RST 218

Card Set Information

RST 218
2011-05-01 17:23:27

U of I
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  1. Elements of A Good Accounting System
    • • 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.
  2. Are budget or accounting figures always exact?
  3. What is the difference between anaccountant and a CPA?
    • – Cost
    • – Guaranteed Acceptable Accounting Principles
  4. Considerations of Accounting
    • • 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.-
  5. Cash vs. Accrual Systems
    • • Cash– Report revenues only when actually receivedand expenditures when actually made.
    • • Accrual– Payments and debits recognized when acommitment is made - not the transaction.
  6. Why are income statements important
    – Show if you have earned a profit
  7. What do income statement consist of?
    • Sales revenue
    • -Operating expenses
    • – Cost of goods sold
    • = Operating profit
  8. Why are balance sheets important?
    Shows the financial health of the firm at anygiven moment.
  9. Why is it called a balance sheet?
    • – Because assets always equal equities
    • – On the left side, what the business has on theright who owns it.
  10. Why are Cash Budgets important??
    • • 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
  11. What is depreciation?
    • – Non-cash expense
    • – Takes the cost of a long term asset andincrementally reduces it to show its declining value.
  12. What is a return on sales?
    Is a measure of operating efficiency. For every dollar in sales what is the profit?
  13. What is Return on Investment (ROI)
    A measure of financial efficiency. What profit are you getting from the entire investment
  14. What are the 4 costs of doing business?
    • • Fixed costs
    • • Variable Costs
    • • Mixed costs
    • • Break-even analysis
  15. What are Ratios: Debt, Liquidity &Profitability for?
    • • 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
  16. What are the debt ratios?
    • • Debt to equity
    • • Maturities of long term debt
    • • Fixed-charge coverage
    • • Degree of financial leverage
    • • Cash flow to total debt
  17. What the the liquidity ratios?
    • • 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
  18. What are the profitability ratios?
    • • Net profit margin after tax
    • • Net profit margin before tax
    • • Earnings per share
    • • Return on equity after tax
  19. What are the advanatages of consumer credit
    • • 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
  20. What are the disadvantages of customer credit?
    • • 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
  21. Why is size important in choosing a facility?
    • Too small and efficiency will suffer
    • Larger than needed and the cost will be too high - money wasted.
  22. What are the four factors in considering your space needs?
    • customer movement
    • – inventory & storage
    • – work areas & offices
    • – displays & restrooms
  23. Why is appearance important in the building?
    The physical appearance gives customers their first impression. Very important for retail establishments
  24. Negatives of buidling a building for your business.
    • – high fixed expense
    • – hassle of construction
  25. What are the positives of bulding a new building for your business?
    • +perfect building
    • +create ideal image for customers
    • +latest design
    • +most efficient
    • +may have no other available choice
  26. What the negatives of buying a building?
    • – settling for something less than ideal
    • – cost of remodeling/codes must be added
    • – the area may decline
    • – like building, cuts down on your mobility
  27. What are the positives of buying a building?
    • +may be good investment (appreciation)
    • +can do what you want with building
    • +like building, favorable tax deductions
  28. What are the negatives of leasing a building?
    • – 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
  29. What are the positives of leasing a business?
    • +no large initial cash outlay
    • +mobility not a problem
  30. Why are storefronts important?
    Sends message (image) to customers.
  31. What are the three basic styles of storefronts?
    • – straight
    • – angled
    • – arcade
  32. Why is signage important?
    • Good medium for mobile society
    • Always on the job & cost efficient
    • Easy to use, control and change
  33. What elements should your signage include?
    • Message should be visible, simple &clear
    • Readable from where the audience is
  34. What interior problems are reported by employees?
    • – poor lighting
    • – lack of privacy
    • – excessive noise
  35. What was the tax reform act of 1986
    • $120 billion swap from individual to business
    • – Increased complexity of tax code - again
  36. When is record keeping important?
    If you are going to have any hope of not payingtoo much taxes an excellent record keepingsystem is mandatory.
