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Lack of adequate financing is one of the most common reasons for business failures. ___________2. Profit is the ultimate objectives of business. ___________3. Achievement of power is one of the reason why people engage in business is to

Lack of adequate financing is one of the most common reasons for business failures. ___________2. Profit is the ultimate objectives of business. ___________3. Achievement of power is one of the reason why people engage in business is to

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I. PRETEST
True or False
___________1. Lack of adequate financing is one of the most common reasons for business failures.
___________2. Profit is the ultimate objectives of business.
___________3. Achievement of power is one of the reason why people engage in business is to
___________4. Patent gives the holder the monopoly on the exploitation of a literary or artistic work for a certain period subject to renewal.
___________5. The correct valuation of the property and services to be acquired by the new business project is a very important step in the assembly of needed resources.

IV. LEARNING ACTIVITY
List down at least 3 business ideas which you think has the potential to succeed, if adapted. Is the business feasible? Why do you think it has the potential to succeed?


V. ASSESSMENT
Answer the following questions.
1. What makes persons decide to engage in business?
2. What are the common reasons for business failures?
3. What is entrepreneurship and give the functions of entrepreneurs.
4. Enumerate the steps in business promotion.
5. How to determine if the business is feasible?

12:17 PM O 37 Finance-Module-2 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES E-mail: mnsctmainop@gmal.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 MODULE 2 ORGANIZINGA BUSINESS I. LEARNING OUTCOME At the end of the module, the students were able to 1. Identify the common reasons for business failures and why people engage in business 2. Define entrepreneurship and determine the functions of entrepreneurs 3. Determine the different business opportunities 4. Define business promotion and enumerate its steps 5. Understand the feasibility study II. PRETEST True or False .1. Lack of adequate financing is one of the most common reasons for business failures. _2. Profit is the ultimate objectives of business. 3. Achievement of power is one of the reason why people engage in business is to _4. Patent gives the holder the monopoly on the exploitation of a literary or artistic work for a certain period subject to renewal. 5. The correct valuation of the property and services to be acquired by the new business project is a very important step in the assembly of needed resources III. CONTENT The first stage in the life cycle of a business is organization. Much of what will happen to the firm in the later stages depends on the first few steps in the organization process. Because of the magnitude of the capital required in establishing a corporation, the activities undertaken in the organization stage are more sophisticated and may take a year or several years before actual operations begin. This does not mean, however, that small businesses do not deserve careful thought and analysis before they start operating. The importance of the organizational stage cannot be overemphasized. Business failures happen to companies regardless of industry classification and the amount of capital investment. The most common reasons for business failures include the following: 1. Bad or improper management practices 2. Poorly focused and executed marketing or inadequate marketing 3. Poor location 4. Failure to invest in new products and efficient technology 5. Lack of adequate financing Why Persons Engage in Business Prospective investors would want to engage in a business venture for one reason or another. They hope to enjoy certain values which are derived from such undertaking. This values are: 1. Provision of employment to people 2. Profits 3. Service to community 4. Personal satisfaction 5. Means to earn a living 6. Achievement of power 7. Protection of one's self and family Entrepreneurship The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit Functions of Entrepreneurs Studies have shown that successful entrepreneurs are likely to be over-achievers, and BUSINESS FINANCE Module 2 | 1 E-mail: mnsctmainop@gmail.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES likely to do well if they are also reasonable, risk-taker, self-confident, hard workers, goal setters, accountable and innovative. However, even if there are successful entrepreneurs, statistics shows that there is also a big number of failures. This indicates that the task of the entrepreneur is not easy. The following are the functions of entrepreneur: 1. To supply the capital of the firm 2. To organize production by buying and combining inputs 3. To decide on the rate of output in the light of his expectations about demand 4. To bear the risk involved Business Prospecting When a determined individual has finally decided to go into business, It is not wise for him to jump on the first opportunity that comes along. He should carefully scan the environment for other possible openings. A list of alternatives business openings should be prepared and he should make his choice from the list. 1/6 The Search for Business Opportunities A person searching for sustainable business opportunity should learn the ways of a talent scout and a salesman looking for a prospect. II
