ULM SATURDAY ACADEMY 1/25/2014

What is Accounting?  Accounting is the recording, measurement and interpretation of financial information. 2

Why is Accounting Important?  Accounting is important to:  Business managers  Business owners  Investors Without accounting, they would not be able to determine whether or not a firm is in good financial standing. 3

What is a business transaction? What are the two main financial statements? Business Transactions Mr. Tom DeNardin

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Business Transaction

So, What Happens When Apple Sells One iPhone Anywhere in the World? 10

So, What Happens When Apple Sells One iPhone Anywhere in the World? 11 Cash Phone Additionally, Apple also had to pay for things like : Employee salaries and benefits Utilities Advertising Shipping And hundreds of other expenses Accountants are in charge of recording all transactions. It does not matter how many or where in the world these transactions take place!!!

Financial Statements Income Statement Balance Sheet Income expenses Net Income Net Income Assets Liabilities Net Worth

Financial Statements Income Statement Paid Income

Financial Statements Income Statement Buy things Expenses

Financial Statements Income Statement What is left over Net Income

Financial Statements Income Statement What is left over Net Income Buy things Expenses Paid Income

Financial Statements Balance Sheet What I Own What I Owe What I’m Worth

Financial Statements Balance Sheet What I Own Assets What I Owe Liabilities What I’m Worth Net Worth

Know you income and net worth at all times.

The Balance Sheet 20 The balance sheet compares business property against business debts

The Income Statement 21 The income statement compares business revenue against business expenses

Activity 22 Look at the raw materials that we have provided for you. Each one of those components has a cost: What is the total cost of the materials that you need to assemble a bot?

Activity 23 Now you need to figure out what the cost of putting all of those components together into one finished Bristlebot is. We call this the cost of labor. For your company the cost of labor is 50 cents per unit. So, now that you have considered the cost of labor, what is the cost of putting together a Bristlebot? The cost of materials and the cost of labor are known as Cost of Goods Sold or COGS.

Activity 24 In addition to the cost of assembling each Bristlebot, you need to consider other costs called Administrative Expenses. These expenses include the following: These expenses are a little different, because it does not matter whether or not you are producing Bristlebots, the firm MUST pay for them. So, even if your factory is closed, you still have to take care of these expenses. Because of this, we call these expenses Fixed Costs. Also, because these expenses do not change with the amount of Bristlebots you produce, the more you Bristlebots you produce, the smaller these expenses will be per unit produced.

Activity 25 Based on what you now know, how much will you charge for each Bristlebot? Once you have determined the pricing and the amount that you need to produce, fill in the form what we have provided for you by following the instructions. Did your company generate a profit? If not, produce and sell more Bristlebots and fill in the form again. What happens to profits as you increase sales?