money doesn't create man but it is the man who created money. -warren buffet

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Money doesn't create man but it is the man who created money. -Warren Buffet

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Money doesn't create man but it is the man who created money.

-Warren Buffet

BANKING AND FINANCE

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Sources of Business Capital

What are the Sources of Business Capital?

Sources of Business Capital Debt

Loan from Friends/Family Loan from Banks Bonds

Equity Personal savings Investment by Friends/Family Investors

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Uses of Business Resources

Uses of Business Resources

What are Uses of Business Resources?

Why Do Businesses Perform the Functions?

To produce and market goods and services (resulting in revenues)

To produce and market goods and services (resulting in revenues)

Key Terms Assets The economic resources owned by an entity; entailing

probable future benefits to the entityExample: Land, Building, Machinery

Owners' equity It represents the collective interest or position of the

entity's owners Debt/Outsider’s LiabilitiesIt represent the obligation to the outsiders. E.g.. Loan, any unpaid expense

Assets = Equity + DebtAssets= Liabilities

How is the Revenue a Business Generates Used?

Profits are retained or distributed

Profits are retained or distributed

Key terms Assets: the resources a business owns –

Fixed Assets – those lasting more than one year and not used up in production – equipment, machinery, buildings, etc.

Current Assets – assets used up during production and which will realise cash within a year – debtors, raw materials, stock, etc.

Key terms

Liabilities: The financial obligations of a business – what

a business owes Loans, shareholders funds, creditors, tax

liability, interest owing Current liabilities – those obligations the

business has to meet within a year

Key terms Expenses

The costs incurred in producing revenues Revenue

Value of goods /services sold by the organization

Profits

Profits (or earnings or income) arethe excess of revenues over expenses.

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Equity Shares–Features Claim on Income Right to Control Voting Rights Limited Liability Dividend Source of Permanent capital

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Term Loans–Features

Maturity Direct Negotiations Security Repayment Schedule Interest and Principle need to paid back

Exercise -IJensen Publishing Company operates newspapers in a

number of small communities. Determine whether each of the following is an asset, a liability, a revenue, or an expense from Jensen's viewpoint. Give reasons too.

a. A loan that is owed to the bank b. The cost of paper used in printing c. Monthly rental charges paid to a landlord d. Receipts collected from subscribers e Machinery owned by the company and used in

the business f. Amounts owed to suppliers of ink