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Users and Uses of Financial Information

In every financial accounting textbook, the authors explain in detail about "Users and Uses of Financial Accounting." Information such as cash flow statements, income statements, and balance sheets are important documents that are kept to ensure that the company is recording everything correctly. The users of this accounting information are divided into two categories, internal and external users.

The internal users of accounting information are the managers who organize, operate and plan daily business routine. They are directly affiliated with the company and use administrative accounting, which includes in-depth reports used to determine financial strengths and weaknesses. For example, internal users would include management, finance, marketing, and human resources. An example of a human resource manager would be that he or she has to ensure the rights of their employees by using wage information along with other data. Important questions arise with internal users. A question for a marketing manager would include, "What price for an Apple I Pad will maximize the company's net income?"

External users are groups of individuals that are outside organizations, and they use accounting to make financial decisions. An example of an external user would include a creditor, who uses accounting to evaluate the risks of granting credit. Taxing authorities, investors, and customers are also external users. External users would receive limited financial information from a company such as financial statements. These statements are the backbone of financial accounting and they give the external users enough information to inform them of the company's economic position. Assets, liabilities, revenues, and expenses are of great importance to users of accounting information. For business purposes, it is customary to arrange this information in the format of four different financial statements; Balance sheet, income statement, retained earnings statement, and statement of cash flows.

The purpose of the income statement is to report the success or failure of the company's operations for a period of time. The income statement lists the company's revenues followed by it expenses. A key point to recall when preparing an income statement is that amounts received from issuing stock are not revenues, and amounts paid out as dividends are not expenses. Therefore they are not reported on the income statement. Retained earnings statement shows the amounts and causes of changes in retained earnings during the period. The time period is equivalent to the time covered on the income statement. Financial statement users can evaluate dividend payment practices by monitoring the retained earnings statement. Some investors seek companies that have a history of paying high dividends, while others seek companies that reinvest earnings to increase the company's growth.

The balance sheet is based on this equation: Assets = Liabilities + Stockholders Equity. This equation is referred to as the basis accounting equation. The balance sheet reports the company's assets, liabilities and owners equity. It is a financial window to the company at a specific point in time. Claims are divided into two categories: claims of creditors, which are called liabilities and claims of owners, which are …

How to Find the Right Joint Venture Partner

Care must be taken in the designing and drafting of the joint venture agreement to clarify exactly who owns what

While joint ventures can propel growth, selection of the right partner matters a lot for the success of the venture. One needs to conduct rigorous research work to find the right partner and do proper due diligence. One can save time and money by partnering with an existing supplier, customer, investor or with someone you have met socially. In social media, too, look for companies which follow you, add you as a friend or visit the same pages as you as they can form an ideal partnership. Great care should be taken in the designing and drafting of the JV agreement to clarify exactly who owns what and when.

The process of finding JV partners is a tedious one. Much before you approach a prospective JV partner, due diligence is crucial. Most companies publish key financial data on their site and are available with the Registrar of Companies. On must download the latest set of accounts and analyze it. One can also look at the news to get the latest stories about your potential JV partner. If they’ve got any skeletons in their cupboard, you should be able to find out here.

Always make an enticing offer with your prospective partner and spell out the nitty gritties of the deal like finance, customers, intellectual property rights, legal issues with your target partner. When you come to draft the proposal, make sure you clearly state your aims and objectives. If the prospective JV partner accepts your offer, one must draw up an agreement which must include details, including the legal status of the JV, key aims and objectives, each party’s stake and investment, the structure and make-up of the management team, and plans for a future exit, if needed. Also, it is crucial to include details of any non-disclosure agreements.

The main reasons you may want to form a JV is that you want the backing of a high-profile partner who has resources available to him. This may be a large mailing list that can get massive exposure for your products very quickly or the proposed partner runs a forum and can advertise your product using a banner. Get started by making a list of everyone in your network who may be a potential JV partner, or who can introduce you to people that are potentially good partners. Brainstorm other people, companies, and websites that are reaching your ideal clients and complement what you offer.

