BUSINESS FOUNDATION REVIEW: Cost concept: Amounts are initially recorded in the accounting records at their cost or purchase

price. Assets= Liability + Owner s Equity When purchased supplies, supplies under assets increased, accounts payable under liability increased Billed customers for delivery services, accounts receivable under assets increased, service fees under Revenue increased Received cash from customers on account, accounts receivable under assets decreased, cash under assets increased. Received cash from customer: cash, fees earned. Paid creditors on account: cash (decreased), accounts payable (decreased) Invest money in company: cash, capital stock Purchased supplies on account: accounts payable (increased), supplies (increased) Received cash from customers on account: cash, account receivable(decreased) Pay wages: cash, wages expense(increased in negative) Paid utilities: cash, utilities expense(increased in negative) Paid dividends: cash, dividends(increased in negative) Billed customers on account: assets (accounts receivable increased), fees earned (increased) Paid dividends: cash decreases, dividend increased by a negative number Page 26, 27 Types of companies Balance Sheet: Includes assets , liability and owner s equity. In assets, cash or land, supplies listed. In liability, accounts payable listed. In owner s equity, retained earnings and capital stocks are listed. Income Statement: Fees earned, Expenses. Retained Earnings Statement: retained earnings from previous statement, dividends, net income or net loss. Statement of cash flows: Cash flows from operating activities:

Fees earned Expenses cost Cash flows from investing activities: Lands expense Cash flows from financing activities: Dividends Capital Stock Cash flows from previous report Cash flows from this month report Mission: organization s goal, reasons of its existence Mission Statement: A "mission statement" describes a business organization in terms of goods, markets, services, and client needs. Starting a business includes: planning, organizing, leading, and controlling A team is a relatively small amount of people who are committed to a common purpose with commentary skills and hold themselves mutually accountable. Characteristics of losing teams: dominated by one individual, unsettled between 2 different strategies, engaged in groupthink, and not all members contribute. Characteristics of winning teams: trust each other, have clear time frame and agreed upon goals, get facts and do analyses before making decisions, divide responsibilities, all team members contribute, everyone challenges different ideas. What makes team effective: personal style and team members, team members behavior, clear roles and expectations, getting and receiving constructive feedbacks. Team charter provides guidelines, what is expected and what is not for the team. Our personal styles are shaped by: background and experiences, interests, desires, values. Problem-solving team consists of 5-12 people from the same department who voluntarily came together to find ways of improving quality, efficiency, and work environment. Self managed team required minimum supervision and managed their own activities. Functional team (vertical) consists of managers and employees within a single functional department.

Free-riders: people who don t contribute fairly to their team since their works aren t held individually accountable. Hidden agenda: private motives that affect team s interaction. Five stages of team development: forming, storming, norming, perfoming, adjourning. Avoidance: ignoring conflict let it resolve on its own. Defusion: downplaying differences and focus on similarities. Confrontation: bring conflict out in open discussion. Manufacturing business: capital intensive Retailers (Merchandizing): labor intensive Service: labor intensive. Form of ownership: sale proprietorship, partnership, and corporation Financial market-input: debt financing, equity financing (stock) Supplier market-input: material, labor, equipment, etc. Product market-output: self services, goods to customers. Objectivity Concept: amounts recorded based on objective evidence. Financial Accounting: records transaction by using accounting equation. Income Statement includes: fees earned, expense Retained Earnings Statement includes: retained earnings from previous record, net income, less dividends. Balance Sheet includes: assets, liabilities and owner s equity: cash, supplies, accounts payable, capital stocks, retained earnings Statements of Cash Flows includes: cash flows from operating activities: fees earned, expense; investing activities: lands; financing activities: capital stocks, dividends.