BUSN115 Final Exam Study Guide

The BUSN115 final exam is 3 pages long. It is a timed exam worth 250 points that you may enter only once. You have 3.5 hours to complete the exam. It consists of 30 multiple choice questions worth 5 points each. There are 5 essay questions worth 20 points each. Be sure to save and save often while you are working on the exam, and submit the exam when you are finished. To earn full credit your response to each essay question should answer the question completely and average 2 3 paragraphs in length. The exam reflects the following course objectives and possible topics: TCO 1 Chapters 1, 2, 3, 5, 6, 13 and 15 Weeks 1, 2, 4 and 5

Given a description of a typical business, demonstrate how that business acts within our economic system to achieve its goals as well as those of society, along with an understanding of how the future may impact these goals. TCO 2 Understand the relationship and interaction of supply and demand in the economy. Be able to define, differentiate and provide examples of a market, command and mixed economy. Define and discuss the fiscal and monetary policy role of the federal government and its respective agencies. List and define the foundations of capitalism. Apply the Invisible Hand to a market economy. Explain productivity and its relationship to international trade. Relate political systems to their respective economic system Describe the demographic trends Define and apply common economic indicators Chapter 4 Week 3

Given the importance of ethics in business, be able to understand and address ethical dilemmas that may occur in workplace activities and offer suggestions to prevent their recurrence. Define and discuss the ethical and social responsibility of business. List and explain business stakeholders. Describe and apply a business code of ethics. Explain compliance-based business ethics.

TCO 3

Chapter 3

Week 2

Given the need to increase profits through cost reductions, describe the use of globalization strategies to accomplish this initiative, along with a discussion of the pros and cons of this approach. TCO 4 Define and discuss globalization and its impact on international trade. Discuss the relationship of the different cultures found in the world to international trade. Explain why nations trade. Explain the benefits of exporting for small businesses. Explain the process of foreign exchange and how it relates to trade between nations. List and apply mechanisms used by nations for international trade protection (tariffs, quotas, subsidies, etc.). Describe the role of multinational corporations in international trade. Define, explain and apply comparative and absolute advantage as applied to trade between nations. Discuss the effect of trade deficits on an economic system. Chapters 1, 2, 5 and 6 Weeks 1 and 4

Given understanding of entrepreneurship, be able to describe the major elements necessary for success, along with an understanding of the potential risks associated with starting a business venture. TCO 5 Describe what it is to be an entrepreneur. Discuss entrepreneurship and its impact on an economy. Describe ways that governments can foster entrepreneurship. Discuss the role of small business in the U.S. economy. List and describe the primary sources of capital for business. Describe an Initial Public Offering (IPO) of a company. Chapters 13 and 15 Week 5

Given a need to identify additional sources of revenue, be able to discuss the importance of the Internet to achieve this goal and the overall value of e-Commerce. TCO 6 List and explain all aspects of supply chain management. Define, explain and apply electronic retailing (etailing). Discuss the application of etailing to international markets. Chapters 7, 9 and 10 Week 6

Given the need to improve human resource performance, describe a managerial approach to teamwork, empowerment, and effective communication to accomplish this objective. Apply diversity to the work place.

TCO 7

List, explain and apply the theories of employee motivation (Maslow, Herzberg, etc.). Demonstrate an understanding of how to manage the control process. Explain how equity applies to the workplace How can employees be empowered and its benefit in the work place. What were the Hawthorne Studies and how can the result is applied to the work place. Explain and apply the styles of management. Describe goals and objectives as they apply to business. What is a business mission statement and how can it be applied in business. Describe and apply the various organization structures used by business. Define and apply management by objectives (MBO). Describe and apply the communication process in a business setting. What is scientific management? Chapters 7, 9 and 10 Week 6

Given a need to understand how products are produced, describe the work performed by various departments in the production of a good to a final customer. Describe the skills needed by management. http://www.mindtools.com/pages/article/newTMM_92.htm Apply operations management to the service sector. Operations management techniques used to be utilized more in the manufacturing sector than in the service sector. However, there is a trend towards focussing more on operations in services. This is mainly due to the increasing importance of the service sector in the U.S. economy. Over 80% of U.S. jobs now originate in the service sector, so more and more emphasis is being placed on increasing productivity and efficiency in the operations of services. - Operations management for the service sector can be viewed as a composite collaborative application that acts as a hub to support shopfloor staff by providing them with automated support for the tasks they need to perform in the order that they need to perform them, whilst at same time it provides operational management with both the capabilities to measure performance and also be able to react quickly to exceptions so they do not turn into crises. This collaborative environment is not only for internal staff to be able work together but also externals, including both suppliers and customers. If you are not able to pull together the information you need to manage operations effectively in real-time-from your HR systems for skills, holidays, and availability and your ERP systems (plus CRM and SCM) for orders, customer and supplier details-and your BPMS system isnt flexible enough to handle every type of process that you have, then it would make sense for you to evaluate an operations management solution in order to operate in real time with your personnel in all their guises. Explain how to manage quality in a business. -Make it a priority. -Set goals. Determine what type of quality you want your company to improve. - Involve employees at all levels in quality improvements. - Document your processes.