As all businesses have strengths and weaknesses, it makes sense to look for a joint venture to fill in the weak spots. For instance, if your strengths are a strong customer list, good distribution channels, and specialized product line, then your JV partner must have products or services that would enable you to stimulate additional revenues from existing customers.

Always look for non-competing companies where both the parties can benefit from the exchange of leads or …

Merits and Demerits of Equity Finance

Equity finance means the owner, own funds and finance. Usually small scale business such as partnerships and sole proprietorships are operated by their owner trough their own finance. Joint stock companies operate on the basis of equity shares, but their management is different from share holders and investors.

Merits of Equity Finance:

Following are the merits of equity finance:

(i) Permanent in Nature: Equity finance is permanent in nature. There is no need to repay it unless liquidation occur. Shares once sold remain in the market. If any share holder wants to sell those shares he can do so in the stock exchange where company is listed. However, this will not pose any liquidity problem for the company.

(ii) Solvency: Equity finance increases the solvency of the business. It also helps in increasing the financial standing. In times of need the share capital can be increased by inviting offers from the general public to subscribe for new shares. This will enable the company to successfully face the financial crisis.

(iii) Credit Worthiness: High equity finance increases credit worthiness. A business in which equity finance has high proportion can easily take loan from banks. In contrast to those companies which are under serious debt burden, no longer remain attractive for investors. Higher proportion of equity finance means that less money will be needed for payment of interest on loans and financial expenses, so much of the profit will be distributed among share holders.

(iv) No Interest: No interest is paid to any outsider in case of equity finance. This increases the net income of the business which can be used to expand the scale of operations.

(v) Motivation: As in equity finance all the profit remain with the owner, so it gives him motivation to work more hard. The sense of inspiration and care is greater in a business which is financed by owner’s own money. This keeps the businessman conscious and active to seek opportunities and earn profit.

(vi) No Danger of Insolvency: As there is no borrowed capital so no repayment have to be made in any strict lime schedule. This makes the entrepreneur free from financial worries and there is no danger of insolvency.

(vii) Liquidation: In case of winding up or liquidation there is no outsiders charge on the assets of the business. All the assets remain with the owner.

(viii) Increasing Capital: Joint Stock companies can increases both the issued and authorized capital after fulfilling certain legal requirements. So in times of need finance can be raised by selling extra shares.

(ix) Macro Level Advantages: Equity finance produces many social and macro level advantages. First it reduces the elements of interest in the economy. This makes people Tree of financial worries and panic. Secondly the growth of joint stock companies allows a great number of people to share in its profit without taking active part in its management. Thus people can use their savings to earn monetary rewards over a long time.

Demerits of Equity Finance:

Business Terms and Attributes You Need to Know

Commitment – This is an attribute necessary in every employee and leader. A committed person sees to the end what they were involved with in the beginning. A committed person gives it their all. People sometimes may not show some commitment if the direction and vision of the organization are not clear. People will certainly not commit to something they are not sure of. Commitment is almost similar to loyalty. When people buy-in to the vision and goals of the organization, they are likely to set aside their personal comfort and commit to the success and overall progress of the organization. When team members are committed to their tasks, completion and success is inevitable.

Company – This is a registered organization with employees and leaders. A company is also called an organization or a business. General structure of a company has Managing Director at the top (Chief Executive Officer) and below him/her are the individual departmental heads e.g. Sales and Marketing Director, Human Resources, Finance and Admin, Operations etc. A company is broken down into individual business units which seem independent but are actually interdependent on other departments. Companies’ existence is usually governed by the Companies Act of the country where the business is registered. See Business under the B Series. A company is also referred to as a corporate entity

Communication – The way we communicate internally and with external stakeholders is what normally divides successful companies from mediocre ones. If you cannot communicate with your employees about vision, targets etc, you should not expect miracles from them. If you can not be in touch with your customers and suppliers out there, no wonder you seem to be on an island of stagnation. Communication uses a channel which varies from print media to electronic media. More and more communication is now electronic as it is faster, less expensive and reaching a larger audience. Companies that have gone bankrupt can actually mention that because they failed to listen to the needs being communicated by their customer, they eventually ran out of business. Communication is a key for success.

