Sorin Anagnoste

1. Introduction

2. External environment of an organization and its stakeholders

3. Types of organizations

4. Steps for setting up a company

5. Organizational structures (AT Kearney presentation)

6. Branding (guest speaker – Paul Markovits)

7. Marketing

8. Human resource department

9. Sales department (AT Kearney presentation)

10. Management functions

11. Production, acquisition and logistics (AT Kearney presentation)

12. Accounting

13. Finance, Investments, Controlling function within an organization Other departments

14. Exam recap

• To understand what is accounting and why it is important

• To describe what accountants do

• To state and explain the basic accounting equation

• To explain the purpose of double entry bookkeeping

• To identify and explain some of the main financial statements

Accounting = system of measuring, interpreting and communicating financial information to support internal and external decision making

Important for: • Creditors • Potential investors and shareholders • Government agencies • Managers

Financial accounting- preparing financial reports for outsiders

Managerial accounting- preparing financial statements for internal stakeholders (e.g. cost analysis, profitability reports, etc.)

Accounting goes beyond bookkeeping (clerical function of recording the economic activities of a business)

Activities performed by accountants:

• Design of accounting systems

• Prepare financial statements

• Analyze financial statements and help in the decision making process

• Analyze profitability

• Prepare financial forecasts and budgets

• Prepare tax returns

• Analyze costs (cost accounting)

• Tax preparation and planning (tax accounting)

Audit = formal and independent evaluation of a company’s accounting records and processes to ensure the integrity and reliability of its financial statements.

Audit report

Internal and external auditors

Assets- Liabilities = Owners’ equity

Assets= any things of value owned or leased by a business (e.g. equipment, cash, land, buildings, inventory etc.)

Liabilities= claims against the assets = what the business owes to its creditors (e.g. banks, suppliers etc.)

Assets = Liabilities + Owners’ equity

Either creditors or owners provide all the assets in a company

The equation must always be in balance

In order to keep the accounting equation in balance companies use double entry bookkeeping

Double entry bookkeeping = system that requires two entries for every transaction. Each transaction affects assets, liabilities or owner’s equity

Example:

Buying of a 50.000 Euro building on bank credit

Assets 50.000 Euro

Liabilities 50.000 Euro

Buying of a 50.000 Euro building cash

Assets and liabilities remain equal; the company would just be switching assets- cash for building

Depreciation- accounting procedure for systematically spreading the cost of a tangible long term asset over a period of time

Calendar year- 1st Jan-31st Dec

Fiscal year – any 12 consecutive months used as an accounting period

Balance Sheet- snapshot of a company’s financial position on a particular date

Assets (current assets + fixed assets)

Liabilities (current liabilities + long-term liabilities)

Shareholders’ equity

Income statement

• Shows an organization profit performance over a specific period of time

• It summarizes all revenues (amount earned from sales of goods or services and inflow from other sources- royalties, interest, rent etc.) and all expenses (the costs)

Statements of cash flow