- Measure the effectiveness of your processes. - Analyze your business and encourage your employees to do the same. Think of creative ways to improve. - Review your efforts and their progress. Make sure that the results are coming into line with the efforts and costs http://www.ehow.com/how_2072969_manage-continuous-quality-improvement.html

Describe types of communication in the work place. Verbal communication includes sounds, words, language and speaking. Language is said to have originated from sounds and gestures. There are many languages spoken in the world Non-verbal communication involves physical ways of communication, like, tone of the voice, touch, smell and body motion. Creative and aesthetic non-verbal communication includes singing, music, dancing and sculpturing Written communication is writing the words which you want to communicate. Good written communication is essential for business purposes. Written communication is practiced in many different languages. Visual communication is visual display of information, like, topography, photography, signs, symbols and designs. Television and video clips are the electronic form of visual communication. http://www.buzzle.com/articles/four-types-of-communication.html

How are teams included in the work place? What is PERT and Gantt chart? http://gates.comm.virginia.edu/rrn2n/teaching/gantt.htm

Gantt and PERT charts are visualization tools commonly used by project managers to control and administer the tasks required to complete a project. The Gantt chart, developed by Charles Gantt in 1917, focuses on the sequence of tasks necessary for completion of the project at hand. Each task on a Gantt chart is represented as a single horizontal bar on an X-Y chart. The horizontal axis (X-axis) is the time scale over which the project will endure.

PERT (Program Evaluation and Review Technique) charts were first developed in the 1950s by the Navy to help manage very large, complex projects with a high degree of intertask dependency. Classical PERT charting is used to support projects that are often completed using an assemply line approach. MS Project can create a PERT chart from a Gantt chart. The PERT below is another representation of the Proposal project shown above.
Know the various manufacturing processes. http://businessknowledgesource.com/manufacturing/various_process_improvem ent_strategy_026050.html One of the most widely used improvement strategy for your process is a program called six sigma. Six sigma is one of the most powerful process improvement strategies out there. The goal of six sigma is to do things better, faster and at a lower cost then you have done before or even other manufacturing plants. The best part about six sigma is that it can be applied to every part of your manufacturing business. This includes production, human resources, technical support and any of your employees on the maintenance floor. A 5s improvement program for your process will again include all parts of your manufacturing business. The names of the 5s stages are Sort, set in order, shine, standardize, and sustain. Each of these 5s stages are different but the same goal is in mind for each stage. The 5s program is meant to help your plant run as smoothly as possible. The 5s program is essentially a way to organize and manage shared workspace to make it more efficient. This program will streamline your process because everything is where it should be and working as it should be. Total quality management or TQM is another process improvement strategy. This improvement strategy has been around since the 1950's and can be considered the grandfather of many of the other process improvement strategies. This improvement strategy is aimed at improving the awareness of quality and all processes involved in the manufacturing process. This process improvement strategy focuses on getting things done right the first time thus ensuring defects and waste are eliminated from the process operations. TPM or total productive maintenance is a process improvement strategy that aims to use all levels and functions in your company by maximizing the effectiveness of your production equipment. This in turn will help improve your process. Total Productive Maintenance provides any training necessary for your employees to understand the equipment and the machines they work with on a daily basis. With the proper training on the machines your employees will have less accidents and break downs. Your employees will also be trained on maintenance prevention and how to fix the problems their machines might have. The end goal of TPM is then to eliminate all losses. When your employees are well trained on their machines and how to fix them your process will improve.

Explain outsourcing. http://en.wikipedia.org/wiki/Outsourcing The procuring of services or products, such as the parts used in manufacturing a motor vehicle, from an outside supplier or manufacturer in order to cut costs. What is ERP?

http://www.erpfans.com/erpfans/erpca.htm http://www.cio.com/article/40323/ERP_Definition_and_Solutions What are ISO9000 and ISO14000 standards? The ISO 14000 environmental management standards exist to help organizations (a) minimize how their operations (processes, etc.) negatively affect the environment (i.e. cause adverse changes to air, water, or land); (b) comply with applicable laws, regulations, and other environmentally oriented requirements, and (c) continually improve in the above. http://en.wikipedia.org/wiki/ISO_14000 The ISO 9000 family of standards relate to quality management systems and are designed to help organizations ensure they meet the needs of customers and other stakeholders http://en.wikipedia.org/wiki/ISO_9000 How does vision apply to business? A vision statement is sometimes called a picture of your company in the future but its so much more than that. Your vision statement is your inspiration, the framework for all your strategic planning. A vision statement may apply to an entire company or to a single division of that company. Whether for all or part of an organization, the vision statement answers the question, Where do we want to go? What you are doing when creating a vision statement is articulating your dreams and hopes for your business. It reminds you of what you are trying to build. While a vision statement doesnt tell you how youre going to get there, it does set the direction for your business planning. (For more on the role of your vision statement in business planning, see Quick-Start Business Planning.) Thats why its important when crafting a vision statement to let your imagination go and dare to dream and why its important that a vision statement captures your passion. Unlike the mission statement, a vision statement is for you and the other members of your company, not for your customers or clients. When writing a vision statement, your mission statement and your core competencies can be a valuable starting point for articulating your values. Be sure when youre creating one not to fall into the trap of only thinking ahead a year or two. Once you have one, your vision statement will have a huge influence on decision making and the way you allocate resources.

