1. Business Financial Records
Chapter 15
Business Financial Records
©2008 Thomson/South-Western
Chapter 15
Business Financial Records

2. Business Financial Records
Financial records — organized summaries of a business’s financial information and activities
Small-scale record systems — manual records systems, cash register information, accounting software
Large-scale record systems — accounting software, accounting departments, POS terminals, outsourcing
Chapter 15
Business Financial Records

3. Types of Financial Records
Cash records
Credit records
Accounts receivable record
Accounts payable record
Depreciation records
Special asset records
Tax and payroll records
Chapter 15
Business Financial Records

4. Business Financial Records
Types of Budgets
Start-up budget
Operating budget
Cash budget
Capital budget
Sales budget
Chapter 15
Business Financial Records

5. Business Financial Records
The Balance Sheet
Balance sheet — financial statement that reports a business’s assets, liabilities, and capital on a specific date
Assets — anything of value owned
Liabilities — claims against assets (debts)
Capital — value of owner’s investment after subtracting liabilities from assets
Chapter 15
Business Financial Records

6. Business Financial Records
The Income Statement
Income statement (profit and loss statement) — financial statement that reports information about revenues and expenses for a specific period
Revenue
Expenses
Profit or loss
Chapter 15
Business Financial Records

7. Using Financial Information
Cash flow — movement of cash into and out of a business
Working capital — difference between current assets and current liabilities
Financial ratios — used to identify possible problems needing correction; examples are return on sales, inventory turnover, current ratio, return on investment
Chapter 15
Business Financial Records

8. Business Financial Records
Cash Flow
Chapter 15
Business Financial Records

9. Sources of Financial Information
Accountants
Bankers
Consultants
Government
Small Business Administration (SBA)
Chapter 15
Business Financial Records