Please respond to the following BUS 508 Explore Activity Week 5 Discussion How You see It income statement or balance PART 1 OF 2

I’m trying to learn for my Business class and I’m stuck. Can you help?

BUS 508 Explore Activity Week 5 Discussion How You see It income statement or balance PART 1 OF 2

  • EXPLORE

    HOW YOU SEE IT

  • moneyThis week, we’re going to explore the role of accounting in business. I’ll bet when you hear the word “accounting” you probably have a similar reaction to a lot of people: “Boring!” But that couldn’t be further from the truth.Sure, accounting requires discipline and attention to detail, and a willingness to work hard to get the numbers just right. But accounting is much more than just “doing the books.” Accounting is its own language—the language that businesses use to understand their financial health. It’s how people within a company or people who are looking into a particular business really get a sense of how it’s doing. And, it ensures that the same methods are being used across the board, so that one business’s definition of “profitable” is the same as everyone else’s definition.Think for a second about your own life. Just like the financial concepts we explored last week, you already know a thing or two about accounting. Every time you balance your checkbook or peek into your bank account, you’re doing some simple accounting. That is, you’re using a system to help you make sense of the numbers.chart notebookAccounting for business is very similar, just on a larger scale. Every time money moves in a business—when things are purchased or sold, when investments are made, when equipment is bought, and when bills are paid—something important changes about the business. And all of these financial transactions start to add up to paint a picture of the business. Accounting helps us understand exactly how all of this moving money affects the business.You’ve no doubt encountered the importance of accounting in your career. At the most basic level, you’ve probably used very specific accounting codes when submitting expenses so the accounting team can determine where the money should go. Perhaps you manage a division in your business and are asked to report on the profitability of the business unit. In each of these cases, accounting is useful for organizing financial information to provide a clear snapshot of how the business is doing.Are we growing in size? Is business declining? Are we using resources efficiently? Is the value of our business going up or going down? Will we have enough money to keep the doors open next month? What about a year from now? Accounting helps us to answer all of these really important questions.Let’s take a look at the Most Important Things for this week to remind ourselves what we’ll be focusing on:
    • Accounting is a system of recording the financial activities of a business to help with reporting and decision-making. To summarize the business’s activities, accountants prepare three financial statements:
      • The income statement summarizes the revenue earned from sales and the expenses it took to earn that revenue.
      • The balance sheet summarizes the assets owned or controlled by the company, the liabilities (or debt obligations) it still has to pay others, and any left-over equity that belongs to the business’s owners or stockholders.
      • The statement of cash flows shows how money enters the company (cash collections) and leaves the company (cash payments).

    WAIT, WHAT IS IT CALLED?

    Make sure to be careful! These three financial statements are often referred to by other names.

    • The income statement is also known as the profit-and-loss statement
    • The balance sheet is also known as the statement of financial condition
    • The statement of cash flows is also known as the cash flow statement

    By the end of this week, you’ll have an understanding of how businesses use accounting to keep track of a business’s finances and how they capture that information in financial statements that give people a snapshot of a business.

    Why Is This Important?

    The truth is that, without accounting, it would be very difficult to measure success. More importantly, it would be nearly impossible to make important decisions about how to use a business’s resources—or to measure how effectively resources such as cash are being used. Additionally, without accounting, there would be no useful financial information about the business, which would make it difficult for managers, employees, and investors to plan effectively.In short, running a business without a clear way of keeping track of things would be very, very difficult. Accounting takes away the guesswork and provides important data to guide the actions of the business. It goes beyond that, too. Businesses also have to provide information to outside parties—investors, partners, and the government, for example—and that information needs to be easily understandable. If these outside parties, many of whom are essential to businesses’ success, had to learn a whole new system each time they reviewed a business’s finances, they would not be nearly as helpful. Accounting provides a common system, a common language, to overcome these challenges.

    QUICK QUESTION:

    What do you know about the financial health of the business you work for? How do you know how well the business is doing? What role—if any—do you play in the accounting process? (Hint: Everyone plays a role!) Can you think of an example where a business got into trouble for bad accounting practices?

    How Does This Connect to the other Parts of Business?

    As mentioned above, accounting gives us important information about how a business is doing. That information is used to make short-term and long-term decisions for the business. Without a way to compare numbers, business leaders would not know if their new sales team is working out, or if they have money left to spend on advertising, or how much the company is worth.All parts of a business should contribute to the overall success of the business. To measure success, accounting gives us a clear financial picture of the impact of each business unit on the finances of the company as a whole. This lets managers know where to focus, how to allocate resources, and where they should be spending their time.To get our minds thinking a bit more about accounting, let’s move on to this week’s Explore Activity.

    Explore Activity

    HOT TOPIC

    DUE DATE:

    Week 5

    PART 1

    Find an income statement or balance sheet for a business. Review the accounting concepts and the income statement or balance sheet to answer the following questions:
    1. How is the business performing based upon your review? Is the business growing or declining, why?2. Where is the business focusing the majority of its resources?3. What advice would you offer to the owner or leadership of the business?

  • Order this or a similar paper and get 20% discount on your first order with us. Use coupon: GET20