Explain and apply facility location and layout to business. http://www.answers.com/topic/facility-layout-and-design http://www.icmrindia.org/courseware/Operations%20Management/Operations%2 0Management-DS6.htm What is a virtual organization?

Several unrelated things are named virtual organization:

In business an organization that can take one of the following forms:

o o

a business which operates primarily via electronic means; see virtual business independent organizations that share resources to achieve their goals; see virtual enterprise

In grid computing, a VO (Virtual Organization) is a group who shares the same computing resources; see utility computing

TCO 8

Chapters 13 and 15

Week 5

Given a need to understand the power of consumers, describe the role that Marketing can play to identify customer needs and desires that can be translated into better products. List and explain common marketing strategies. http://en.wikipedia.org/wiki/Marketing_strategy Apply marketing to nonprofit organizations. In marketing, what is a customer orientation?

Customer orientation
A firm in the market economy survives by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even existence as a going concern. Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach. In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.[11] A formal approach to this customer-focused marketing is known as SIVA[12] (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus. The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, placement, promotion) of marketing management. Solution Value

Product Price

Place

Access

Promotion Information

If any of the 4Ps had a problem or were not there in the marketing factor of the business, the business could be in trouble and so other companies may appear in the surroundings of the company, so the consumer demand on its products will become less.

What is relationship marketing? Relationship Marketing refers to a long-term and mutually beneficial arrangement where both the buyer and seller have an interest in providing a more satisfying exchange. This approach attempts to transcend the simple purchase-exchange process with a customer to make more meaningful and richer contact by providing a more holistic, personalized purchase, and uses the experience to create stronger ties. According to Liam Alvey [1], relationship marketing can be applied when there are competitive product alternatives for customers to choose from; and when there is an ongoing and periodic desire for the product or service. http://en.wikipedia.org/wiki/Relationship_marketing What are the four eras in the evolution of marketing? mesozoic paleozoic cenozoic precambrian It is, production era sales " marketing " relationship " The four eras of marketing include: The Production Era: Beginning with the colonization of America and continuing until the early 1900's, this era was focused on reducing the cost of production as there was a seemingly unbound demand for product. The biggest marketing focus was on increasing production while lowering costs of storage and distribution. The Selling Era: Began in the 1920's and focused on shifting focus from mass production to selling. Selling and advertising took hold in an effort to persuade consumers to purchase existing products. The Marketing Concept Era: Existed from the end of World War Two until the late 1900's. This era is commonly termed the baby boom as soldiers returned home to start families. This rise in families created a very sudden increase in consumer spending and thus demand for products and services. Out of this boom came the Marketing Concept which was composed of an orientation on customers, service, and profit. In this business were focused on determining what consumers wanted, their overall level of satisfaction, and producing the goods and services that would produce the largest profit.

The Customer Relationship Era: From the late 1900's and early 200's and continuing today, companies have sought to extend it's marketing concepts into the practice of customer relationship management. Customer relationship management is focused on the continuous learning and information gathering about customers and in doing so being able to not only meet a consumers expectations or needs but to go above and beyond in producing ongoing consumer satisfaction. Through the use of CRM software and more recently the use of social media, companies are continuing to find innovative ways in which they can not only reach customers buy interact and learn about them.

Read more: http://wiki.answers.com/Q/What_are_the_four_eras_in_the_marketing_evolution_of_the _US#ixzz181C2BtA4 Describe business-to-business marketing (B2B) Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. Contrasting terms are business-to-consumer (B2C) and business-to-government (B2G). http://en.wikipedia.org/wiki/Business-to-business List and explain the steps in the marketing research process. http://en.wikipedia.org/wiki/Marketing_research_process Describe and apply market segmentation and target markets. http://en.wikipedia.org/wiki/Target_market

Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small businesss success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities. So if, for instance, I open a catering business offering catering services in the clients home, instead of advertising with a newspaper insert that goes out to everyone, I could target my market with a direct mail campaign that went only to particular residents. While market segmentation can be done in many ways, depending on how you want to slice up the pie, three of the most common types are:

Geographic segmentation based on location such as home addresses; Demographic segmentation based on measurable statistics, such as age or income; Psychographic segmentation based on lifestyle preferences, such as being urban dwellers or pet lovers.

If youre interested in target marketing, the first step is to do the research that will help you define and zero in on your target market. How to Find and Sell to Your Target Market will help you get started.

Also Known As: Niche marketing. Common Misspellings: Targit marketing, target markiting. Examples: The target marketing example above is an example of how demographic market segmentation could be used.

Explain the four Ps or the marketing mix. http://www.netmba.com/marketing/mix/ Chapters 13, 15, 17, 18 and Bonus Chapter B Weeks 5 and 7

TCO 9

Given a need for timely and accurate data for decision making, discuss the use of technology and ways in which the management of information can facilitate this goal.
Technology is an enabler; it can help a business improve efficiencies and even expand operations

http://tutor2u.net/business/gcse/external_environment_technology.htm What are computer networks as used in business?

