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Chapter Nine

Chapter Nine. Financing and Accounting. 9- 2. Learning Outcomes. 9.1 Identify key financial issues involved with starting a new business 9.2 Discuss the basics of funding a business 9.3 Explain the importance of proper accounting when starting a business. 9- 3.

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Chapter Nine

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  1. Chapter Nine Financing and Accounting

  2. 9-2 Learning Outcomes 9.1 Identify key financial issues involved with starting a new business 9.2 Discuss the basics of funding a business 9.3 Explain the importance of proper accounting when starting a business

  3. 9-3 Identification of Key Issues • How much initial funding does a business need in order to survive the first year of operation? • What is the nature of the funding? • How will the funding be used? • What accounting management system will the new entity utilize?

  4. 9-4 Funding • Non-Equity Funding-debt is a generic term to describe any type of non-equity funding tied to the business • Debt-comes in many forms, each with positives and negatives. Common forms include: • Loans • Credit Cards • Supplier Credit

  5. 9-5 Funding • Equity Investmentinvolves selling a percentage of the business to an outside party • Sources of equity investment include: • Other Businesses • Venture Capital • Business Angels

  6. 9-6 Funding • Other Financing tools include: • Asset Leasing is a form of lease tied to a particular asset used by a business to conserve cash and maintain the latest versions of whatever equipment is available • Factoring are accounts receivable that are sold at a discount to another company in order to receive immediate cash

  7. 9-7 Accounting • Cash- vs. Accrual-based Accounting • Evaluate which Accounting Program would be best for the business such as: • Simply Accounting • MYOB Premier • QuickBooks • Peachtree

  8. 9-8 Accounting • Chart of Accounts • Petty Cash Register • Check Register • Expense Accounts • Inventory Account • Accounts Payable • Payroll • Managing Data Flow

  9. 9-9 Summary • In this chapter we considered: • Obtaining Sufficient Initial Funding • Means of Obtaining Financing • The Development of the Firms Accounting System

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