RST 218

• • Make comparisons about performance.
• • Generate reports, tax documents & financialstatements.
• • Accurately account for all resources.
• • Minimize theft and fraud.
• • Do all the above at low cost.

No

• – Cost
• – Guaranteed Acceptable Accounting Principles

• • Budgets should be considered as planningtools for businesses. Helps to set goals.
• • Cash budgets are a critical way we have tocontrol our business
• .• Through budgets and accounting we reduceeverything to dollar terms thus they arecomparable.-

• • Cash– Report revenues only when actually receivedand expenditures when actually made.
• • Accrual– Payments and debits recognized when acommitment is made - not the transaction.

– Show if you have earned a profit

• Sales revenue
• -Operating expenses
• – Cost of goods sold
• = Operating profit

Shows the financial health of the firm at anygiven moment.

• – Because assets always equal equities
• – On the left side, what the business has on theright who owns it.

• • Important because they measure cash flow.
• • It helps answer the vital question: Will be able to pay our bills on time.
• • It shows when cash will come in and when it needs to go out

• – Non-cash expense
• – Takes the cost of a long term asset andincrementally reduces it to show its declining value.

Is a measure of operating efficiency. For every dollar in sales what is the profit?

A measure of financial efficiency. What profit are you getting from the entire investment

• • Fixed costs
• • Variable Costs
• • Mixed costs
• • Break-even analysis

• • To assess the same firm/profit center overtime
• • To compare different firms/profit centers
• • The value and use of any ratio dependsupon your needs and objectives

• • Debt to equity
• • Maturities of long term debt
• • Fixed-charge coverage
• • Degree of financial leverage
• • Cash flow to total debt

• • Current ratio How many times firm cancover liabilities with current assets
• • Quick or acid test
• Using most liquid assets
• • Inventory turn over by unit of time
• • Accounts receivable turnover by unit of time

• • Net profit margin after tax
• • Net profit margin before tax
• • Earnings per share
• • Return on equity after tax

• • More likely to become repeat customers
• • May purchase things they wouldn’t haveotherwise
• • Tent to overspend
• • Pay less attention to price
• • Easier to sell them things
• • Purchase items of higher quality
• • Appeals to those not wanting to carry cash

• • Tie up money in accounts receivable
• • Credit refusal may cause ill will
• • Credit customers tend to return more items
• • More bookkeeping needed
• • Some just won’t pay
• • Sometimes competition forces us into it

• Too small and efficiency will suffer
• Larger than needed and the cost will be too high - money wasted.

• customer movement
• – inventory & storage
• – work areas & offices
• – displays & restrooms

The physical appearance gives customers their first impression. Very important for retail establishments

• – high fixed expense
• – hassle of construction

• +perfect building
• +create ideal image for customers
• +latest design
• +most efficient
• +may have no other available choice

• – settling for something less than ideal
• – cost of remodeling/codes must be added
• – the area may decline
• – like building, cuts down on your mobility

• +may be good investment (appreciation)
• +can do what you want with building
• +like building, favorable tax deductions

• – limitations in remodeling
• – additions become property of owner
• – if successful expect rent hikes
• – lease may not be renewed
• – owner may be reluctant to fix things
• – cost, prime space on Green $15.25/sq’/yr

• +no large initial cash outlay
• +mobility not a problem

Sends message (image) to customers.

• – straight
• – angled
• – arcade

• Good medium for mobile society
• Always on the job & cost efficient
• Easy to use, control and change

• Message should be visible, simple &clear
• Readable from where the audience is

• – poor lighting
• – lack of privacy
• – excessive noise

• $120 billion swap from individual to business
• – Increased complexity of tax code - again

If you are going to have any hope of not payingtoo much taxes an excellent record keepingsystem is mandatory.

• Permanent
• Accurate
• Complete

No

• Cash receipts (gross income)
• Deductible business expenses
• Depreciation allowance.
• Self-employment taxes - what you take

Partners are liable for their share of thebusiness income regardless of whether ornot they received any of it personally

• what they cost to make or buy
• a little more difficult to measure for manufactoring

• These expenses are considered capitalexpenditures and must be deducted over 60mos. or more.
• Include: market research, location analysis,consulting and training

• Ordinary and necessary (related to thebusiness)
• Reasonable (compared to similar businesses)
• Services rendered (actually performed)
• Paid in current year

• Item must be employed by the business orused to produce income.
• Its useful life is determinable and longer than1 year.
• It must wear out or become obsolete.

• Legal obligation (debtor-creditor relationship)
• Must actually incur a loss.
• Must make a reasonable attempt to recoverloss.
• Partial loss is OK for IRS.