Computer networks: the basics

Office networks

For many businesses, the first computer network they need will be confined to a single building. This type of network is called a local area network (LAN). There are two common kinds of LAN - peer-to-peer and client/server. Peer-to-peer networks connect two or more computers directly, allowing them to share files or programs. They are particularly suitable for collaborative work, fairly straightforward and relatively cheap to create. However, peer-to-peer networks can be much slower than server-based networks and are unsuitable for very complex networks. Also, peer-to-peer systems connect users through other users' computers, so a failure at one point in the network will affect every computer connected to that network. Client/server networks use one computer as a server - where shared files and programs are kept - which other PCs connect to. This central machine can be a normal PC, although it is best to use a powerful computer or a purposebuilt server computer. Client/server networks have a number of advantages. As files are stored centrally, these systems are more efficient at backing up and handling data. For example, users cannot modify files simultaneously. You can also link to different types of computer, and support more users more reliably than you can with a peer-to-peer network. Unlike peer-to-peer systems, a failure at a single point in a client/server network will not affect other computers on the network, as long as the server remains intact. Wireless networking technology can replace all, or some, of the cabling requirements for a network. See the page in this guide on choosing cable or wireless, or see our guide on wireless technology.

The role of Information Technology (IT) in business. What is a virtual office? A virtual office is a combination of off-site live communication and address services that allow users to reduce traditional office costs while maintaining business professionalism http://en.wikipedia.org/wiki/Virtual_office

What are some of the common types of software used by business? What is broadband as applied to the internet. Broadband is often called "high-speed" access to the Internet, because it usually has a high rate of data transmission. In general, any connection to the customer of 256 kbit/s (0.25 Mbit/s) or greater is more concisely considered broadband Internet access. http://en.wikipedia.org/wiki/Broadband_Internet_access What is internet technology? What major security issues are threatening e-business? Chapters 17, 18 and Bonus Chapter B Weeks 5 and 7

TCO 10

Given a need to understand a firms financial performance, be able to identify and explain the major elements contained within financial and accounting statements.

ELEMENTS OF FINANCIAL STATEMENTS

The Financial Accounting Standards Board (FASB) has defined the following elements of financial statements of business enterprises: assets, liabilities, equity, revenues, expenses, gains, losses, investment by owners, distribution to owners, and comprehensive income. According to FASB, the elements of financial statements are the building blocks with which financial statements are constructedthe broad classes of items that financial statements comprise. These FASB definitions, articulated in its "Elements of Financial Statements of Business Enterprises," are as follows:

Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Comprehensive income is the change in equity (net assets) of an entity during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Distributions to owners are decreases in net assets of a particular enterprise resulting from transferring assets, rendering services, or incurring liabilities to owners. Distributions to owners decrease ownership interest or equity in an enterprise.

Equity is the residual interest in the assets of an entity that remains after deducting its liabilities. In a business entity, equity is the ownership interest. Expenses are outflows or other uses of assets or incurring of liabilities during a period from delivering or producing goods or rendering services, or carrying out other activities that constitute the entity's ongoing major or central operation.

Gains are increases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from revenues or investments by owner.

Investments by owners are increases in net assets of a particular enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interest (or equity) in it.

Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.

Losses are decreases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from expenses or distributions to owners.

Revenues are inflows or other enhancements of assets of an entity or settlement of its liabilities (or a combination of both) during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations. http://www.referenceforbusiness.com/small/Eq-Inc/Financial-Statements.html

Read more: Financial Statements - benefits, cost, Financial reporting, Major financial statements, Elements of financial statements, Subsequent events, Personal financial statements, Development stage companies http://www.referenceforbusiness.com/small/Eq-Inc/FinancialStatements.html#ixzz1816OaUo3

List, describe and apply business financial statements (income statement, balance sheet, statement of cash flows).

They typically include four basic financial statements, accompanied by a management discussion and analysis:[1] 1. Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity at a given point in time. 2. Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. Profit & Loss account

provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state. 3. Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period. 4. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities. http://en.wikipedia.org/wiki/Financial_statement For large corporations, these statements are often complex and may include an extensive set of notes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.

What is a financial plan? In general usage, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate.

In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan. Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department.[1] A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.[2] While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash.

How does auditing apply to business finance? What are the finance concerns for small businesses? List the types of financial budgets.
The types of budgets include master, operating (for income statement items comprised of revenue and expenses), financial (for balance sheet items), cash, static (fixed), flexible, capital expenditure (facilities), and program (appropriations for specific activities such as research and development, and advertising). These budgets are briefly explained below. Master Budget A master budget is an overall financial and operating plan for a forthcoming calendar or fiscal year. It is usually prepared annually or quarterly. The master budget is really a number of subbudgets tied together to summarize the planned activities of the business. The format of the master budget depends on the size and nature of the business. Operating and Financial Budgets The operating budget deals with the costs for merchandise or services produced. The financial budget examines the expected assets, liabilities, and stockholders' equity of the business. It is needed to see the

