Business and Accounting Education....!
Business and Accounting Education....!
Business and Accounting Education....!
Business and Accounting Education
Contents
1.
Business Background
2.
Business Environment
3.
Business Systems
4.
Introduction to Accounting
5.
Accounting Equation
6.
Double Effect of Transactions
Business Background
Business
All
economic activities related to the production and distribution of goods and
services to satisfy the needs and wants of people are called business.
Needs
The
conditions that arise in humans and must be fulfilled are called needs.
•
Food
•
Clothing
•
Housing
•
Education
•
Health
•
Transportation
•
Communication
•
Love
Characteristics
of needs
•
Essential
•
General
•
Limited.
•
Cannot be generated
Want
•
The various ways of satisfying needs are called wants.
Food – Bittu, Roti, Idli
Clothing – Shirt, Skirt
Housing – House, Mansion, Cottage
Characteristics
of wants
•
Non-essential.
•
Various types.
•
Undefined.
•
Can be generated
Difference between needs and wants
|
Needs |
Wants |
|
Essential |
Non-essential
|
|
General |
Various types. |
|
Undefined |
Undefined |
|
Cannot be originated |
Can be originated
|
Stages
of development of business..
•
Barter period
•
Cash flow period
•
Technology application period
•
Information technology application period / Electronics application period
Barter
The
exchange of goods for goods by people to fulfill their needs is called barter
system.
Disadvantages
of barter
Incompatibility
of dual needs.
•
Inability to measure value properly
•
Inability to store goods properly.
Money
Money
is a common medium accepted by everyone and legally recognized by all and used
in the exchange of goods and services.
Countries and their currencies
Country
Currency
Unit
United
States US Dollar
England Sterling Pound
Europe
(France, Italy) Euro
India
Indian
Rupee
Japan Yen
Parties Interested in a Business
The
following are the parties interested in a business.
•
Owner
•
Manager
•
Employees
•
Customers
•
Suppliers
•
Competitors
•
Financial institutions
•
Government
•
Society
1.
Owner
• The person who starts the business by investing capital (money, assets) in the business
•
The financial knowledge and experience of the business owner are the reasons
for the success of a business.
•
These owners are seen as individuals or 1 group.
2.
Manager
• The person who implements the business operations is called a manager.
•
The person who implements the decisions of the owner.
•
A manager is a person who uses the resources available in a business in the
right way to achieve the objectives of a business.
•
A manager is a person who establishes good relations between customers and
employees of the company
•
Some companies are considered to be the owner of the company.
•
Large companies have multiple managers such as financial manager, marketing manager,
manager, human resource manager, etc.
3.
Employees
• Employees are considered to be those who use their knowledge and skills to properly carry out the tasks assigned to them
•
Their positive attitude and dedication will be the reason for the success of
a business.
4.
Customer
• The party that receives goods and services from a business Customer
•
They acquire these goods and services for resale/reuse or for final use.
•
The success of a business depends on the stability of the customer.
•
The business carries out its activities by knowing the needs and wants of the
customer
5.
Suppliers
•
The parties that provide various services (transportation, raw materials)
required by the business.
•
Quality raw materials and services should be provided at the right time and at
a reasonable price.
6.
Competitors
•
However, competitors are those who produce and market products and services
that are superior to the products produced by a business.
7.
Financial institutions
•
Banks and other institutions that provide loans, consulting services, etc.
required by the business are called financial institutions.
8.
Government
•
The government sets the necessary policies for the economic development of the
country
9.
Society
•
The entire population living in the country
•
Journalists
•
Pressure groups
•
Community level groups
The
purpose of stakeholders is to be concerned.
1. Owner
•
To protect the invested capital
•
To earn sufficient profit
•
To develop the business in the future
2.
Manager
•
To achieve business objectives, make necessary decisions and implement them
•
Job satisfaction
•
Business development
3.
Employees
•
To receive fair wages
•
To ensure job security
•
To receive other benefits (extra pay)
4.
Customer
•
To receive quality goods and services.
•
Obtaining goods and services at a fair price
5.
Suppliers
•
Receiving payments on time
Receiving
money for orders placed
6.
Competitor
•
Determining the prices of their products
·
Getting
information about how other businesses are doing business Facing the
competitive situation.
7.
Financial institutions
Recovering
loans on time
Providing
more loans
8.
Government
•
Collecting tax revenues in a proper manner
Creating
employment opportunities
Increasing
national production
9.
Society
•
Observing whether business activities are carried out in a way that does not
harm the environment.