Transcribed Image Text:12:17 PM O 37 Finance-Module-2 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES E-mail: mnsctmainop@gmal.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 MODULE 2 ORGANIZINGA BUSINESS I. LEARNING OUTCOME At the end of the module, the students were able to 1. Identify the common reasons for business failures and why people engage in business 2. Define entrepreneurship and determine the functions of entrepreneurs 3. Determine the different business opportunities 4. Define business promotion and enumerate its steps 5. Understand the feasibility study II. PRETEST True or False .1. Lack of adequate financing is one of the most common reasons for business failures. _2. Profit is the ultimate objectives of business. 3. Achievement of power is one of the reason why people engage in business is to _4. Patent gives the holder the monopoly on the exploitation of a literary or artistic work for a certain period subject to renewal. 5. The correct valuation of the property and services to be acquired by the new business project is a very important step in the assembly of needed resources III. CONTENT The first stage in the life cycle of a business is organization. Much of what will happen to the firm in the later stages depends on the first few steps in the organization process. Because of the magnitude of the capital required in establishing a corporation, the activities undertaken in the organization stage are more sophisticated and may take a year or several years before actual operations begin. This does not mean, however, that small businesses do not deserve careful thought and analysis before they start operating. The importance of the organizational stage cannot be overemphasized. Business failures happen to companies regardless of industry classification and the amount of capital investment. The most common reasons for business failures include the following: 1. Bad or improper management practices 2. Poorly focused and executed marketing or inadequate marketing 3. Poor location 4. Failure to invest in new products and efficient technology 5. Lack of adequate financing Why Persons Engage in Business Prospective investors would want to engage in a business venture for one reason or another. They hope to enjoy certain values which are derived from such undertaking. This values are: 1. Provision of employment to people 2. Profits 3. Service to community 4. Personal satisfaction 5. Means to earn a living 6. Achievement of power 7. Protection of one's self and family Entrepreneurship The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit Functions of Entrepreneurs Studies have shown that successful entrepreneurs are likely to be over-achievers, and BUSINESS FINANCE Module 2 | 1 E-mail: mnsctmainop@gmail.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES likely to do well if they are also reasonable, risk-taker, self-confident, hard workers, goal setters, accountable and innovative. However, even if there are successful entrepreneurs, statistics shows that there is also a big number of failures. This indicates that the task of the entrepreneur is not easy. The following are the functions of entrepreneur: 1. To supply the capital of the firm 2. To organize production by buying and combining inputs 3. To decide on the rate of output in the light of his expectations about demand 4. To bear the risk involved Business Prospecting When a determined individual has finally decided to go into business, It is not wise for him to jump on the first opportunity that comes along. He should carefully scan the environment for other possible openings. A list of alternatives business openings should be prepared and he should make his choice from the list. 1/6 The Search for Business Opportunities A person searching for sustainable business opportunity should learn the ways of a talent scout and a salesman looking for a prospect. II
The business promoter may also be induced to consider certain product ideas because of the availability of raw materials. Suppliers of marble products are attracted by Romblon, Gapan (in Nueva Ecija) and other areas where marble abounds. Bagoong and patis factories are established in areas near the coastlines of Malabon Rizal, Lingayen, Pangasinan and Balayan, Batangas. Authors of books and composers of music may seek the commercial exploitation of their work. The inventor of a new process formulation of a new product may also seek prospective investors to exploit or use his convention. A case in point is the transfer of technology provided by the National Institute of Science and Technology (NIST) to the BUSINESS FINANCE Module 2 | 2 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY E-mail: mnsctmainop@gmail.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES Philippine Herbal Group, Incorporated. The authorization involves commercial production of transparent soap based on NIST patent claims. Determination of Feasibility Once a choice has been made on the business idea to adapt, its feasibility should be determined. Oftentimes, a feasibility study is required. If the idea is found not to be feasible, it should be discarded and a new one should be considered, if required. A feasibility study is a detailed investigation and analysis of a proposed business venture to determine its viability. It must contain some or all of the following aspects: 1. Management Study 2. Marketing Study 3. Technical Study 4. Taxation Study 5. Financing Study 6. Profitability 7. Social Desirability 1. Management Study. In this particular portion the following aspects are determined: 1. The appropriate form of business The 3. The owners ternal structure of the organization 4. The staffing pattern of the organization 2. Marketing Study. In this portion should provide the following information: 1. The future total demand for the product 2. The competitive situation of the product in the industry 3. An estimate annual sales volume 4. Future selling prices 5. The marketing program 3. Technical Study. In this particular portion the following aspects are determined: 1. The manufacturing process selected (if applicable) 2. The related capacity of the plant 3. The design of the machinery 4. The location and lay-out of the plant 5. The specification of the structures 6. The requirements for operation 4. Taxation Study. In this particular portion the tax burden applicable should be shown. An important factor that must be considered is that the design of the project must be such that the tax burden is legally minimized 5. Financing Study. In this particular portion the source of financing for the project is discussed. Particular attention is given to selecting the most attractive financing scheme using factors of cost and availability 6. Profitability. The rate of return using various approaches is shown in this particular aspect of the feasibility study 7. Social Desirability. Provide a description of the social returns applicable to project. It should benefit that will be afforded by the projects to the community Assembling the needed resources Once the feasibility of a proposed business project is determined by experts, the proponent may proceed to assemble the needed resources. This is made prior to the start of business operations. The resources needed may comprise a. Initial capital required b. The essential properties С. Processes d. Personnel BUSINESS FINANCE Module 2 | 3 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY E-mail: mnsctmainop@gmail.