Competition – When you have another company or individual offering services like the ones you offer they are considered your competition. You compete to win the heart of the customer. You compete for space, orders, attention etc. It is healthy to have competition. Your competition is not your enemy. It helps to keep your services in check. In situations where companies are a monopoly there is a general tendency to slip back, relax and assume business will always be there. This is why the same company will suffer the day a competitor comes onto the same market because customers never forget those that look after the diverse needs.

Confidentiality – Information in the organization has levels of exposure. Information that is for public consumption will be found in the press or on company noticeboards. Sometimes a bulk email may be sent to the whole organization. However certain sensitive information is just for …

Money Laundering

Money laundering is the process of moving money from the illegitimate to the legitimate economy. The crime of money laundering consists of knowingly disguising the source, origin or ownership of illegal funds.

Any criminal transactions are carried out in cash and the function of the money launderer is often to translate these small sums into a larger, more liquid sum which will be difficult to trace and more easy to invest. Money laundering has emerged on a massive international scale with the globalization of the world economy and the internationalization of organized crime.

Money earned in one region can, with increasing facility, be transferred to another part of the world, preventing its eventual recovery by law enforcement. With the globalization of organized crime activity, money is earned in all regions of the world and must be collected, consolidated and moved.

 This growth has been facilitated by new technologies, the increasing movement of goods and people globally and the declining significance of borders. A large number of professionals, including lawyers, accountants and bankers, have emerged to provide services to this criminal and corrupt clientele with large amounts of money at their disposal. Not involved in the original act, these professionals help perpetuate criminal and corrupt activities through their services. Organized crime groups have particularly benefited from the expansion of global financial markets. They have exploited the differential regulatory regimes and the possibility of moving money across jurisdictions rapidly in order to hinder detection by taking advantage of the discrepancies between country based regulatory systems.

They seek out locales that are less regulated with respect to international anti-money laundering laws. These havens, frequently offshore banking centers, provide both banking and corporate secrecy. They also provide secrecy for the trusts, which are used to hide large-scale assets that are often illegally diverted from the companies controlled by organized crime groups. In 1996 economists of the International Monetary Fund (IMF) suggested that 2 percent of global GDP (gross domestic product) was related to drug crime and the laundered sums associated with corruption and tax evasion would be an even larger percentage. The share of the world’s economy would be even higher today for several reasons as many forms of organized crime have grown in this period and the countermeasures have failed to dent the profits of this activity except at the margins.

Much laundered money has been invested in dollarized accounts and other strong currencies where it has escaped significant losses through currency devaluations in origin countries. In offshore regimes where financial capital is untaxed, its growth is faster than that of money that is part of taxed and regulated regimes. The range of businesses and financial institutions used to launder money has proliferated with the profits and the growing sums which need to be laundered. Among the institutions employed are large banks, offshore banks and financial institutions, currency exchange and wire transfer businesses, stock brokerage houses, gold dealers, casinos, insurance and trading companies.

The ability to safeguard the proceeds of transnational criminal activity, …

Funding Your Bachelor Degree Education

For the average working adult, going back to school can be one of the largest investments he will make in his life. But if you have some time before you pursue your studies, instead of applying for a bank loan, why not let time and capital work for you. Even if you plan to pursue a bachelor degree in the near future, say, in three years more, you can still save for it.

First of all, you need to have a target amount. Usually, the course fees represent a large portion of the cost. Other costs are examination fees and living expenses for those who come from other towns.

Some students may choose to study full time so that they can focus on their studies. In this case, if your employer doesn’t give you paid time off to do your studies, your budget will increase significantly, as you now have to account for your entire living expenses. In addition to that, you’ll still have to continue paying for things like insurance, car, mortgage, credit card as well as utility bills.