company's financial health. Cash Budget The cash budget is for cash planning and control. It presents expected cash inflow and outflow for a designated time period. The cash budget helps management keep cash balances in reasonable relationship to its needs and aids in avoiding idle cash and possible cash shortages. The cash budget typically consists of four major sections: 1. Receipts section, which is the beginning cash balance, cash collections from customers, and other receipts 2. Disbursement section, comprised of all cash payments made by purpose 3. Cash surplus or deficit section, showing the difference between cash receipts and cash payments 4. Financing section, providing a detailed account of the borrowings and repayments expected during the period Static (Fixed) Budget The static (fixed) budget is budgeted figures at the expected capacity level. Allowances are set forth for specific purposes with monetary limitations. It is used when a company is relatively stable. Stability usually refers to sales. The problem with a static budget is that it lacks the flexibility to adjust to unpredictable changes. In industry, fixed budgets are appropriate for those departments whose workload does not have a direct current relationship to sales, production, or some other volume determinant related to the department's operations. The work of the departments is determined by management decision rather than by sales volume. Most administrative, general marketing, and even manufacturing management departments are in this category. Fixed appropriations for specific projects or programs not necessarily completed in the fiscal period also become fixed budgets to the extent that they will be expended during the year. Examples are appropriations for capital expenditures, major repair projects, and specific advertising or promotional programs.

Be familiar with the corporate financial scandals of the 2000s. http://www.forbes.com/2002/07/25/accountingtracker.html List and describe the types of accounting software.

Accounting software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost. The market has been undergoing considerable consolidation since the mid 1990s, with many suppliers ceasing to trade or being bought by larger groups. Accounting software is typically composed of various modules, different sections dealing with particular areas of accounting. Among the most common are: Core Modules

Accounts receivablewhere the company enters money received Accounts payablewhere the company enters its bills and pays money it owes General ledgerthe company's "books" Billingwhere the company produces invoices to clients/customers Stock/Inventorywhere the company keeps control of its inventory Purchase Orderwhere the company orders inventory Sales Orderwhere the company records customer orders for the supply of inventory

Cash Bookwhere the company records collection and payment

Non Core Modules

Debt Collectionwhere the company tracks attempts to collect overdue bills (sometimes part of accounts receivable) Electronic payment processing Expensewhere employee business-related expenses are entered Inquirieswhere the company looks up information on screen without any edits or additions Payrollwhere the company tracks salary, wages, and related taxes Reportswhere the company prints out data Timesheetwhere professionals (such as attorneys and consultants) record time worked so that it can be billed to clients Purchase Requisitionwhere requests for purchase orders are made, approved and tracked

Forty-Four Different Types of Accounting Software

Mar 012010

Most people believe that accounting software is not a very broad topic. However, it turns out that there are about as many different accounting packages as there are people in a small country. Below is a list of all the different types we could identify. Well provide a short summary of each here, but in the future we plan to go more in depth into each category. In fact look for a post on each software category in the future.

Business Accounting Software This is a pretty broad category within the accounting softwares arena. It basically consists of all of the accounting packages that a business might use. Some popular choices include QuickBooks, Sage, Peachtree, etc. Note that a lot of larger businesses will develop special software just for their business.

General Ledger Accounting Software Just like it sounds, this software is specifically designed to interact with the general ledger. Most software out there has this integrated within the package, but there are still some places where you can buy just general ledger software.

Manufacturing Accounting Software Turns out that manufacturers want their own type of accounting software. Well dive more into this topic at a later time, but manufacturers need something that will not only keep them in compliance with GAAP, but will also keep track of vital manufacturing information that can give them an edge on their competitors.

Inventory Control Software This in all honesty is some of the coolest accounting software available. The normal software tracks the information provided by bar codes and scanners. The high-end packages are really awesome; the software actually interacts with RFID

(Radio-Frequency Identification) tags to keep track of where your inventory is at all times. Very nice, and very expensive.

Property Software Like all the categories we are discussing, this one has a lot of different functions. The basic function of this type of software is to be able to keep track of a Landlords many properties and tenants while still being able to generate reports that satisfy banks and investors.

Restaurant Accounting Software Another fun area of accounting. There is actually a whole field of accounting software dedicated to restaurants. Who would have thought? More on this coming in the future.

MRP Software Stands for material requirements planning software. This software is used to account for the type, quantity, and quality of material that will be necessary for the manufacturing process.

Small Business Inventory Software This is just like the inventory software mentioned above except it is specifically designed for smaller businesses. This usually means that the package is not as detailed, and in most cases not as expensive.

Payroll Accounting Software This software is specifically designed to keep track of the payroll department of a business. It tracks payroll information, generates checks, and generates payroll reports for management.

Insurance Accounting Software If youre not part of the insurance industry you may believe that were making up this type of accounting software. Although it doesnt seem like the Insurance industry would need its own accounting software, there are companies that specialize in making accounting software for these companies.

Trust Accounting Software Trust accounting is a difficult area, burdened with all sorts of laws and policies. Having specific software for this industry helps, but dont expect it to solve all your problems.

Warehouse Inventory Software Similar to inventory software, but designed for larger warehouses.

Asset Software This type of software can be as basic as you want or as high tech. Some people keep track of their assets with excel, while others have some complicated programs that interact with RFID tags to keep track of depreciation, life, location, and value of each asset (pretty cool software).

