Entrepreneurship

LECTURES/PPT AND HANDOUTS-BASED

FINANCIAL STATEMENTS - Fixed Assets
- are written records that convey the financial activities
LIABILITIES - what a company owes-
of a company.
- Debts or obligations of a business
1. INCOME STATEMENT (“profit and loss
statement” or “statement of revenue and expense”) - Current liabilities are a company's short-term financial
obligations that are due within one year or a normal
- is a financial statement that lets managers and
operating cycle (e.g. accounts payable).
investors know if a company made or lost money during
a specific period. - Long-term liabilities are obligations listed on the
balance sheet that are due for more than a year.
- Essentially, it measures a company’s financial
performance over a specific accounting period by giving OWNER’S EQUITY - how much money the company
a summary of how the business incurs its revenues and owner(s) have invested in the business.
expenses through both operating and non-operating
activities. It shows the net profit or loss incurred over a - Money Invested
specific accounting period, typically over a fiscal quarter - Paid in Capital
or year.
Retained earnings are the amount of profit a company
Net Profit = Revenue - Expenses has left over after paying all its direct costs, indirect
costs, income taxes and its dividends to shareholders.
There are two (2) parts to an income statement:
OPERATING SECTION
• Revenues – “Revenues are the sales of products,
merchandise, and services that a company makes to
customers due to the normal business activities.
• Expenses – the cost required for something; the money
spent on something
• Depreciation/Amortization - An accounting method
use to allocate the cost of a tangible or physical asset
over its useful life.

NON - OPERATING SECTION

• Other revenues or gains (not from business operations)
INTEREST EARNED
• Other expenses or losses (not from business
operations) /Financial costs INTEREST OWED

BALANCE SHEET (or “statement of financial

position”)
- is a summary of the financial balances of a sole
proprietorship, a business partnership, or a company. It’s
a summary of what the company owns and owes, as well
as the amount invested by the shareholders. Assets,
liabilities, and ownership equity are listed as of a
specific date, such as the end of its financial year.

Assets = Liabilities + Owner’s Equity

ASSETS - what a company owns.

- “Resources such as merchandise, land, buildings and
equipment, that are owned by a company and that will
provide future economic benefits to the company”
- Current Assets