  37. Records must be:
    • Permanent
    • Accurate
    • Complete
  38. Can you backtrack your expenses?
  39. What are some things to keep track of?
    • Cash receipts (gross income)
    • Deductible business expenses
    • Depreciation allowance.
    • Self-employment taxes - what you take
  40. What are partners liable for in taxes?
    Partners are liable for their share of thebusiness income regardless of whether ornot they received any of it personally
  41. What is the cost of goods
    • what they cost to make or buy
    • a little more difficult to measure for manufactoring
  42. What are some of the expenses assoiated with starting a business?
    • These expenses are considered capitalexpenditures and must be deducted over 60mos. or more.
    • Include: market research, location analysis,consulting and training
  43. What are the 4 tests with salaries and wages?
    • Ordinary and necessary (related to thebusiness)
    • Reasonable (compared to similar businesses)
    • Services rendered (actually performed)
    • Paid in current year
  44. What are wages associated with depreciation?
    • 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.
  45. What are 4 tests that are associted with bed debts?
    • Legal obligation (debtor-creditor relationship)
    • Must actually incur a loss.
    • Must make a reasonable attempt to recoverloss.
    • Partial loss is OK for IRS.
  46. What are some expenses associated with travel?
    • 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
  47. What are some expenses associated with transportation?
    • 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
  48. What are some expenses with meals?
    • Not lavish & directly related to business.
    • Must have substantial business decision; before,during or after. Only 80% deductible
  49. What are some expenses associated with entertainment?
    • More than a general expectation of earning incomeor some other benefit.
    • During this time you did engage in business
    • Main purpose was business transaction.
  50. What are some expenses associated with gifts?
    • Cannot exceed $25 and be deductible
    • Under $4 & with the company name fully deductible
  51. Same some taxes that you pay? 5
    • Income tax
    • Social Security
    • Self-employment tax
    • optional retirement programs
    • unemployment tax
  52. Name 4 other taxes that you pay
    • State and city income taxes
    • Property tax
    • Import Duties
    • Excise tax on specific products
  53. What is the goal of tax accounting?
    The goal of tax accounting is to recognize operating expenses ASAP and postponesales revenues a long as possible
  54. In a small business enviroment Because of close relationship the entrepreneur can better observe employees to:
    • give them more responsibility, train, reward
    • be supportive when things are tough
  55. Problem in Managing Staff:
    • Discipline is problem in fam atmosphere
    • Boss can expect too much
    • Boss can be too busy to listen to problems
  56. How should you define your organization?
    • in terms of skills not on individuals
    • be sure to include yourself
  57. What is the benefit of writing job desciptions?
    They can help you focus on staff needs and skills
  58. What 6 features should a job description include?
    • Title
    • Job Statement
    • Major and Minor Duties
    • Relationships
    • Skills and Training Needed
    • Salary and Other Compensation
  59. What are the positives of hiring within?
    • + Know their work habits
    • + Low cost of recruiting
    • + Transition to new job can be smooth
    • + Can motivate others to work hard
  60. What are the negatives of hiring within?
    • May cause inbreeding- lack of fresh ideas
    • Complacency - too easy
    • New hire must be qualified to avoid resentment
  61. What are advantages of hiring people from competitors?
    • + Employee already has skills - no training
    • + Has inside knowledge of competition
    • + May bring new ideas
  62. What are some negatives of hiring from competitors?
    • – The competition may do it to you
    • – Starts an upward bidding spiral for employees
  63. What are the advantages of hiring from an outside source?
    • May be the only source
    • Surprizing source of new talent
  64. What are some negatives of hiring from an outside source?
    • may not have exact match in skills
    • more training needed (time and money)
  65. What are some ways you can go about hiring new employees?
    • ask current and former employess
    • state and private employement agencies
    • newspapers and trade publications
  66. What are 6 things that determine that salary that you pay?
    • • 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.