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES Initial Capital Requirements. A new business project requires initial capital to take care of the following. Cost of Organization – it includes payments made for business permits, licenses, incorporations taxes, business name. Also include are lawyer's fees for initial legal requirements like the preparation of building or office contracts, articles of incorporation, architect's fees for construction plans of buildings and management consultancy fees. Whenever applicable, the following may also be included: promoter's fee and the cost of obtaining franchise, license for patents on required inventions, and license for copyrights on required literary or artistic works. Working capital- is required to firaro inventories and supplies, salaries and wages, power, water, rent, insurance, transportation, advertising and sales promotion. Maturing obligations of the firm and the financing of credit sales will also require sufficient amount of working capital. II
Transcribed Image Text:The business promoter may also be induced to consider certain product ideas because of the availability of raw materials. Suppliers of marble products are attracted by Romblon, Gapan (in Nueva Ecija) and other areas where marble abounds. Bagoong and patis factories are established in areas near the coastlines of Malabon Rizal, Lingayen, Pangasinan and Balayan, Batangas. Authors of books and composers of music may seek the commercial exploitation of their work. The inventor of a new process formulation of a new product may also seek prospective investors to exploit or use his convention. A case in point is the transfer of technology provided by the National Institute of Science and Technology (NIST) to the BUSINESS FINANCE Module 2 | 2 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY E-mail: mnsctmainop@gmail.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES Philippine Herbal Group, Incorporated. The authorization involves commercial production of transparent soap based on NIST patent claims. Determination of Feasibility Once a choice has been made on the business idea to adapt, its feasibility should be determined. Oftentimes, a feasibility study is required. If the idea is found not to be feasible, it should be discarded and a new one should be considered, if required. A feasibility study is a detailed investigation and analysis of a proposed business venture to determine its viability. It must contain some or all of the following aspects: 1. Management Study 2. Marketing Study 3. Technical Study 4. Taxation Study 5. Financing Study 6. Profitability 7. Social Desirability 1. Management Study. In this particular portion the following aspects are determined: 1. The appropriate form of business The 3. The owners ternal structure of the organization 4. The staffing pattern of the organization 2. Marketing Study. In this portion should provide the following information: 1. The future total demand for the product 2. The competitive situation of the product in the industry 3. An estimate annual sales volume 4. Future selling prices 5. The marketing program 3. Technical Study. In this particular portion the following aspects are determined: 1. The manufacturing process selected (if applicable) 2. The related capacity of the plant 3. The design of the machinery 4. The location and lay-out of the plant 5. The specification of the structures 6. The requirements for operation 4. Taxation Study. In this particular portion the tax burden applicable should be shown. An important factor that must be considered is that the design of the project must be such that the tax burden is legally minimized 5. Financing Study. In this particular portion the source of financing for the project is discussed. Particular attention is given to selecting the most attractive financing scheme using factors of cost and availability 6. Profitability. The rate of return using various approaches is shown in this particular aspect of the feasibility study 7. Social Desirability. Provide a description of the social returns applicable to project. It should benefit that will be afforded by the projects to the community Assembling the needed resources Once the feasibility of a proposed business project is determined by experts, the proponent may proceed to assemble the needed resources. This is made prior to the start of business operations. The resources needed may comprise a. Initial capital required b. The essential properties С. Processes d. Personnel BUSINESS FINANCE Module 2 | 3 MINDORO STATE COLLEGE OF AGRICULTURE & TECHNOLOGY E-mail: mnsctmainop@gmail.com Website: www.minscat.edu.ph Phone: (+63) 977-8467228 VICTORIA, ORIENTAL MINDORO 5205 PHILIPPINES Initial Capital Requirements. A new business project requires initial capital to take care of the following. Cost of Organization – it includes payments made for business permits, licenses, incorporations taxes, business name. Also include are lawyer's fees for initial legal requirements like the preparation of building or office contracts, articles of incorporation, architect's fees for construction plans of buildings and management consultancy fees. Whenever applicable, the following may also be included: promoter's fee and the cost of obtaining franchise, license for patents on required inventions, and license for copyrights on required literary or artistic works. Working capital- is required to firaro inventories and supplies, salaries and wages, power, water, rent, insurance, transportation, advertising and sales promotion. Maturing obligations of the firm and the financing of credit sales will also require sufficient amount of working capital. II
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