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Canada (162,376)
ENTR 3P96 (4)
Chapter 4

Chapter 4

5 Pages
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Department
Entrepreneurship
Course Code
ENTR 3P96
Professor
Dirk De Clercq

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Description
CHAPTER 4 Learning Objectivesdescribe the process for obtaining and recording resources needed for an earlystage venture describe and prepare a basic balance sheet describe and prepare a basic income statement explain the use of internal statements as they relate to formal financial statements briefly describe the cost of production schedule and the inventories schedule prepare cash flow statement and explain how it helps monitor a ventures cash position describe operating breakeven analysis in terms of EBDAT breakeven survival revenues identify major drivers on the amount of revenues needed to survive describe operating breakeven analysis in terms of NOPAT breakeven revenuesBasic Accounting Concepts Generally Accepted Accounting Principles GAAP guidelines that set out the manner and form for presenting accounting information Accrual Accounting the practise of recording economic activity when recognized rather than waiting until realized Depreciation reducing in values of a fixed asset over its expected life intended to reflect the usage of wearing out the asset Accumulated Depreciation sum of all previous depreciation amounts to charged to fixed assetsBalance Sheet financial statement that provides a snapshot of a ventures financial position as of a specific date Balance Sheet Equation Total assetstotal liabilitiesowners equity Assets financial physical and intangible items owned or controlled by the businessListing Order of Assets assets are listed in declining order of liquidity or how quickly the asset can be converted into cashwellassets underestimate true value not so wellassets overestimate value Liabilities shortterm liabilities are listed first followed by longterm debts owed by the venture Owners Equity equity capital contributed by the owners of the venture is shown after listing all liabilities Current Assets cash and other assets that are expected to be converted into cash in less than one year Fixed assets assets with expected lives of greater than one yearCash amount of coin currency and checking account balances Receivables credit sales made to customers Inventories raw materials workinprocess and finished products which the venture hopes to sellPayables shortterm liabilities owed to suppliers for purchases made on credit Accrued wages liabilities owned to employees for previously completed work
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