Reference no: EM131051766

Part 1

Completion of Accounting Chapter Summaries

ESSENTIALS OF ACCOUNTING

Chapter 1: Why is accounting essential for an organization?

1. What is accounting?
2. What is financial accounting (f/a)?
3. What is managerial accounting (m/a)?
4. What are other differences between financial and managerial accounting?
5. Why is accounting essential for an organization?
6. Who is an entrepreneur?
7. Why is accounting essential for an entrepreneur?
8. Accounting in a picture
9. The language view of accounting

Chapter 2: Why don't you become and entrepreneur?

1. Why do people want to get rich and get there fast?
2. Money can certainly give immediate happiness but can it give the lasting happiness that our hearts long for?
3. What is a better way to ensure happiness in the long-term?
4. What lessons from good to great companies confirm this approach to happiness?
5. Is your current career plans in line with your dna?
6. Circle the mountain (n) in society that you and your partner desire to see moved?
7. Identify your top 3 assets (talent, skills, experience, resource, citizenship etc.)
8. Dream big: based on your combined assets, what is a need within the identified mountain that you can, and like to, meet (dna)
9. Begin small: begin by identifying one unit of your primary product or service.
10. Who are your target customers in terms of service and generating cash inflows?

Chapter 3: How do you estimate the revenues of your organization?

1. Why is it a good idea to focus initially on a single product or service?

2. How do you estimate the revenues from a single product or service?

3. What is the connection between estimated revenues and marketing?

4. What is the connection between marketing and selling?

5. How did this marketing concept emerge over time?

6. What then is marketing management?

7. What constitutes a marketing plan?

8. How do you estimate the demand for a new product or service?

9. What is price sensitivity?

10. What is price elasticity?

Chapter 4: How do you manage the costs of your organization?

1. Why do firms incur costs?

2. Should firms seek to minimize their costs?

3. How are costs classified?

4. What is the difference between start-up costs and operational costs?

5. Why are some start-up costs capitalized (long-term assets) while others expensed?

6. Why are some operational costs considered variable while others fixed?

7. What are some examples of variable and fixed costs?

8. What is operating leverage?

9a: what are some examples of long-term assets?

9b: what are some examples of initial expenses start up cost!!

10. What is the connection between operations management and operational costs?

11. What is the connection between supply chain management and operational costs?

12. What is a production flow chart

Chapter 5: How do you position your organization strategically?

1. What is the basic idea of a strategy?
2. What is not a strategy?
3. What exactly is a strategy?
4. What are the two distinct factors that affects a company's performance (ncf)?
5. What are the two strategies companies use to position themselves within an industry?
6. What is strategic management?
7. How can a business decide which positioning - product differentiation or operational efficiencies - suits them the best?
8. What is the difference between adding a second business versus expanding the product line?
9. What should you look for in expanding the product line to improve net cash flow?

Chapter 6: How do you deal with demand uncertainty?

1. Net cash flow (ncf) is a good indicator of profitability but are all input factors easy to estimate?
2. What problems does an uncertain demand cause?
3. What is the impact on ncf, if first year demand is half what you predicted?
4. Given its impact on ncf, should firms conduct market research to estimate demand?
5. How then should a manager deal with an uncertain demand?
6. What is a unit contribution margin (ucm)?
7. What factors increase ucm?
8. When does unit variable costs (uvc) decrease?
9. What is operating leverage (ol)?
10. What is the algebraic expression of the ncf - demand line?
11. How do you calculate the break-even point?
12. What is the margin of safety (ms)?
13. What is percentage margin of safety (ms)?
14. What is the degree of operating leverage (dol)?
15. What problems do multiple products cause for breakeven analysis?
16. How do firms get around this problem?

Chapter 7: How do you identify all information relevant for a decision?

1. What are the challenges in identifying information relevant for a decision?

2. How then can managers identify all relevant information?

3. What does it mean to focus on value when making a decision?

4. What does it mean to think incrementally when making a decision?

5a: what is a sunk cost?

5b: what is an opportunity cost?

6. A decision making framework

Chapter 8: How do you handle opportunity cost of capital and operational risk?

1. Suppose you have excess capital and an opportunity to earn a 5% return on your capital.

2. How much will a dollar invested today will become after 1 year?

3. When you have the opportunity to make returns, this one dollar becomes more important 2 years and 3 years?

4. Which will you prefer - receiving a dollar today or $1.157625 after 3 years?

5. In other words, the present value of $1.157625 after 3 years is

6. What then will be the present value of a dollar after 3 years?

7. What then is the present value of a dollar after n years?

8. Suppose the opportunity cost of capital is r% and a dollar is received after n years:

9. What will be the present value of this dollar?

10. What will be the present value of x dollars received after n years?

11. What will be the present value of $2,000 received after 3 years with an occ of 5%?

12. How should iv analysis be modified to accommodate for opportunity cost of capital?

13. Suppose the opportunity cost of capital is 6%, what is the present value of $1,000 after 9 years?

14. What factors play into the risk adjustment?

15. How should the npv analysis be modified to account for the operational risk?

16. What do you do when you are unsure about the exact level of risk adjustment?

17. What can you learn from the irr (internal rate of return) of a business or project?

18. How does one use irr to decide whether to invest in the business or not?

Chapter 9: How do you incorporate taxes into the npv/irr analysis?

1. What are the purposes of taxes?
2. What are the ways the government earns tax revenues?
3. How does tax evasion differ from tax avoidance?
4. What are the major determinants of the tax implications of an entrepreneur?
5. How do you calculate the tax liability of an entrepreneur?
6. What is the downside of sole proprietorships and partnerships?
7. How can the entrepreneur avoid this risk?
8. So what is your recommendation?
9. When then should an entrepreneur incorporate?

Chapter 10: What is the optimal way to finance your organization?

1. Why do you need financing?
2. What is the cheapest way to finance your start-up costs?
3. What is the next best way to finance your start-up costs?
4. When does dipping into credit cards become necessary?
5. What do you do when you still do not have enough of the start-up costs?
6. What is your wacc - weighted average cost of capital?
7. How do you decide whether to invest in your organization or not?

Chapter 12: How do firms keep track of their transactions?

1. What is the difference between gaap and ifrs?
2. What is a double entry?
3. What are debits and credits?
4. What are some important principles that govern the double entry?
5. Why following these principles require some adjusting entries at the end of a period?
6. What are the major transactions during the start-up phase?
7. What are the major transactions during each year (operating cycle)?
8. What is the connection between transaction analysis and the balance sheet?
9. Which balance sheet items receive the most entries during transaction analysis?
10. How does transaction analysis connect with the cash flow and income statements?

Part 2 of Business Plan

The second part (about 8-12 pages long) is a chapter by chapter report with an internal audience:

· What you think are the main accounting concepts under each chapter
· How did they come into play in your business plan
· The challenges you faced and lessons learnt under each chapter
· Any other interesting observations under each chapter