Accounting
4 Purpose of Accounting
•Record financial transactions
•Prepare financial statements
•Use financial statements to make decisions
•Meet legal requirements
Finance is about two things
1- manage finance
2- attract finance
5 key tasks of HRM
Recruitment
Training and Development
Salary and Benefits
Safety and Health Management
Performance Management
A company has a bond loan of 20,000. If the company own 35,000 how much stockholder equity they need to be even
15,000
Wealthy Vs Rich
Being rich typically means having a lot of possessions and material wealth, while being wealthy is more about having sustainable and lasting wealth.
3 important financial statement
Income Statement: Shows the company’s profitability over a specific period (quarterly, annually, etc.). Focuses on Expenses, revenue and net income.
Balance Sheet: Provides a snapshot of the company’s financial position at a specific point in time. Focuses on Assets, liability, and Equity.
Cash Flow Statement: Tracks cash inflow and outflow over a period of time. Focuses on operating, investing and financing activities.
3 Functions of Money
Medium of Exchange
Measure of Value
Store of Value
Most popular HRM analysis tool (know the defination and a picture of each)
•Replacement Chart
•Skill Inventory
•Delphi Method
•Trend Analysis
•Staffing Table
Finance Vs Accounting
Purpose
Focus
Jobs
Certificates
Salary
Finance: Planning and directing transactions for an organization, focus on the present and future, CFA.
Accounting: Recording and reporting transactions, focus on the past, CPA
Short Vs Medium Vs long Term Goal
Short --> Less than a year
Medium --> Less than 5 years
Long --> More than 5 years
3 reasons you should learn accounting
1- Stable Industry
2- Financial Literacy
3- Make MoneyFor money to be a medium of exchange, it must possess a few crucial properties:
Divisable
Portable
Durable
Difficult to Counterfeit
Malsow Heirchy of needs
What is Moslow Hierarchy of needs? a psychological theory that categorizes human needs into five levels, The most basic needs are at the bottom, and the more advanced, here are the levels:
Physiological Needs: Basic survival needs like food, water, and shelter.
Safety Needs: Security and protection from harm.
Love and Belongingness: Social relationships and a sense of belonging.
Esteem Needs: Self-respect and recognition from others.
Self-Actualization: Personal growth and realizing one’s potential.
How is FICO credit score calculated
How you pay your bills (35%)
Amount of money you owe and the amount of available credit (30%)
Length of credit history (15%)
Mix of credit (10%)
New credit applications (10%)
Two types of income
Explain the following GAAP Principles
- Single Entity
- Materiality
- Monetary Unit
- Time Period
Single Entity --> All financial statements are distinct from the owner
Materiality --> ●all relatively important amounts should be reported in the financial statements and trivial amounts can be disregarded
Monetary Unity --> business transactions should only be recorded if they can be expressed in terms of a currency
Time period --> Record it in the right year.
M1 VS M2
•The narrowest measure, M-1 , includes the most liquid forms of money—the forms, such as cash and checking-accounts funds, that are spent immediately.
•M-2 includes everything in M-1 plus near-cash items invested for the short term—savings accounts, time deposits below $100,000, and money market mutual funds.
Herzberg’s Motivation-Hygiene Theory
It divides workplace factors into two categories: Motivators and Hygiene Factors.
1.Motivators (Factors that Encourage Job Satisfaction): These factors increase employee satisfaction and motivate them to perform better.
2.Hygiene Factors (Factors that Prevent Job Dissatisfaction): These factors do not necessarily motivate employees when present, but cause dissatisfaction when absent or inadequate.
Two Types of Financial Institutions
1.Depository institutions (banks that accept deposits), including commercial banks , savings banks , and credit unions
2.No depository institutions (which provide financial services but don’t accept deposits), including finance companies , insurance companies, brokerage firms, and pension funds
3 things that can determin personal wealth
•Personal Budget Management
•Zip Code
•Education
Explain the following GAAP Principles
- Going Concern
- Revenue Recognition
- Full Disclosure
- Matching Principle
- Historical Cost
- Conservatism
Going Concern --> keep on keeping on
Revenue Recognition --> Recognize revenue when earned, not when cash received/earned
Historical Cost --> We use orginal cost for our assets, not market value.
Coservatism --> a principle that requires company accounts to be prepared with caution and high degrees of verification. All probable losses are recorded when they are discovered, while gains can only be registered when they are fully realized.
Full Disclosure --> must disclose all material information related to finance to its shareholders
Matching Principle --> The matching principle is an accounting concept that dictates that companies report expenses at the same time as the revenues they are related to.
What is the main goal for Finance managers?
Maximizing Shareholder Wealth
•Job redisign
•Job Enrichment
•Job Enlargement
•Job Rotation
Job Redesign: looks specifically at ways to expand an employee's job by redesigning certain aspects relating to the scope and depth of what it is that an employee does and is responsible for at the organization.
Job Enlargement: Expanding the scope of a job by adding similar tasks at the same level of responsibility, which increases variety but doesn’t necessarily add more responsibility.
Example: A data entry clerk, previously only responsible for entering orders, is now also asked to update customer contact information, providing more variety without increasing job difficulty.
Job Enrichment: Enhancing a job by adding more meaningful tasks, increasing responsibility, or providing greater autonomy to make the work more rewarding and engaging.
Example: A customer service representative is given additional authority to resolve client complaints without needing manager approval, adding both responsibility and decision-making power to their role.
Job Rotation: Moving employees between different jobs or tasks at the same level within an organization to enhance skills. This method helps employees see the “large picture” within an organization.
Example: A marketing associate rotates between social media management, content writing, and event planning within the marketing department every few months, allowing them to develop new skills and avoid routine
4 types of financial Markets (Explain Each)
•Money Market for short term securities
•Capital Market Long Term security (corporate bonds, government bonds)
•Primary Market New Stocks are bid
•Secondary Market Resell stocks/ buy stock
Net Worth
What you own - What you owe