Entrepreneurship – FINALS REVIEWER

MARKETING MIX

The marketing mix is a combination of marketing tools used by a company to satisfy their target market
and achieve organization goals. McCarthy classified these tools into four categories:

 Product – goods and services offered by the organization.

 Price – amount charged for a product or service.
 Place – goods sold to customers must be made available at an accessible place for them to make
purchase.
 Promotion – done through means of personal selling, advertising, publicity, and sales
promotion.

However, Booms and Bitner added three more categories: People, Process, and Physical Evidence.

Market Segmentation is defined as the sub-division of a market into identifiable buyers-groups or sub
markets. The most frequent methods of market segmentation are the following variables:

 Geographical: region, population, density, climate, etc.

 Demographical: age, sex, family size, occupation, social class, etc.
 Buyers-behavior: usage rate, benefits sought, brand loyalty, etc.

Market Research focuses on the segmentation and analysis of information required for the making of
marketing decisions. There are two basic areas in which information is sought:

 Markets – what is happening outside the organization in the market place.

 Marketing tactics and methods – oriented towards how the organization is responding
internally to the customers.

4MS OF OPERATIONS MANAGEMENT

Operations management is defined as the delivering of products and services to customers to meet or
surpass their expectations.

 Manpower – workforce involved in the manufacturing process of the business.

 Machine – manufacturing equipment used in the production of goods or delivery of services.
 Materials – raw materials needed in the production or manufacturing of a product.
 Method – the overall manufacturing process of the business.

There are also two additional M’s of operations: money and management. These elements help a
business achieve its objectives, satisfy its customers, introduce new products, etc.

INCOME AND EXPENSES

Income, or revenue, is the amount a business earns by selling services and products and investing.
Meanwhile, expense is the decrease in owner’s equity resulting from the cost of goods, fixed assets and
services, etc.; the cost of doing business.

UNDER INCOME/REVENUE UNDER EXPENSES

 Operating Revenue – resulting from  Cost of Sales/Goods sold – cost of
normal operations of a business. products purchased or manufactured.
 Non-operating revenue/Gains – all  Operating Expenses – salaries and
 types of income that is not part of the wages, leasing/renting, etc.
main line of business such as gains/losses  Non-operating Expenses – donations,
from investments, property or asset sales, penalties/fines, interests, etc.
etc.

PROFIT COMPUTATION

Gross profit is not the true profit of the business. It is the total sales deducted by the cost of goods
sold. Meanwhile, net profit is the true profit of the expenses. It is gross profit deducted by all indirect
expenses.

Gross profit = Total sales – all direct expenses (cost of goods sold)

Gross profit margin (GPM) = GP/NS

Net profit = Gross profit – all indirect expenses

KEEPING BUSINESS RECORDS

Record keeping is the orderly and disciplined practice of storing business records. It ranges from simple
to complex. Record keeping is important for the following areas:

 Business Operations/Tracking details – customer records, sales records, correspondence,

inventory
 Legal documents – contracts, licenses and permits, payroll and personnel
 Federal, state, and local taxes

Record Keeping Tools

 Simple “paper tools” – file folder, hanging folder, cabinet storage, etc.
 “Tickler” system – helps remind you of upcoming events such as quarterly taxes, license
renewals, insurance reviews and renewals, upcoming bills, callbacks, etc.
 Computer systems – takes less space than paper; faster and easier due to internet transmission.
 Cloud computing – uses the internet to store, manage, and process data.
o Accounting and file hosting

BOOKKEEPING

Bookkeeping is the systematic way of recording financial transactions of a business.

Elements of Bookkeeping

 Double Entry System – identifies dual affect of each transaction to assets, liabilities or owner’s
equity and record it in books.
o Increase in Asset and Expenses = DEBIT
o Decrease in Asset and Expenses = CREDIT
o Increase in Liability, Owner’s Capital and Sales = CREDIT
o Decrease in Liability, Owner’s Capital and Sales = DEBIT
 Source Documents – original record containing the details to prove record of a transaction
entered in an accounting system.
o Examples: purchase invoice, sales receipt, credit note, debit note
  Journal/The day book – a book of original entry; transactions are journalized as soon as they
have occurred.
 Ledger – consists of separate accounts for all assets, liabilities, owner’s equity, income and
expenses.
 Trial Balance – totals of debits and credits of the trial balance should be equal.
 Financial statements – consists of income statement, capital statement, and balance sheet.
o Income statement – prepared to measure the profitability of a business over a period.
o Capital statement – prepared to report the changes during the period to the owner’s
equity accounts of a company.
o Balance sheet – used to report the financial condition at a certain date; assets, liabilities,
and owner’s equity-related accounts are listed.
 Post-closing trial balance – after closing all temporary accounts, the remaining accounts will be
balanced and ruled.

RULES OF DEBIT AND CREDIT

The rules of debit and credit can be simplified in one statement:

DEBIT -> What goes into the company

CREDIT -> What goes out of the company

When journalizing transactions, the following accounts are under debit and credit are to be considered:

DEBIT CREDIT

Expenses Owner’s Equity

Assets Income

Drawings Liabilities

JOURNALIZING TRANSACTIONS

Consider the chart of accounts when journalizing:

CHART OF ACCOUNTS
Assets Owner’s Equity
Cash Rella, Capital
Accounts Receivable
Supplies Income
Furniture and Fixtures Unearned Revenue
Land Service Revenue
Building
Office Equipment Expense
Liabilities Salaries Expense
Accounts Payable  Utilities Expense
Notes Payable