•
Observing whether they are acting with concern for social welfare
The
contribution that the business expects from stakeholders.
1. Owner
•
Obtaining the necessary capital contribution.
•
Conducting business activities with commitment and dedication.
•
Reviewing business activities
2.
Manager
•
Implementing the business plan properly
•
Making the right decisions.
3.
Employees
•
Fulfilling the assigned responsibilities properly
•
Increasing their efficiency
4.
Suppliers
•
Providing quality raw materials
•
Providing raw materials on time
5.
Government
•
Obtaining tax benefits.
•
Obtaining other incentives such as loans at low interest rates
Purpose
of businesses
•
Main purpose
To make a profit
To satisfy the needs/wants of the people
•
Secondary purpose
Maintaining the quality of goods and services.
Creating employment opportunities.
Maintaining employee benefits.
Manufacturing
business
Companies that provide goods and services to the people are called
manufacturing businesses.
•
Based on the nature of production, businesses are divided into 2 types
1.
Goods manufacturing business
2.
Service manufacturing business
Goods
manufacturing business
•
Businesses that produce tangible physical goods that satisfy the needs and
wants of people are goods manufacturing businesses.
•
Goods manufacturing business is carried out by considering the taste, income
level, lifestyle, and social status of the consumer.
Soft drinks
Furniture
School equipment
Service
manufacturing business
• Companies that provide services, which are activities provided to consumers to satisfy the needs and wants of consumers through business, are called service manufacturing businesses.
Banking
Wholesale and retail trade
Insurance
Factors
of production
The various resources required by businesses to produce goods and services.
The
factors of production are classified as follows.
1.
Land
2.
Labor
3.
Capital
4.
Effort
Land
All
resources obtained from nature are called land.
The
resources found not only on the surface of the land but also under it are
called land.
The
resources obtained from the land are limited.
Mineral
resources
Forest resources
Labor
The
physical and mental contributions made in a business are called labor.
Physical labor providers: - Refinery workers, miners.
Mental labor providers: - Accountants, managers
Capital
The
resources created by man for production and used as an aid during production
are called capital.
Money
Machine
Furniture
Building
Enterprise
The
act of organizing the factors of production such as land, labor, and capital
required for production and starting and carrying out any production process is
called enterprise.
The
party who undertakes this enterprise is the entrepreneur
The
party who carries out new discoveries and innovations is the entrepreneur.
Factors
of production and their rewards
• Land – Rent
•
Labor wages | Salary
•
Capital – Interest
•
Effort – Profit | Loss
Consumer
•
The party who receives goods and services for final use.
Service
production business
•
Companies that provide services, which are activities provided to consumers to
meet the needs and desires of consumers through business, are called service
production business.
Bank
Wholesale and retail trade
Insurance
Unit 02
Business
Environment
•
Business environment includes various factors that can affect the operation of
a business.
•
Businesses carry out their activities considering these business environment
changes.
Types
of Business Environment
1.
Internal Environment | Controllable Environment
2.
External Environment / External Environment | Uncontrollable Environment
Internal
Environment
• Various groups involved in the operation that can affect the operation of the business are also called internal factors.
•
These internal factors can be favorable or unfavorable to the organization.
•
When these changes are unfavorable, they are controllable by the business, so
it is a controlling environment.
•
The following are found as internal factors
1.
Owner
• He will be the one who invests capital in the business.
•
The financial strength, business knowledge, and experience of the owners are
the reason for the success of a business
•
2.
Manager
• Managers are the people who make the necessary decisions to implement the resources of the business to fulfill the objectives of a business.
•
The best relationship between the customers and employees of a business is built
by managers.
•
In some businesses, the owners are also seen as managers.
3.
Employees
• Employees are those who use their knowledge and skills to properly perform the tasks assigned to them.
•
Their positive attitude and dedication are the reason for the success of a
business.
External
Environment
The external environment is the departments and other factors operating outside the business that affect the operation of a business.
•
Changes in these external factors can be favorable or unfavorable for the
business.
•
When it is an adverse change, it is considered uncontrollable by the company.
•
The company must change its operations according to these changes
The
following are the external factors
1.
Customer
• Customers are the parties who receive goods and services in a business.
•
The sustainability of a business is determined by them.
•
Businesses should take action to properly identify and satisfy the needs and
wants of customers.
•
Changes in the purchase of goods and services by customers will have a major
impact on the operations of businesses.
2.
Suppliers
• The raw materials required when running a business. Suppliers are the parties that provide various services such as transportation facilities.