Audit Management Software Just like it sounds, this software industry provides a tool for auditors to manage their audits. Most of the larger audit firms (The Big 4) have their own

proprietary software, but some of the smaller firms may be interested in some over-thecounter packages.

Retail Inventory Software Similar to normal inventory software, but for retailers. On a big scale think Wal-Marts vendor managed inventory system that basically forces all of their suppliers to keep their inventory stocked. On a smaller scale, think of a Mom-and-Pop shop that needs some inventory tracking software that will alert them when they need to reorder.

Construction Accounting Software QuickBooks Premier Edition actually has a specific industry section for construction; that shows you how large of an accounting software industry this is.

Online Accounting Software This type of software, known as software as a service (SAAS) has become very popular in recent years. Basically the idea is that you dont need to store your information on local computers. Instead the information is stored on secure servers. This can be beneficial because you can access key information from anywhere in the world, even when youre on vacation.

Personal Accounting Software Excel is probably the most used personal accounting software. There are some other popular services out there such as QuickBooks. There is also a wealth of free resources available on the Internet.

Accounts Payable Software Not a lot to add about this type of software. It simply tracks a companys accounts payable. Most accounting software comes with this included, but you some still sell it as a separate module. Accounts Receivable Software Tracks your accounts receivable. This software can help you reduce your days receivables outstanding.

ERP Accounting Software ERP (Enterprise Resource Planning) software is a growing trend amongst todays businesses. The idea is that you have one software package to manage all parts of the business. As you can imagine, these are often custom built because each business is different. However there are a few basic packages that will work if youll mold them to your business model.

Fund Accounting Software Fund accounting is most often used by governments, nonprofits, and churches. This is a growing area of accounting software with a few wellestablished providers, but room for others to move in.

Tax Accounting Software Almost everyone knows about this type of accounting software. Turbo Tax and Tax Act are some of the more popular services out there. More and more this type of software is moving to the Internet. FreeTaxUSA is a popular online tax service, and the federal filing is free.

Cost Accounting Software There are some over-the-counter packages that deal with managerial accounting. However, there are no rules when it comes to cost accounting so

many companies develop their own accounting packages and consider these packages a confidential, competitive advantage.

Linux Accounting Software Specifically designed accounting software for Linux.

Project Accounting Software This is usually used for managing large projects. You would be amazed at how difficult it can be to manage a large project without some software.

School Accounting Software What type of accounting a school does really depends on its affiliation with the government. If it is a public school then it will likely want to use some form of governmental accounting software. If the school is a private, not-for-profit, then it will probably still want to use fund accounting. If the school is a for-profit entity then it will probably just want to use basic accounting software.

Trucking Accounting Software Yes even truckers need some form of accounting software. Basically this keeps track of where everyone is going.

Farm Accounting Software Anytime there is something to keep track of you will see some form of accounting software popping up. Farms are no different; if you think about it they have plenty to manage.

Medical Accounting Software This is a rapidly developing area. In the olden days, doctors were ridiculed for their lack of business prowess; nowadays they have software built especially for their practices. Some software packages in the medical industry are tracking patient information. Connecting this information with doctors around the world is the future of medical accounting.

Loan Accounting Software This software handles loan billing, loan servicing, and loan amortization processes. Its a smaller industry, but it exists.

POS Accounting Software Point of Sale accounting software comes in very handy for those organizations that sell multiple products. Basically you integrate your point of sale system with your accounting software. This means that for each sale, the accounting information is automatically updated.

Hotel Accounting Software Basically an accounting package designed for hotels. Surprisingly enough this has been around since the 1980s.

Partnership Accounting Software Partnerships have different rules and regulations than corporations. It only makes sense that they would have some slightly different accounting packages as well. Time Accounting Software Were not talking about your average, run of the mill planners

here. These are packages designed to track what hundreds of employees throughout the day. This comes in very handy when trying to eliminate employee waste.

Invoice Accounting Software Software that processes invoices and automatically enters it into the accounting system.

Mortgage Accounting Software Basically some software that mortgage companies use to track all of their customers payment and billing information.

Stock Accounting Software Basically a glorified excel spreadsheet. This software tracks whatever stock information you ask it to.

Daycare Accounting Software Who would have thought that daycares needed their own special accounting software? You wont see QuickBooks having a special category for these guys, but there is some software out there that keeps track of important financial daycare information and interfaces with QuickBooks.

Municipal Accounting Software Similar to governmental accounting software. Governments dont account for their money in the same way that businesses do; so they need their own type of software. Government accounting has a lot of tricky rules that we dont want to get into in this article, but we will talk more on this in the future.

Opensource Accounting Software This type of software doesnt entail a specific type of software, but more about how the software is created. Opensource refers to the fact that the code is available to manipulate the software and usually for free. This can be very helpful if your company is looking to develop custom software, but needs a base to begin.

Database Accounting Software Most accounting softwares act as a type of database; however when people are looking for this type of software, we assume they are looking for something with a little more storage power than your average software. Database accounting software can be queried and manipulated for data mining purposes.

Rental Accounting Software If your organization is more focused on renting than selling, then you may want to look for accounting software in this category.

Billing Accounting Software Most accounting packages come with some form of billing function. However some software packages create the bills and automatically update your accounting ledgers.