However, expenses can be higher if the course is done part time, as the person has less time to devote to his studies. As a result, he may have to prolong the program or even have to re-sit some papers, which means additional examination fees.

How much time you have to put aside the money depends on when you plan on taking up the program. When is the ideal time to start? To get more out of a bachelor degree, it would be good to have real world working experience of two to three years, on which to reflect upon when you’re doing the units.

At least three years of working experience would be good but you shouldn’t wait too long as the motivation level will drop. Even if you commence your studies in three years, you don’t have to pay the money in one lump sum. You can save through the study period as well which, gives you more time to accumulate funds.

Many education centers and colleges have worked out interest free schemes that you can use to your benefit. You can let your money work for you while you use the interest free payment option.

There is also an option for students to pay their fees in the monthly payments over the period of study and if the amount is paid in a lump sum, students are given a rebate. Another option is a scheme in collaboration with a bank, where students pay few hundred dollars at the start of the program and nothing else for two years. Thereafter, they have the option to repay in installments upon completing their studies.

Finally, you need to work backwards; given the number of years, inflation rate and a projected rate of return to come up with how much you need to put aside regularly. However, inflation may not have a large impact if your study period is short.

Once …

Personal Debt Consolidation Loans – Pay Off Your Debts Easily

Stuck in a swamp of debts that seem to have accumulated without mercy? Then you are probably spending much time and brain work on figuring out how to get out of it without resorting to desperate measures. Well, you can unload the burden from your brains and solve your debt crisis through a smart management plan. There are many strategies through which you can achieve the desired effect- namely, the successful repayment of your numerous debts. A tried, tested and preferred method among them is a personal debt consolidation loan.

A personal debt consolidation loan is one that helps you to pay off your multiple debts. You might be languishing under outstanding unpaid bills or unpaid high interest personal loans; the only criteria that a personal debt consolidation loan demands you to meet is that you owe over £5000 to more than one creditor.

Personal debt consolidation loan can be obtained from many professional debt consolidation agencies. The standard procedures through which you manage your debts with this loan are simple to understand. First, all your debts will be assimilated into a single one. Then, based on an evaluation of your financial condition, a repayment plan will be devised. The agency will then loan you the required amount that can fund this repayment plan.

The advantages of availing a personal debt consolidation loan are as follows:

o Interest rate on the consolidated loan is lower.

o You have just one creditor- your consolidation loan provider. You will be paying the installments to this party only. It will, in turn, distribute the payment among your previous creditors. Repayment becomes more manageable

o All negotiations and interactions with your previous creditors are done by your debt consolidation agency. So, you will be spared of any further contact from these parties.

Thus, you can pay off your multiple debts gradually and easily. And since you are paying less than what you were supposed to, you can also save some extra money for your personal use. You can also request for credit counseling which many debt consolidation agencies provide. Under this program, you can learn how to manage your personal finance and economize on your expenditures.…

Promote yourself on radio for free

Unless you have become extremely popular in your personal or business name, you likely need all of the marketing and promotion you can get. Now, you may say, of course, I'm aware of this, but who has the money? This is a good and fair question. It may surprise you, though, when I say, you do not need money for some of the most valuable marketing available – radio advertising.

If you are not the kind of person who listen to talk radio, the next time you're taking a drive, tune in to one of your local talk shows and listen for awhile. Try to find something that is not a sports talk show, although they also offer the type of free advertising I want to explain. What you'll ever hear is an interview. A talk show host will have a guest, who is an expert at something. Perhaps it's a health show, and the subject is weight loss and the guest is talking about some new diet.

Now, listen carefully, because you will not hear the guest babbling about his book, web site, or going on and on about his great product that is going to melt the pounds off of every fat person in America. What you will hear, in most cases, is someone who is explaining a method for weight loss that is a new approach. Now, at times throughout the show, this expert will certainly mention his product, and the host will ask the expert to tell the audience how to order it.

Even if you are an avid listener to these types of shows, and you've heard hundreds of guest experts, what you may not know is that in 99 percent of these cases, this is not paid advertising.

