
👋 Oi, mga repapips, Brian Dys here! I love music, photography, and creative stuff like UX design and art. This is a place where I collect my thoughts and works. Apart all these, I’m Jaycelle’s better half and Bryce’s dad. 🥰
Prof. Maurino Bolante “Mau”
Basic Accounting Concepts
Basic Financial Reports
Basic Questions
Happiness Rate
Income Statement (or Performance Report or Score Card)
Sales (Top Line)
= Net Profit / Net Loss (Bottom Line)
What is your bottom line? Is it worth it?
Usually reports are prepared after a year
For the period ended – the period when you have began selling
Sales
–
Cost
Gross Profit
Less: Operating Expenses
= Net Operating Income
Depreciation: expense of fixed assets (building, equipment, machinery) under operating expense
–
In a starting business, as much as possible, look for customers who will pay in cash.
It’s not sufficient to simply make a sale. Make a sale in cash. Eventually when you trust the customer already, you can sell in credit.
As much as possible, avoid Period Costs; commission basis employees?
Balance Sheet (Status Report)
Pre-operation and Post-operation
When you start, invest less money on Fixed Assets. Put more money on Current Assets or Operating Capital. Build Fixed Assets as you become profitable.
Avoid long term loans.
Shareholders have a hold on a company; just use creditors.
Balance Sheet
The Asset side says about the investing decisions of the company (where did the money go?).
Put your money where it will generate the revenue.
Assets are company resources that are expected to generate performance.
The Liabilities and Equities
Income Statement
How much is salary expense versus sales?
Cash Flow
Depreciation: to be set aside for replacement after the life of the asset
Steps in preparing Statement of Cash Flow
Free Cash Flow (FCF)
Financial Statement Analysis
Common measures of profitablity: margins
Cash flows from Operations Ratio = Cash flows from operations / current liabilities
Always look for cash customers
Don’t lock in your inventory which will not sell; you will dispose of it in a discount which will not make profit