  67. Why are preformace appraisals so important
    • To give rewards where they are mostneeded.
    • • Show where training is needed
    • • Shows that you care
    • .• Justifies future personnel actions
  68. Name the three types of e-business
    • up
    • down
    • across
    • value chains
  69. what is the UP type of e business
    • between you and a parent company or supplier B2B
    • this is the biggest sector of e-business
  70. what is the DOWN type of e-business
    between you and your customers B2C
  71. What is the ACROSS type of e-business
    between you and similar firms or competition B2B
  72. Name some types of e-business: direct marketing
    • retail dot com
    • retail/traditional
    • copperatives= one site many vendors
    • auctions
  73. Name 5 advantages of retail/traditional e-business approach
    • • 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.
  74. What is the importance of website design for a e-business
    • Can make or break an e-business
    • information architecture
    • attractive, consistent and easy to use
  75. what are some customer expectations of an website
    • good webpages
    • discount prices
    • security
    • ease of use
  76. Name 3 ways of communicating with customers through website
    • display mechanism
    • registration system
    • transaction order processing mechanism
  77. what is display mechanism in regards to communication with customers
    showing your goods in a positive way
  78. same three types of website management
    • vendor hosted
    • vendor hosted with software required
    • in house hosting
  79. name some marketing strategies of e-businesses
    • market share
    • adversting and data mining
    • oneline testimonials and ratings
    • interactive sites
    • accept ebiz returns are stores
  80. name some ways e-business' can be personalized/customer service focused
    • 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
  81. Name some security issues that go along with e-businesses
    • collecting data on consumers
    • selling customer data
    • financial security
    • digital signature
    • intrusive push technology
  82. Name some trends in e-business
    • 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
  83. name some miscallenous issues that have to do with e-business
    • maintenance costs
    • push technology and pop up windows
    • software that blocks advertising
    • hackers
    • stickiness and click through
  84. Online auctions are_____
    • micro business opportunities
    • very easy to start
    • often more work
    • potential for unlimited growth
    • consumer behavior- auction fever
  85. what is the old dot com business model
    • 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
  86. what is the new business model for dot com business
    • growth in direct email advertisitng
    • sponsorship of webpages
    • quick adjustment and cancellation of ads
    • use web to inform not direct sales
  87. Name the five elements of a purchasing plan
    • quality
    • quantity
    • price
    • time
    • vendor/supplier analysis
  88. what is the concept of title ownership
    • indentification
    • risl of loss
    • receiving merchandise
  89. what is involved in inventory management
    • inventory control systems
    • physical inventory count
    • just in time
    • jobbers
    • slow moving inventory
  90. how much money does shoplifting cost for business
    cost businesses over 20 billion a year
  91. what are the 5 profiles of shoplifters
    • juveniles
    • impulse shoplifters
    • vagrants, alcoholics and addicts
    • kelptos
    • professionals
  92. how can you detect shoplifters?
    • 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
  93. how can you deteer shoplifters
    • learn to look
    • train employees
    • install mechanical devices
    • set up the store layout a specific way
  94. what do you do when catching a shoplifter
    • do not have physical contact
    • call police
    • if possible approach outside the store
    • don't accuse people of stealing
  95. what percentage of employees steal from the company?
    30 %
  96. why is employee theft such a big problem?
    • no security
    • too trusting
    • don't want to admit it
  97. how can you avoid employee theft
    • 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
  98. Your business is an extension of ___
  99. Name four responsibilites is the basis of strategic planning
    • economic responsibility
    • legal obligations
    • ethical responsibilty
    • philanthrophy
  100. the only reason to act unethically in small business is ______
    short term financil gain
  101. name some ethical issues are:
    • enviromental
    • health
    • persons with diabilites
    • ism and other biases
    • cheating on taxes
    • misrepresenting a product or service