Chapter 1
1
Business
Activities and the Role of
Accounting
Firm’s Objectives
• What is the Objective (Goal) of a Firm?
– Delivering high quality products?
– Producing at the lowest possible cost?
– Developing innovative products?
– High customer satisfaction?
– A state bailout?
– Long-term growth?
– Survival?
– Making money?
/Industrial Engineering and
Innovation Sciences
Maximize shareholder value
PAGE 2
Finance and Accounting in the Organization
and Accounting
Secure financial resources
It is what firms do
Analyze investment opportunities & provide funds Production of goods and service
Assessing customer needs and wants that will be met by performing Operations
Financial Management
• Finance is concerned with providing and investing funds for the operations.
• How to raise (obtain) funds?
– Internal cash
– Creditors (banks and other financial institutions)
– Equity
– Others: Factoring, trade credits,…
• Managing financial risk
/Industrial Engineering and
Innovation Sciences
PAGE 4
Accounting
• Accounting is about collecting, analyzing and communication financial information.
• Why is it important?
• Who uses this information for which purpose? /Industrial Engineering and
Innovation Sciences
PAGE 5
Accounting – Öykü Bilgisayar
• Öykü Bilgisayar is a small start-up firm providing IT services and trading computer and other electronic devices.
• Are we making money?
Chapter 1
Mugan-Akman 2010
6
Other Users of Accounting Information
• Accounting is about collecting, analyzing and communication financial information.
• Who uses this information?
– Managers,
– Shareholders/Investors,
– Banks/Creditors,
– Employees,
– Government,
– Suppliers, … use this information to base their decisions.
/Industrial Engineering and
Innovation Sciences
PAGE 7
Accounting
• What if the managers provide misleading accounting information?
• “Al Capone, head of the most profitable crime syndicate of the Prohibition Era and mastermind of the notorious 1929
"Valentine's Day
Business
Activities and the Role of
Accounting
Firm’s Objectives
• What is the Objective (Goal) of a Firm?
– Delivering high quality products?
– Producing at the lowest possible cost?
– Developing innovative products?
– High customer satisfaction?
– A state bailout?
– Long-term growth?
– Survival?
– Making money?
/Industrial Engineering and
Innovation Sciences
Maximize shareholder value
PAGE 2
Finance and Accounting in the Organization
and Accounting
Secure financial resources
It is what firms do
Analyze investment opportunities & provide funds Production of goods and service
Assessing customer needs and wants that will be met by performing Operations
Financial Management
• Finance is concerned with providing and investing funds for the operations.
• How to raise (obtain) funds?
– Internal cash
– Creditors (banks and other financial institutions)
– Equity
– Others: Factoring, trade credits,…
• Managing financial risk
/Industrial Engineering and
Innovation Sciences
PAGE 4
Accounting
• Accounting is about collecting, analyzing and communication financial information.
• Why is it important?
• Who uses this information for which purpose? /Industrial Engineering and
Innovation Sciences
PAGE 5
Accounting – Öykü Bilgisayar
• Öykü Bilgisayar is a small start-up firm providing IT services and trading computer and other electronic devices.
• Are we making money?
Chapter 1
Mugan-Akman 2010
6
Other Users of Accounting Information
• Accounting is about collecting, analyzing and communication financial information.
• Who uses this information?
– Managers,
– Shareholders/Investors,
– Banks/Creditors,
– Employees,
– Government,
– Suppliers, … use this information to base their decisions.
/Industrial Engineering and
Innovation Sciences
PAGE 7
Accounting
• What if the managers provide misleading accounting information?
• “Al Capone, head of the most profitable crime syndicate of the Prohibition Era and mastermind of the notorious 1929
"Valentine's Day