Financial accounting is the process of recording, summarizing and reporting a company’s business transactions through financial statements. These statements are: the income statement, the balance sheet, the cash flow statement and the statement of retained earnings.
Here’s What We’ll Cover:
What Is the Difference Between Accounting and Financial Accounting?
What Are the Four Basic Financial Statements?
Why Is Financial Accounting Important?
NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.
What Is the Difference Between Accounting and Financial Accounting?
“Accounting” encompasses all of a company’s financial transactions. A well-managed accounting department will have set policies and procedures for expenses, data management and the generation of financial reports.
Financial accounting is concerned specifically with the generation of these reports, that they are based on accurate information and follow “Generally Accepted Accounting Principles” (otherwise known as GAAP). GAAP sets accounting standards in the United States for a wide array of topics, including financial statement presentation.
What Are the 4 Basic Financial Statements?
The 4 basic financial statements used in financial accounting are the balance sheet, income statement (profit-and-loss statement), cash flow statement, and statement of owner’s equity.
Illustration: the 4 basic financial statements in accounting
The Balance Sheet
A balance sheet shows what a company owns (its “assets”) and owes (its “liabilities”) as of a particular date, along with its shareholders’ equity.
Assets can include:
Cash
Prepaid Expenses
Accounts Receivable
Notes Receivable (money owed to the company within 1 year)
Inventory
Investments (including real estate)
Buildings
Machinery and equipment
Vehicles
Intangible Assets (such as patents)
Liabilities can include:
Accounts Payable
Loans Payable
Notes Payable (money the company owes within 1 year)
Unearned Revenue (a product or service a client has paid for, but the company has not yet provided)
Deferred Tax
Current Taxes
Payroll (owed but not yet paid)
Warranty Obligations
Mortgages
Shareholders’ Equity can include:
Stocks (preferred and common stocks)
Retained Earnings (money to be invested back into the business)
Comprehensive Income (profit or loss in a company’s investments during a specific time period)
On a balance sheet, Assets = Liabilities + Shareholders’ Equity.
The Income Statement
An Income Statement is a company’s net income for a certain period of time. It is a company’s total revenue minus its total expenses.
You will also hear the income statement being referred to as the “Profit and Loss Statement”.
The Cash Flow Statement
The cash flow statement documents in detail all of a company’s income and debts over a specifi
1. Defining marketing for the
new realities
Core concepts of Marketing
4p’s
Market Orientation
2. What is Marketing?
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering value
to customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.
Or marketing is “meeting needs profitably.”
3. What is Marketing Management?
Marketing management is the art and science
of choosing target markets and getting,
keeping, and growing customers through
creating, delivering, and communicating
superior customer value.
5. What is Marketed?
• Places: states, regions, and whole nations compete to
attract tourists.
• Properties: real estates, stocks and bonds.
• Organizations: Museums, performing arts
organizations, corporations, and nonprofits all use
marketing to boost their public images and compete for
audiences and funds.
• Information: is essentially what books, schools, and
universities produce.
• Ideas: Products and services are platforms for
delivering some idea or benefit.
7. Demand States
Eight demand states are possible:
1. Negative demand: Consumers dislike the
product.
2. Nonexistent demand: Consumers may be
unaware of or uninterested in the product.
3. Latent demand: Consumers may share a strong
need that cannot be satisfied by an existing product.
4. Declining demand: Consumers begin to buy the
product less frequently or not at all.
8. Demand States
5. Irregular demand: Consumer purchases vary on a
seasonal, monthly, weekly, daily, or even hourly basis.
6. Full demand: Consumers are adequately buying all
products put into the marketplace.
7. Overfull demand: More consumers would like to
buy the product than can be satisfied.
8. Unwholesome demand: Consumers may be
attracted to products that have undesirable social
consequences.
11. Key Customer Markets
Consumer markets:
Business markets:
Global markets:
Nonprofit/Government markets:
.
12. Core Marketing Concepts
Needs, Wants, and
Demands
Target Markets,
Positioning, and
Segmentation
Offerings and Brands
Marketing Channels
Paid, Owned, and
Earned Media
Impressions and
Engagement
Value and Satisfaction
Supply Chain
Competition
Marketing
Environment
13. Types of Needs
Stated needs: what the customer asks for (an inexpensive
car).