Budgeting Software For individuals budgeting software may just be excel or a personal QuickBooks. However, large companies that rely on budgeting need complex budgeting software. The government is probably the largest entity that uses budgeting regularly. Yes we know it is hard to believe, but the governments budgeting techniques are rigorous and highly sophisticated. They more than anyone need and use budgeting software.

As most people know, the accounting software does not solve all of your accounting problems. It is simply a tool, but you still need to understand accounting in general, as well as any industry-specific accounting or legal issues. For example if you know nothing about trust accounting and you buy trust accounting software, dont expect that you will automatically be in compliance with all of the industry standards.

List and describe financial ratios as applied to business. The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your business. Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this compare your ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow you to solve your business problems before your business is destroyed by them. Balance Sheet Ratio Analysis Important Balance Sheet Ratios measure liquidity and solvency (a business's ability to pay its bills as they come due) and leverage (the extent to which the business is dependent on creditors' funding). They include the following ratios: Liquidity Ratios These ratios indicate the ease of turning assets into cash. They include the Current Ratio, Quick Ratio, and Working Capital. Current Ratios The Current Ratio is one of the best known measures of financial strength. It is figured as shown below: Current Ratio = Total Current Assets / Total Current Liabilities The main question this ratio addresses is: "Does your business have enough current assets to meet the payment schedule of its current debts with a margin of safety for possible losses in current assets, such as inventory shrinkage or collectable accounts?" A generally acceptable current ratio is 2 to 1. But whether

or not a specific ratio is satisfactory depends on the nature of the business and the characteristics of its current assets and liabilities. The minimum acceptable current ratio is obviously 1:1, but that relationship is usually playing it too close for comfort. If you feel your business's current ratio is too low, you may be able to raise it by: Paying some debts. Increasing your current assets from loans or other borrowings with a maturity of more than one year. Converting non-current assets into current assets. Increasing your current assets from new equity contributions. Putting profits back into the business. Quick Ratios The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of liquidity. It is figured as shown below: Quick Ratio = Cash + Government Securities + Receivables / Total Current Liabilities The Quick Ratio is a much more exacting measure than the Current Ratio. By excluding inventories, it concentrates on the really liquid assets, with value that is fairly certain. It helps answer the question: "If all sales revenues should disappear, could my business meet its current obligations with the readily convertible `quick' funds on hand?" An acid-test of 1:1 is considered satisfactory unless the majority of your "quick assets" are in accounts receivable, and the pattern of accounts receivable collection lags behind the schedule for paying current liabilities. Working Capital Working Capital is more a measure of cash flow than a ratio. The result of this calculation must be a positive number. It is calculated as shown below: Working Capital = Total Current Assets - Total Current Liabilities Bankers look at Net Working Capital over time to determine a company's ability to weather financial crises. Loans are often tied to minimum working capital requirements. A general observation about these three Liquidity Ratios is that the higher they are the better, especially if you are relying to any significant extent on creditor money to finance assets.

Leverage Ratio This Debt/Worth or Leverage Ratio indicates the extent to which the business is reliant on debt financing (creditor money versus owner's equity): Debt/Worth Ratio = Total Liabilities / Net Worth Generally, the higher this ratio, the more risky a creditor will perceive its exposure in your business, making it correspondingly harder to obtain credit. Income Statement Ratio Analysis The following important State of Income Ratios measure profitability: Gross Margin Ratio This ratio is the percentage of sales dollars left after subtracting the cost of goods sold from net sales. It measures the percentage of sales dollars remaining (after obtaining or manufacturing the goods sold) available to pay the overhead expenses of the company. Comparison of your business ratios to those of similar businesses will reveal the relative strengths or weaknesses in your business. The Gross Margin Ratio is calculated as follows: Gross Margin Ratio = Gross Profit / Net Sales Reminder: Gross Profit = Net Sales - Cost of Goods Sold Net Profit Margin Ratio This ratio is the percentage of sales dollars left after subtracting the Cost of Goods sold and all expenses, except income taxes. It provides a good opportunity to compare your company's "return on sales" with the performance of other companies in your industry. It is calculated before income tax because tax rates and tax liabilities vary from company to company for a wide variety of reasons, making comparisons after taxes much more difficult. The Net Profit Margin Ratio is calculated as follows: Net Profit Margin Ratio = Net Profit Before Tax / Net Sales Management Ratios Other important ratios, often referred to as Management Ratios, are also derived from Balance Sheet and Statement of Income information. Inventory Turnover Ratio

This ratio reveals how well inventory is being managed. It is important because the more times inventory can be turned in a given operating cycle, the greater the profit. The Inventory Turnover Ratio is calculated as follows: Inventory Turnover Ratio = Net Sales / Average Inventory at Cost Accounts Receivable Turnover Ratio This ratio indicates how well accounts receivable are being collected. If receivables are not collected reasonably in accordance with their terms, management should rethink its collection policy. If receivables are excessively slow in being converted to cash, liquidity could be severely impaired. Getting the Accounts Receivable Turnover Ratio is a two step process and is is calculated as follows: Daily Credit Sales = Net Credit Sales Per Year / 365 (Days) Accounts Receivable Turnover (in days) = Accounts Receivable / Daily Credit Sales

