RECAP LECTURE 7. CAPITAL STRUCTURE RECAP LECTURE 7 SHARE FEATURES THAT AFFECT CAPITAL STRUCTURE WHAT...

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Transcript of RECAP LECTURE 7. CAPITAL STRUCTURE RECAP LECTURE 7 SHARE FEATURES THAT AFFECT CAPITAL STRUCTURE WHAT...

RECAP LECTURE 7

RECAP LECTURE 7RECAP LECTURE 7 CAPITAL STRUCTURE

RECAP LECTURE 7SHARE FEATURES THAT AFFECT CAPITAL STRUCTURE

WHAT ARE THEY?RECAP LECTURE 7OWNERSHIP RIGHTSREPAYMENT REQUIREMENTSCLAIM ON ASSETSCLAIM ON PROFITSRECAP LECTURE 7WHAT ARE THE INTERNAL FACTORS THAT AFFECT CAPITAL STRUCTURE?

WHAT ARE THE EXTERNAL FACTORS THAT AFFECT CAPITAL STRUCTURE?A REVIEW OF FINANCIAL ACCOUNTINGACCOUNTING IS OFTEN SAID TO BE THE LANGUAGE OF BUSINESS.IT IS USED IN BUSINESS WORLD TO DESCRIBE THE TRANSACTIONS ENTERED INTO BY ALL KINDS OF ORGANIZATIONS.ACCOUNTING TERMS AND IDEAS ARE THEREFORE USED BY PEOPLE ASSOCIATED WITH BUSINESS, WHETHER THEY ARE MANAGERS, OWNERS, INVESTORS, BANKERS, LAWYERS OR ACCOUNTANTSA REVIEW OF FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTING IS A SYSTEM OF KEEPING BUSINESS RECORDS SO AS TO EXPLAIN WHAT IS HAPPENING IN THE BUSINESSIN THIS LECTURE WE WILL REVIEW THE BASIC PRINCIPLES AND STRUCTURE OF FINANVIAL ACCOUNTINGA REVIEW OF FINANCIAL ACCOUNTINGTHE FIELD OF ACCOUNTING CAN BE DIVIDED INTO FOUR MAJOR AREAS:

FINANCIAL ACCOUNTINGMANAGEMENT / MANAGERIAL ACCOUNTINGCOST ACCOUNTINGAUDITINGA REVIEW OF FINANCIAL ACCOUNTING FINANCIAL ACCOUNTING

RECORDING TRANSACTIONS AND PREPARING REPORTS AND FINANCIAL STATEMENTS THAT CAN BE USED BY MANAGEMENT, OWNERS, CREDITORS, GOVERNMENT AGENCIES, AND OTHERS TO UNDERSTAND WHAT IS HAPPENING IN THE BUSINESS OR NON-PROFIT ORGANIZATIONA REVIEW OF FINANCIAL ACCOUNTING MANAGEMENT/MANAGERIAL ACCOUNTING

ALSO CALLED BUDGETING, THIS INVOLVES PLANNING FOR THE FUTURE. ACCOUNTING DATA ARE PREPARED ON AN EXPECTED OR PRO FORMA BASIS, THAT IS THE FIRM IS FORECASTING BUSINESS ACTIVITYA REVIEW OF FINANCIAL ACCOUNTING COST ACCOUNTING

THIS AREA COVERS TECHNIQUES FOR DETERMINING THE COSTS OF A BUSINEE AND DEVELOPING METHODS FOR CONTROLLING THOSE COSTS.

PARTICULAR ATTENTION IS GIVEN TO COMPUTING THE COST OF AN INDIVIDUAL PRODUCT OR SERVICE IN SITUATIONS WHERE THOUSANDS OF SUCH PRODUCTS OR SERVICES ARE SOLD A REVIEW OF FINANCIAL ACCOUNTING COST ACCOUNTING

EXAMPLE: TOYOTA MOTOR COMPANY WANTS TO MANUFACTURE A NEW CAR, IT MUST INCUR LARGE CAPITAL COSTS IN ADVANCE, TRAIN THOUSANDS OF WORKERS ON A NEW ASSEMBLY LINE, STOCK MILLIONS OF COMPONENTS AND PARTS AND FINALLY BEGIN PRODUCTION.

WHAT DOES IT COST TO PRODUCE THE FIRST CAR? THESE QUESTIONS ARE ANSWERED IN THE AREA OF COST ACCOUNTINGA REVIEW OF FINANCIAL ACCOUNTING AUDITING

AN AUDIT MAY BE DEFINED AS AN EXAMINATION OF ACCOUNTING OR FINANCIAL RECORDS TO DETERMINE WHETHER A COMPANY, BANK OR OTHER ORGANIZATION IS MEETING CERTAIN RULES OR STANDARDS. AUDITING IS THE FIELD THAT DEVELOPS STANDARDS FOR AUDITS AND PROVIDES THE PEOPLE TO CONDUCT AUDITS.A REVIEW OF FINANCIAL ACCOUNTING AUDITING

INERNAL AUDITOR

EXTERNAL AUDITOR

A REVIEW OF FINANCIAL ACCOUNTING INTERNAL AUDITOR

AN AUDITOR MAY WORK FOR A COMPANY AND CONDUCT AN INTERNAL AUDIT, ENSURING THAT ESTABLISHED ACCOUNTING PROCEDURES AND MANAGEMENT INSTRUCTIONS ARE BEING FOLLOWED THROUGHT A COMPANYA REVIEW OF FINANCIAL ACCOUNTING EXTERNAL AUDITORS

AN AUDITOR MAY WORK FOR AN OUTSIDE ACCOUNTING FIRM AND CONDUCT AN EXTERNAL AUDIT TO VERIFY ACCOUNTING AND FINANCIAL RECORDS TO CREDITORS, STOCKHOLDERS OR THE GOVERNMENTA REVIEW OF FINANCIAL ACCOUNTINGGENERALLY ACCEPTED ACCOUNTING PRINCIPLES GAAP

WHAT IS GAAP?

A REVIEW OF FINANCIAL ACCOUNTING GAAP

IS THE OVERALL BODY OF REGULATION ESTABLISHING HOW CAMPANY ACCOUNTS MUST BE PREPARED IN THE UK. THIS INCLUDES NOT ONLY ACCOUNTING STANDARDS BUT ALSO UK COMPANY LAWA REVIEW OF FINANCIAL ACCOUNTING GAAP

A PRINCIPLE IS A FUNDAMENTAL LAW OR RULE UPON WHICH OTHER RULES AND PRACTICES ARE FORMED.

OVER THE YEARS, THE PROFESSION OF ACCOUNTING HAS DEVELOPED A NUMBER OF GAAP THAT MUST BE FOLLOWED IN RECORDING,TRANSACTIONS AND PREPARING FINANCIAL STATEMENTS.A REVIEW OF FINANCIAL ACCOUNTING GAAP

THESE PRINCIPLES HAVE BEEN ACCEPTED BY PROFESSIONAL GROUPS SUCH AS AMERCIAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA), ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS (ACCA)

INSTITUTE OF CHARTERED ACCOUNTANTS ENGLAND & WALES (ICAEW), INSTITUTE OF CHARTERED ACCOUNTANTS PAKISTAN (ICAP)

A REVIEW OF FINANCIAL ACCOUNTINGSOME OF THE MOST IMPORTANT OF THE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOLLOW:BUSINESS ENTITYGOING CONCERMCONSISTENCYMATERIALITYPRUDENCE