Real needs: what the stated need really means (The
customer wants a car whose operating cost, not initial price, is low.)
Unstated needs: (The customer expects good service
from the dealer.)
Delight needs: (The customer would like the dealer
to include an onboard GPS system.)
Secret needs: (The customer wants friends to see him
or her as a savvy consumer.)
14. Target Markets, Positioning &
Segmentation
Marketers identify distinct segments of buyers by
identifying demographic, psychographic, and
behavioral differences between them.
They then decide which segment(s) present the
greatest opportunities.
For each of these target market the firm develops a
market offering that it positions in target buyers’
minds as delivering some key benefit(s).
16. Offerings and Brands
The company offering a set of benefits that satisfy
costumer needs, which can be a combination of
products, services, information, and experiences.
A brand is
an offering
from a
known
source.
17. Marketing Channels
To reach a target market, the marketer uses three
kinds of marketing channels:
1- Communication channels deliver and receive
messages from target buyers. EX: Newspapers ,
billborads
2- Distribution channels help display, sell, or
deliver the physical product or service(s) to the
buyer or user.Ex: wholesaler, retailers, agents
3- Service channels to carry out transactions with
potential buyers. Ex:transportation cos, banks etc.
18. PAID, OWNED, AND EARNED
MEDIA
The rise of digital media gives marketers a host of new ways
to interact with consumers and customers.
Paid media: TV, Magazine and display ads.
Owned Media: web sit, blog, Facebook page, Twitter
account.
Earned media: in which consumers, the press, or other
outsiders voluntarily communicate something about the
brand via word of mouth, buzz, or viral marketing methods.
19. IMPRESSIONS AND ENGAGEMENT
Marketers now think of three “screens” or means to
reach consumers: TV, Internet, and
mobile.
20. Value and Satisfaction
The buyer chooses the offerings he or she perceives to
deliver the most value the sum of the tangible and
intangible benefits and costs.
Value, a central marketing concept, is primarily a
combination of quality, service, and price (qsp),
called the customer value triad.
Value perceptions increase
with quality and service but
decrease with price.
21. SUPPLY CHAIN
The supply chain is a channel stretching from raw
materials to components to finished products
carried to final buyers.
24. The production concept
It holds that consumers prefer products that are
widely available and inexpensive.
Managers of production-oriented businesses
concentrate on achieving high production efficiency,
low costs, and mass distribution.
25. The product concept
The Product concept proposes that consumers
favor products offering the most quality,
performance, or innovative features.
They might commit the “bettermousetrap”
fallacy, believing a better product will by itself
lead people to beat a path to their door.
26. The selling concept
The selling concept holds that consumers and
businesses, if left alone, won’t
buy enough of the organization’s
products.
It is practiced most aggressively with
unsought goods—goods buyers don’t
normally think of buying such as
insurance and cemetery plots—and
when firms with overcapacity aim to sell what they make,
rather than make what the market wants.
27. The marketing concept
The job is to find not the right customers for your
products, but the right products for your customers.
The marketing concept holds that the key to achieving
organizational goals is being more effective than
competitors in creating, delivering, and
communicating superior customer value to your target
markets.
29. Integrated Marketing
It occurs when the marketer devises marketing
activities and assembles marketing programs to create
, communicate and deliver value to the consumer.
The whole is better than some of its parts.
E.G. Washing Machine.
30. Relationship Marketing
A key goal of marketing is to develop deep, enduring
relationships with people and organizations that
directly or indirectly affect the success of the firm’s
marketing activities. E.G. ICICI Bank Services.
31. Social Responsibility Marketing
Considering ethical, legal, environmental and social
context.
E.g. LG electronics offering electronic recycling
programs.
32. The holistic marketing concept
The holistic marketing concept is based on the
development, design, and implementation of
marketing programs, processes, and activities that
recognize their
breadth and interdependencies.
Holistic marketing acknowledges that everything
matters in marketing— and that a broad, integrated
perspective is often necessary.
33. The Marketing Mix
“A set of marketing tools that the firm uses to pursue
its marketing objectives in the target market"
34. Updating the Four Ps
People: reflects, in part, internal marketing and the fact that
employees are critical to marketing success.
Processes: reflects all the creativity, discipline, and structure
brought to marketing management.
Programs: reflects all the firm’s consumer-directed activities.
We define performance as in holistic marketing to capture whole
range of outcome measures.