Return on Assets Ratio This measures how efficiently profits are being generated from the assets employed in the business when compared with the ratios of firms in a similar business. A low ratio in comparison with industry averages indicates an inefficient use of business assets. The Return on Assets Ratio is calculated as follows: Return on Assets = Net Profit Before Tax / Total Assets

Return on Investment (ROI) Ratio The ROI is perhaps the most important ratio of all. It is the percentage of return on funds invested in the business by its owners. In short, this ratio tells the owner whether or not all the effort put into the business has been worthwhile. If the ROI is less than the rate of return on an alternative, risk-free investment such as a bank savings account, the owner may be wiser to sell the company, put the money in such a savings instrument, and avoid the daily struggles of small business management. The ROI is calculated as follows: Return on Investment = Net Profit before Tax / Net Worth These Liquidity, Leverage, Profitability, and Management Ratios allow the business owner to identify trends in a business and to compare its progress with the performance of others through data published by various sources. The owner may thus determine the business's relative strengths and weaknesses.

What is the difference between: Fixed- Fixed assets have commercial value but are not expected to be consumed or converted into cash in the normal course of business. They are long-term, more permanent or "fixed" items, such as land, building, equipment, fixtures, furniture, and leasehold improvements. Fixed assets often decrease in value (depreciate) over time due to wear and tear from use. The federal government allows businesses to depreciate items for tax purposes, and it has defined specific depreciation rates for different categories of fixed assets. On your balance sheet, therefore, you will see the initial value of the asset, the amount of accumulated depreciation, and finally the net depreciated value of the asset. Example of a fixed asset on the balance sheet:

Vehicle $ 28,000 Accum Deprec - Vehicle $ -8,500 Total Vehicle $ 19,500* Intangible assets- The Intangibles While Intangible Assets do not appear directly on your balance sheet, they can be a significant factor when one looks to buy or sell a business or part of the business. Intangible assets include things like good will; intellectual property such as copyrights, trademarks, patents; leases; franchises; permits and so on. While you do not list these assets on your balance sheet, they are reflected in the sense that they enable you to maintain profit margins and market share, so in turn they show up on the current assets section of your balance sheet through the revenue and profits they create. Current- Assets are anything with commercial value that your business owns. They are divided into three categories: current assets, fixed assets, and other assets. Current assets are cash, accounts receivable, inventory, and other assets that will likely be turned into cash, bartered, exchanged, or converted into an expense within a year during the normal course of business. Included in the other current assets category are loans to shareholders, also known as due to shareholders. Some business owners will not pay themselves a salary, preferring to take drawings, which they must deal with at year-end. In the current assets section, due to shareholder amounts may artificially inflate current assets if you plan to convert them to bonuses, dividends or management fees at year-end, at which time they become expenses of the business. Demonstrate an understanding of the accounting equation. (Assets = liabilities + equity)

Accounting is built upon the fundamental accounting equation: Assets = Liabilities + Owner's Equity This equation must remain in balance and for that reason our modern accounting system is called a dual-entry system. This means that every transaction that is recorded in accounting records must have at least two entries; if it only has one entry the equation would necessarily be unbalanced. The equations three parts are explained as follows: 1. Assets = what the business has or owns (equipment, supplies, cash, accounts receivable) 2. Liabilities = what the business owes outsiders (bank loan, accounts payable) 3. Owners Equity = what the owner owns (investment and business profit)

THE ACCOUNTING EQUATION

From the equation we can see that what the business owns (assets) equals what it owes both creditors (liabilities) and the owners (equity). 1. The business owes creditors for loans made and other obligations to pay for goods or services. 2. The business owes the owner for any money or other assets that the owner invests in the business 3. The business also owes the owner the profit that is realized from business operations. The accounting equation can be expressed in 3 ways: Assets = Liabilities + Owners' Equity Liabilities = Assets - Owners' Equity Owners' Equity = Assets - Liabilities If you know any two of the amounts you can calculate the third. Business Transactions occur on a daily basis as a result of doing business. Items are purchased or sold, credit is extended or borrowed, income is made or expenses are assumed. These business transactions result in changes to the three elements of the basic accounting equation. 1. A transaction that increases total assets must also increase total liabilities or owner's equity. 2. A transaction that decreases total assets must also decrease total liabilities or owner's equity. 3. Some transactions may increase one account and decrease another on the same side of the equation i.e. one asset increases and another decreases. Assets = + + Liabilities + + Owner's Equity +

+ and -

A few general suggestions for taking the exam are as follows. Please save and save often as you complete your exam. Make sure your answer remains selected after you save as sometimes those dots do not fill in and stay selected. Do not submit your exam until you are satisfied with your results. Make sure you have a clock close by to judge your time. The exam should indicate your remaining time left and every 15 minutes you will be prompted to save. Have your textbook, course assignments, quizzes, and notes readily in front of you before you enter the exam. The exam is comprehensive so all the chapters we covered from the course are included. The multiple choice questions are similar to those you experienced in the quizzes throughout the course. As for the essay questions, you can expect to see the major topics covered in the course. Good Luck!