BUS305 Study Guide
Unit 5: Financing the New Venture
5a. Explain the importance of the financial plan
1. There are two main branches of business accounting: financial accounting and managerial accounting.
- What are the differences between financial and managerial accounting?
- What are the features of each of the types of accounts utilized by a business: asset accounts, liability accounts, equity accounts, revenue or income accounts, expense accounts, and contra accounts?
- What is accrual accounting?
2. Financial statements are records of the financial health and position of a company.
- How do businesses use the income statement, the balance sheet, the cash flow statement, and the statement of changes in equity?
- What are the elements of the accounting equation?
- What is a break-even analysis?
3. The financial plan, as a whole, can help you measure the value of your company. Understanding where your company's money is coming from and where it is going are essential for the organization's financial health.
- What are the potential sources of value, such as stocks, assets, and comparables?
- How can current value be determined by past financial performance?
- How does a company's stage of life relate to financial risk factors?
- How do financial risk factors affect the overall plan for growth?
To review, see:
- Financing Your Organization
- Financial Statements
- Standardizing Financial Statements
- Finance and Forecasting
- Break-Even Analysis
5b. Explain how to finance personal business ventures
Businesses can be financed through personal investment or with the help of outside investors.
- What are the features of each of the traditional types of investment sources for a business venture: angel investors, bootstrapping, venture capitalists, micro-lending, peer-to-peer lending, banks/financial institutions, and government agencies?
- What are the features of new, innovative ways to finance a business venture: customer financing, crowdfunding, and bartering?
To review, see Sources of Financing and Financing Company Operations.
Unit 5 Vocabulary
This vocabulary list includes terms that might help you answer some of the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.
- Accrual accounting
- Angel investor
- Asset accounts
- Assets
- Balance sheet
- Barter
- Bootstrapping
- Break-even
- Cash flow statement
- Contra accounts
- Crowdfunding
- Debt
- Equity
- Equity accounts
- Expenses
- Financial accounting
- Financial equation
- Grants
- Income
- Income statement
- Liabilities
- Loans
- Managerial accounting
- Micro-lending
- Peer-to-peer lending
- Revenue
- Statement of equity
- Strategic partnership
- Venture capitalist
- Working capital