Summary Accounting in a Business Context
Samenvatting – Finance & Accounting
ACCOUNTING IN A BUSINESS CONTEXT – Aiden Berry & Robin Jarvis 5th Edition Slides – G.C. Vergeer
Chapter 1 – Introduction to Accounting Accouting: is generally about quantitative information the information is likely tob e financial it should be useful for making decisions
Key financial statements: the statement of financial position or balance sheet the income statement or profit and loss account the cash flow statement
Chapter 20 – Investment Decisions
Compare the estimated ARR of a proposed project with the target ARR: If the estimate exceeds the target accept the project If it is lower reject the project
Payback = the period which it takes the cash inflows from an investment project to equal the cash outflows. Present value = the cash equivalent now of a sum of money receivable or payable at the stated future date, discounted at a specified rate of return. ( ( ( ) ) ( ( A = lower rate of return with positive NPV B = higher rate of return with negative NPV P = amount of the positive NPV N = amount of the negative NPV ( ) ) )
Chapter 17 – Accounting for Decision Making: When there are no resource constrains Sunk costs/Past costs can easily be identified in that they will have been paid for or they are owed under legally binding contracts. The firm is committed to paying for them in the future. Differential (incremental) costs are the differences in costs and benefits between alternative opportunities available to the organization. It follows that when a number of opportunities are being considered, costs and benefits that are common to these alternative opportunities will be irrelevant to the decision. Opportunity cost of a resource = the maximum benefit which could be obtained from that resource if it were used for some alternative purposes. Relevant costs and benefits = those that relate to the future and are additional costs and revenues that will be incurred or result from a decision. Costs
ACCOUNTING IN A BUSINESS CONTEXT – Aiden Berry & Robin Jarvis 5th Edition Slides – G.C. Vergeer
Chapter 1 – Introduction to Accounting Accouting: is generally about quantitative information the information is likely tob e financial it should be useful for making decisions
Key financial statements: the statement of financial position or balance sheet the income statement or profit and loss account the cash flow statement
Chapter 20 – Investment Decisions
Compare the estimated ARR of a proposed project with the target ARR: If the estimate exceeds the target accept the project If it is lower reject the project
Payback = the period which it takes the cash inflows from an investment project to equal the cash outflows. Present value = the cash equivalent now of a sum of money receivable or payable at the stated future date, discounted at a specified rate of return. ( ( ( ) ) ( ( A = lower rate of return with positive NPV B = higher rate of return with negative NPV P = amount of the positive NPV N = amount of the negative NPV ( ) ) )
Chapter 17 – Accounting for Decision Making: When there are no resource constrains Sunk costs/Past costs can easily be identified in that they will have been paid for or they are owed under legally binding contracts. The firm is committed to paying for them in the future. Differential (incremental) costs are the differences in costs and benefits between alternative opportunities available to the organization. It follows that when a number of opportunities are being considered, costs and benefits that are common to these alternative opportunities will be irrelevant to the decision. Opportunity cost of a resource = the maximum benefit which could be obtained from that resource if it were used for some alternative purposes. Relevant costs and benefits = those that relate to the future and are additional costs and revenues that will be incurred or result from a decision. Costs