• Ordinary and necessary
• Not extravagant - reasonable for your position.
• Can cover meals, lodging, transp. laundry, phone.
• You may deduct US travel that mixes business andpleasure
• Keep accurate records: receipts, documentdeparture & return times, purpose of trip, itinerary

• If used only for business then everything isdeductible: gas, repairs, ins., interest, loan etc.
• If mixed use you must break out costs.
• Again, record keeping is very important. It isadvisable to keep a log book

• Not lavish & directly related to business.
• Must have substantial business decision; before,during or after. Only 80% deductible

• More than a general expectation of earning incomeor some other benefit.
• During this time you did engage in business
• Main purpose was business transaction.

• Cannot exceed $25 and be deductible
• Under $4 & with the company name fully deductible

• Income tax
• Social Security
• Self-employment tax
• optional retirement programs
• unemployment tax

• State and city income taxes
• Property tax
• Import Duties
• Excise tax on specific products

The goal of tax accounting is to recognize operating expenses ASAP and postponesales revenues a long as possible

• give them more responsibility, train, reward
• be supportive when things are tough

• Discipline is problem in fam atmosphere
• Boss can expect too much
• Boss can be too busy to listen to problems

• in terms of skills not on individuals
• be sure to include yourself

They can help you focus on staff needs and skills

• Title
• Job Statement
• Major and Minor Duties
• Relationships
• Skills and Training Needed
• Salary and Other Compensation

• + Know their work habits
• + Low cost of recruiting
• + Transition to new job can be smooth
• + Can motivate others to work hard

• May cause inbreeding- lack of fresh ideas
• Complacency - too easy
• New hire must be qualified to avoid resentment

• + Employee already has skills - no training
• + Has inside knowledge of competition
• + May bring new ideas

• – The competition may do it to you
• – Starts an upward bidding spiral for employees

• May be the only source
• Surprizing source of new talent

• may not have exact match in skills
• more training needed (time and money)

• ask current and former employess
• state and private employement agencies
• newspapers and trade publications

• • Overall job climate
• • What the competition pays, inc. benefits
• • Prevailing union rates
• • Minimum wage
• • Local cost of living
• • Workman’s comp & other required costs
• • Your ability to pay.

• To give rewards where they are mostneeded.
• • Show where training is needed
• • Shows that you care
• .• Justifies future personnel actions

• up
• down
• across
• value chains

• between you and a parent company or supplier B2B
• this is the biggest sector of e-business

between you and your customers B2C

between you and similar firms or competition B2B

• retail dot com
• retail/traditional
• copperatives= one site many vendors
• auctions

• • It is theirs to loose.
• • They already have the customers.
• • They have brand identity (logo &trademarks)
• • They already know the market
• • They already know the distribution channelsand suppliers.

• Can make or break an e-business
• information architecture
• attractive, consistent and easy to use

• good webpages
• discount prices
• security
• ease of use

• display mechanism
• registration system
• transaction order processing mechanism

showing your goods in a positive way

• vendor hosted
• vendor hosted with software required
• in house hosting

• market share
• adversting and data mining
• oneline testimonials and ratings
• interactive sites
• accept ebiz returns are stores

• Help and search functions.
• • Online one-to-one text based chats.
• • Internet telephony.
• • Automated response to email.
• • To retain customers and increase spending.
• • Reduce expensive labor costs

• collecting data on consumers
• selling customer data
• financial security
• digital signature
• intrusive push technology

• shopping bots and price comparison services
• cost of good e-business may rival traditional stores
• future built on credibility
• interactivity vs. shovel aproach
• innovators often left customers dissatisfied
• traditonal retailers adopting eCommerce cautiously
• P2P transactions on the rise
• Customization
• Personalization

• maintenance costs
• push technology and pop up windows
• software that blocks advertising
• hackers
• stickiness and click through

• micro business opportunities
• very easy to start
• often more work
• potential for unlimited growth
• consumer behavior- auction fever

• based on assumption the web was the new way sales were going to be made
• advertise revenue a key factor
• as effectiveness drops agrgressiveness rises

• growth in direct email advertisitng
• sponsorship of webpages
• quick adjustment and cancellation of ads
• use web to inform not direct sales

• quality
• quantity
• price
• time
• vendor/supplier analysis

• indentification
• risl of loss
• receiving merchandise

• inventory control systems
• physical inventory count
• just in time
• jobbers
• slow moving inventory

cost businesses over 20 billion a year

• juveniles
• impulse shoplifters
• vagrants, alcoholics and addicts
• kelptos
• professionals

• they work alone or in groups
• when few staff are around
• linger in one area for a long time
• refuse help of sales people
• frequently look around
• have thier own ways of concealing goods

• learn to look
• train employees
• install mechanical devices
• set up the store layout a specific way

• do not have physical contact
• call police
• if possible approach outside the store
• don't accuse people of stealing

30 %

• no security
• too trusting
• don't want to admit it

• what the workaholic
• watch the disgruntled employee
• show a high moral standard
• run a tight ship and watch catch control
• look at facility and security
• hire honest people

you

• economic responsibility
• legal obligations
• ethical responsibilty
• philanthrophy

short term financil gain

• enviromental
• health
• persons with diabilites
• ism and other biases
• cheating on taxes
• misrepresenting a product or service