Finance LAP 7

ADescribe the role of finance and

accounting in a business organization.

Role of Finance and Accounting

Money Matters

Finance duties and accounting duties are closely interrelated

Large businesses separate these departments

Small businesses often combine them

In JA Company, they will be combined

Key differences: Finance - _________________ and

money ___________decisions

Accounting - ______________ activities

Finance and Accounting Department

Key differences:

Finance - boost ____________, reduce risks

Accounting - provide accurate and timely __________________

Finance and Accounting

Finance goals:

• Ensuring the business is __________________

• Reducing financial _____________

Finance in Business

Administration of assets (___________ ________)

Acquisition of funds (__________ _________)

Finance Activities

Helps set _______ for the future

Plans and controls company spending

Ensures sufficient financing

_______________ company money wisely

Decides whether to pay ______

Importance of Finance

Controls spending for production and ______________________

Responsible for _______________________ (collaborates with accounting)

Helps plan new projects and strategies

Relationships With Other Business Activities

Which projects to invest in—capital budgeting

How to finance—capital

• ________

• ________

Capital Investment Decisions

Whether or not to pay ________________

• When?

• How much?

• Cash or stock?

Capital Investment Decisions

What Is Accounting? What Is Accounting?

• The process of creating the following financial records:The process of creating the following financial records:

• ______statement: Shows the ___ or __________statement: Shows the ___ or ____

• ______ sheet: Balances the accounting equation ______ sheet: Balances the accounting equation (________ = _______ + _______________)(________ = _______ + _______________)

• Maintaining the following:Maintaining the following:

• Accounts _________: Money owed to othersAccounts _________: Money owed to others

• Accounts ________: Money owed to the companyAccounts ________: Money owed to the company

What Do Businesses Track with What Do Businesses Track with Accounting Information? Accounting Information?

• The value of the things they own (______)The value of the things they own (______)

• How much money they owe (________)How much money they owe (________)

• The company’s net worth (_______ ______)The company’s net worth (_______ ______)

Why Is AccountingWhy Is AccountingImportant to Businesses? Important to Businesses?

• Enables them to maintain ______________ of their Enables them to maintain ______________ of their moneymoney

• Is used to make good _________ decisions Is used to make good _________ decisions

How Does Accounting Maintain How Does Accounting Maintain Financial Control? Financial Control?

• Tracking the business’s ________________

• Planning for the __________

Chris—financial manager

• Working on a budget

• Friend in marketing wants more money

What should he do?

• Ride-go’s former CEO improperly spent investors’ money.

• Ride-go’s current CEO held a board meeting in the Bahamas.

Spent $350,000 on the “meeting”

Hired a tattoo artist, mermaids, and fire dancers

• What should Ride-go’s accountant do?

Approve payment for the trip?

Refuse to use company funds to pay for a party?

Acknowledgments

Original Developers:

Kerry Winfrey andLelia Ventling, MBAResearch

Version 2.0

Copyright © 2014MBA Research and Curriculum Center

Acknowledgments

Original Developers:

Kerry Winfrey andLelia Ventling, MBAResearch

Version 2.0

Copyright © 2014MBA Research and Curriculum Center

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