on “equipment” Workers Compensation Health Insurance Advertising Office Supplies Rent Utilities Bad debts Travel Miscellaneous Interest Taxes Gross Profit Net Income

Statement of Retained Earnings  Net income  Explains the changes.  Breaks down changes.