1. Business Administration Unit 5 Financial Management Chapter 15 Financial Records in a Business

2. Text Book Page 383 Record Keeping – Time Consuming But Important Work Book Page 129 – Controversial Issues 15-1

3. Accounting Records Organized summaries of a business’s financial activities What records to keep How to keep them Who prepares Use info to prepare budgets

4. Small Businesses Manual record system Standardized forms Cash register Software programs

5. Large Businesses Accounting software Record, process & store info Bookkeepers & accountants Outsourcing Hiring an outside firm, expertise, less expensive

6. Large Businesses Data Processing Center Computers analyze & organize data Prepares reports Payroll, billing, inventory Point-of-sale terminal Bar code scanners Subtract from inventory Reorders

7. Types of Records Accounting for cash Receipt & payment records Depreciation records Special asset records Tax records Payroll records

8. Accounting For Cash Petty Cash Used for small purchases Never larger than needed Petty cash voucher Proof of payment Keep track of depleted amount Bank Statement Matches checkbook balance

9. Receipt & Payment Records Accounts receivable record Credit sales Who owes, who paid Accounts payable record Money you owe Amount paid, amount still owe

10. Depreciation Records Asset Anything of value owned Tools, computers, cars Depreciation Decrease in assets value over time

11. ? ? ? ? ? ? ? Calculate depreciation for 1 year on equipment purchased for $12,000, it will last 4 years and has scrap value of $2,000

12. Depreciation Records Fixed assets Material assets that last a long time Building, land, equipment Except land, depreciate over time Charge loss in value as operating expense

13. Depreciation Records Obsolescence Out of date or inadequate for particular purpose Old computer Still works, but can’t run new programs

14. Special Asset Records Detailed info on assets Precise record of insurance policies Type of policy, company purchased from, amount, premium, purchase & expiration date All fixed assets included

15. Special Asset Records Asset book value Original cost less accumulated depreciation Purchase price = $2,000 Depreciation = $300 yr. X 2 yrs. = $600 Asset book value = $1,400

16. Tax Records Federal income tax W-4 provides info on family status Social security Unemployment compensation insurance

17. Payroll Records Hours worked, regular wages, overtime wages & deductions Reports made from info Pay checks written

18. Budgets Financial plan (usually 1 year) Estimated revenues & expenses Set financial goals Compare actual results with goals Keeps expenses in line

19. Sales Budget Forecast of expected sales revenue Sales territories Sales representatives Branch offices, departments Products

20. Sales Budget Factors to consider Previous sales Economic trends Competition Weather Population shifts Sales force Availability of merchandise Buying habits Season of the year

21. Merchandising Budget Amount of merchandise expect to sell Too little – lost sales Too much – money tied up in inventory Stored, protected & insured

22. Advertising Budget Based on estimated sales Sales not always in direct proportion to advertising Special ad campaign can temporarily raise sales Merchandising & advertising budgets should be planned together

23. Cash Budget Flow of cash in & out of the business Enough to make payments 2 primary sources Cash receipts &/or Borrowing

24. Capital Budget Replacing fixed assets or acquiring new ones Worn-out or obsolete

25. Income Statement Budget Projected sales, costs, expenses & profits Sales – costs & expenses = profit

26. Budget Estimate of what might happen Can’t be followed exactly 3 budgets planned Sales < expected Expected sales Sales > expected Can quickly switch as needed

27. Text Book Page 399 – Management Close-Up Answer ?’s 1-2-3 Check if done Review in class

28. Work Book Pg. 129 – 15-2 - Controversial Issues Check if 15-1 & 15-2 done Review in class Pgs. 127-128 – Study Guide Turn in Pgs. 130-133 15-B, 15-E, 15-F, 15-G, 15-I Check if done – review in class

29. End of Chapter 15