•
The services of suppliers, such as ensuring the continuous availability of raw
materials and services on time and ensuring their quality, are very important
for the continuous operation of the business.
3.
Competitors
• Competitors are companies that produce or distribute a product or service equivalent to a business's product or service.
•
The methods in which competitors conduct their business activities, the prices
and quality of competitors' products, etc., also have a major impact on
business operations.
4.
Political Environment
• The political environment is the various policies formulated by the government for the economic development of the country.
•
Businesses will change their operations considering these policy changes.
Government stability
Infrastructure development policies
Budgetary policies
Labor-related policies
5.
Legal Environment
• Laws created to protect domestic producers, consumers, the business community, etc. It is called the legal environment.
•
Businesses should carry out their activities in accordance with the laws thus
created.
•
Institutions, boards, commissions, responsible officers, etc. have been
appointed to implement these laws
To protect consumers – Consumer Affairs Authority Act, No. 9 of 2003 (Consumer
Affairs Authority)
Companies Act, No. 7 of 2007 (Registrar of Companies Department) - Company
Registrar
Shop Office Employees Act, No. 14 of 1954. (Industrial Disputes Board)
For environmental protection – Central Environment Authority) – Public Health
Inspector (PHI)
6.
Technological Environment
•
Technological Environment The advancements in technology due to new inventions
and creations. Technological environment
•
Companies change their operations considering these technological changes
•
Computer technology and digital technology have changed the operations of the
company.
Technological
environment changes
•
Quality clothes are produced using modern computer technology instead of
hand-operated machines in garment production.
•
Accounting records recorded in books in the past are now carried out using
computer software
•
Email and fax are used instead of ordinary mail used in the past
•
Human labor is used to carry outThe production process is now carried out using
electronic devices.
7.
Economic Environment
• The economic environment includes the economic factors that affect business.
•
The government plays a major role in formulating these economic policies.
Economic policies are formulated on the advice of the Central Bank of Sri
Lanka.
Economic
Environmental Factors
a.
Interest Rate
• It is the rate of interest charged by a bank to its customers for deposits and the rate of interest charged by the bank to its customers for loans.
b.
Inflation
• Inflation is the continuous increase in the aggregate price levels of goods and services.
• This increase causes the value of money to fall.
c.
Full Employment
• A country is at full employment when everyone who is looking for work can find suitable employment.
d.
Income Distribution.
• The income distribution of a country is the distribution of income among its people.
e. Savings
• Savings are the portion of income that individuals keep for consumption purposes rather than spending.
• When a country's savings increase, its investments increase.
f.
Currency Exchange Rate / Foreign Exchange Rate
• The method / rate at which one country's currency is exchanged for another country's currency is the currency exchange rate.
g.
International Relations
• The relations that a country maintains with other countries are international relations.
• These relations are established through trade zones and trade agreements
8.
Globalization
• The close relationship between the countries of the world in terms of economy, society and culture is called globalization
• This globalization allows not only political and other relations but also business activities to be carried out freely between the countries of the world.
•
Due to the development of information and communication technology, the entire
world has become a single village today.
Positive
effects of globalization on domestic trade.
1. Modern technologies can be obtained.
2.
Quality foreign raw materials can be obtained.
3.
Ability to obtain efficient machinery.
4.
Inflow of foreign capital into the country.
5.
Ability to obtain foreign markets for domestic goods and services
Adverse
effects of globalization on domestic business
1. There will be a situation where there
2.
Having an accepted brand logo
Weaknesses
of a business
1.
Insufficient financial strength of the owner.
2.
Inadequate trained employees.
3.
Inadequate use of modern technologies.
4.
Negative attitude of employees.
5.
Incompetent management. = Inappropriate geographical location of the business
Business
opportunities
1.
Introduction of low-interest credit systems by the government.
2.
Providing tax incentives to businesses
3.
Creating new cities.
4.
Construction of new roads | expressways.
5.
Changing lifestyles of consumers.
Business
threats
1.
Imposition of international trade restrictions.
2.
Emergence of competitors.
3.
Natural disasters. Difficulty in adapting to new technology.
SWOT
Analysis
•
This is the analysis of the strengths, weaknesses, opportunities, and threats
of a business.
•
By analyzing the internal environment, strengths and weaknesses can be
identified, and by analyzing the external environment, opportunities and
threats can be identified
1.
S-strength – Strength
2.
W-Weakness – Weakness
3.
0-Opportunity- Opportunities
4.
T- Threats – Threats
Business and Accounting Education....!
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