Finance LAP 7 A Describe 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? 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 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 Accounting Important to Businesses? Enables them to maintain ______________ of their moneyEnables them to maintain ______________ of their money Is used to make good _________ decisionsIs used to make good _________ decisions

How Does Accounting Maintain 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 and Lelia Ventling, MBA Research Version 2.0 Copyright © 2014 MBA Research and Curriculum Center Acknowledgments Original Developers: Kerry Winfrey and Lelia Ventling, MBA Research Version 2.0 Copyright © 2014 MBA Research and Curriculum Center

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