You see, there are thousands of talk show stations in America, and the ones that program only talk shows probably have five to 10 different shows per day. Some quick math will tell you that tens of thousands of talk shows nationwide need things to talk about and guests to keep listeners tuned in. This is where the magic comes in for you. As a new author, salesman or business owner – talk shows need you.

Best of all, virtually anyone can get on a talk show. When I published my first book, Winning the Mortgage Game, I had very little idea how to market it, but I did know I was on a very small budget. I put up a web site, started an ezine, and it was an extremely slow beginning. That is, until I learned about being on radio talk shows. I read a very well-written how-to book by a man namedJoe Sabah about approaching radio producers and getting them to invite me to be a guest on their shows.

The second show I ever did was an hour-lomg interview on a station hundreds of miles away from my home. The producer called me at my house minutes before I was on, and …

How Can I Get Free Money To Start My Own Business

So you want to launch your very own business or product but you do not have the funds to get you started. That can be a major problem. In order to make your business venture become a reality, you will need to have financing in place in order to develop, manufacture, launch and market your business.

Now you must ask yourself the all important question:

How Can I Get Free Money To Start My Own Business?

Well, It's easier than you might think, but first let's entertain some options.

1. You can use your own personal savings. That's assuming that you've managed to sock away a huge amount of money and you've got nothing better to do with it but some how I doubt that is going to be the case.

2. You can always beg, borrow or steal (just kidding) from friends or family members. This option may work for you if you only require a small small loan, However, most business start ups require a much larger amount of money, the kind of money that friends and family simply do not have available, let alone be willing to lend it to you.

3. A more obvious solution would be to take out a bank loan. Sounds easy enough right? Wrong! You'll need to come up with an extensive business not to mention a multitude of solid reasons why your business is worth investing in and prove that you will be able to pay back the loan in a reasonable amount of time.

4.If you have multiple credit cards with very large spending limits you could consider using them to finance your business, however, when you consider the high interest rates associated with credit cards I'm sure you'll agree that this is strictly the way to go. The high interest rates you will have to pay will likely put you into further debt and put business at risk ..

5.Finding Investors is often another consideration but you will find them to be next to impossible to come by when you are first starting out, unless you have a bullet proof business plan that will guarantee high returns quickly, investors simply will not be interested in putting their money at risk.

6.From my own personal experience I have found that the best avenue for locating free money for a small business venture is via state & federal grant programs. The government provides billions of dollars in grant money for business start ups every year, and you do not have to jump through hoops to get it.

So the next time you ask yourself … How Can I Get Free Money To Start My Own Business? I suggest that you save yourself the hundreds of hours it will take you to search individual offerings, by simply accessing a Government Grant Directory, as they will have an extensive database of all government grants available to you. They typically charge a very small, one time fee but you will find it to be …

How to Get Finance Homework Help

In its core, finance explores the ways in which business entities, individuals and organizations utilizes the resources over time. The study of money and the management of assets has been the focus of finance. Maximization of shareholders wealth has the main focus of the financial manager. Decisions relating to investments, dividends and financing have been taken by the financial manager. Finance home work help provided by the online sites worth its salt. Although there are plenty of experts who provide online help for various topics in finance. It is quiet important to find the right guide who can lead the students properly.

The basic areas of finance is the time value of Money, bond valuation, stock valuation, dividend policy, capital structure, risk & return, cost of capital and capital budgeting.

The time value of the money is also processed in Finance. At the time of investment "The bird in the hand principle" is of much importance. One dollar in hand today is certain but one dollar which can be received tomorrow is less certain. This is the risk strategies in finance. Even with the consumption preferences, the preference level for the immediate consumption is stronger than the delayed consumption. As the saying goes "The promise of a bigger pizza next week counts less for a starving man."

Although homework help with finance is quiet complex, there are many experts who work round the clock to serve the needs of the students.

The whole responsibility of managing the general accounting function, the internal control procedures, and the pay-out systems is in the hand of the finance and accounting manager. So, the students of finance and management need to put intensive care in learning the basics of finance. …