Rashid Javed


An indispensable part of any system of accounting is programmed of periodical statements and reports to inform management of the current financial position of the business and of the progress made by, and the costs incurred for, each process, department and division. The number of statements and reports and their characters differ according to the requirements of management of each business enterprise. The following statements and supporting cost reports are commonly prepared for the management; (1) balance sheet, (2) profit and loss statement or income statement supported by statement of cost of goods manufactured and sold.

Balance sheet is a statement of assets and liabilities which reveals the financial position of the business. A balance sheet prepared for a manufacturing enterprise is similar in form and contents to the balance sheet of concerns engaged in merchandising activities, with the exception that it requires three inventory accounts i.e., raw materials, work in process and finished goods. The income statement of a manufacturing company and a merchandising company reflects the basic difference in operations of these two types of enterprises.

The manufacturing company transforms raw material into finished goods through the use of labor and factory facilities (for example, a company manufacturing furniture from wood or timber). A merchandising company, such as a retail furniture store which buys finished furniture and sells it in the same form i.e., sells the goods it buys without changing the basic form. The income statement which is prepared by a merchandising concern needs no calculations of cost of goods manufactured. But the income statements prepared by the manufacturing concern requires the calculations for the cost of goods manufactured.

The income statement or condensed statement of profit and loss shows the profit or loss of the business, while the cost of goods manufactured and sold statement reveals the cost to make and sell. The cost of goods sold section of the income statement of a manufacturing business can be divided into five distinct parts:

(1) Direct materials section; it comprises of beginning inventory, purchases and purchases returns and allowances and ending inventory.

(2) Direct labor section; it includes the cost of employees whose work can be identified directly with the product manufactured.

(3) Factory overhead; it comprises of all those costs that assist in an indirect manner in the manufacturing of the product e.g., indirect materials, indirect labor, depreciation of plant and machinery, depreciation of building, rent of factory building, repairs and insurance of factory plant and machinery etc. It is to be noted that with regard to factory overhead recording, there may be three possibilities: (A) Only actual factory overhead incurred are given. (B) Only applied factory overhead are provided. (C) Both actual and applied factory overhead are given. When both actual and applied factory overhead are known then the difference is analyzed which is known as under or over applied factory overhead which is shown in the cost of goods sold or income statement. Under or Over Applied Factory Overhead is the difference of actual factory over head and applied factory overhead. I applied factory overhead are less than actual factory overhead, the variance is known as under applied factory overhead. On the other hand when applied factory overhead are more than the actual factory overhead, the variance is called over applied factory overhead. Under applied overhead are added while over applied overhead are deducted from cost of goods sold at normal.

(4) Work in process inventories; these represent the costs in process at the beginning and costs still in process at the end of the fiscal period.

(5) Finished goods inventories; These represent the cost of finished goods inventories present at the beginning and at the end of the fiscal period.

The income statement is based upon the sales or revenue, costs and expenses of manufacturing, selling or marketing, administrating, other income and expense items. The income statement is the complementary to the balance sheet.

Luis Luarca


Business management refers to one’s ability to manage a business effectively and efficiently while retaining profitability. But what does that mean? Anyone can ‘manage’ a business, right?

But do we really know how to manage a business? And if we do, what does that entail? Do you just run around your company telling people what to do or run to the bank and make deposits at the end of the each week? Is that business management?

If that is all it takes to run a business, why isn’t everyone a business owner? If managing a business is so easy, why are there consultants? Simple answer: business management is more daunting a task than we may think.

I have always said that no matter how large or small a company is, it is an overwhelming task to manage the everyday issues. We could all use a little bit of help.

Traditional business management, which is what I have studied and is the methodology I use when discussing business issues with clients, takes into account all aspects of running a business, large or small.

Whether it is a million-dollar company or a billion-dollar company, all companies run the same.

Traditional business management is pretty much self-explanatory; it is managing business through traditional methods that have been used for many years.

Those traditional methods incorporate three aspects: sales and marketing strategies, efficient operation and productions methods, and finance and accounting (SG&A). I believe all business owners should have some understanding of these areas of business and try to manage them as best they can. Most large companies focus on these areas in that they have the resources to pay employees who specialize in these particular areas.

For example, consider some of the largest companies in the United States like Home Depot, Starbucks and Dell. These companies require precise and expert management of their business operations at all times while maintaining a positive financial position for investors. These businesses pay full-time employees to function in the company in particular capacities.

When we look at small businesses in the United States, we have to ask, “Do small businesses have the financial resources to pay for similar resources such as a chief financial officer, or a qualified VP of Sales”? Quick answer: no! Actually, no is the only answer.

When we look at larger companies and how they manage their sales and marketing efforts, we find that larger companies have the financial resources to hire employees on a full-time basis who are experts in sales and marketing.

We can say the same for the third aspect of traditional business management, operations and productions. Once again, large businesses have the revenue available to have full-time positions for a general manager, a production manager, and sometimes, a Vice-President of Operations.

Again, small businesses rarely have the opportunity to pay experts full-time salaries, which could cost a business thousands of dollars annually.

So, now we know that traditional business requires the expertise of individuals in particular areas, such as finance, marketing, sales, production, operations, and management.

As a small business owner, can you pay the full-time wages of each of these employees? Do you have to hire all these employees in order for you to spend less time in the office worrying about business issues?

I have seen many million-dollar companies and I have seen a few billion-dollar companies; the only difference is that one pays for expert full-time employees and the other doesn’t. Obviously, the larger companies have the money to pay for expert employees, and small businesses don’t.

So how does the small business owner learn the basics of business management without paying for an MBA or spending thousands of dollars in annual salaries for experts?

Recently traditional business management had to make room for a new aspect of business: technology.

Through the years traditional business management has had to marry its strategies with the proliferation of technology where every business owner from Starbuck’s to Jim’s Auto has had to incorporate technology into its everyday operations.

The problem is that business believed that technology was going to be the solution for every problem, but it wasn’t until recently that business management thinkers realized that technology will fail if it is not implemented properly. That is, traditional business management must seamlessly marry itself with technology.

So, now you have this traditional business model to think of, and you also have to think that the model has incorporated technology. You see, managing a business is not as easy as it sounds. When you look at this business model I know for sure that you have never looked at your business in this way before. Believe it or not, graduate schools teach this stuff and larger companies obviously have the money to pay someone to think of this stuff, but what about the small business owner?

Small business owners do not have the financial resources to pay for this thinking and consulting companies for some reason; do not necessarily speak to the small business owner. Why not? Most consulting companies are always looking to fry the “big fish”, the 1% of businesses in the United States that can afford the phenomenal fees they charge.

Larger consulting companies do not have the time or the desire to speak to small businesses, nor will they change their fees which range over $400.00 per hour.

One of the comments I hear often in small businesses is, “Great idea, I wish I could get my people to do that, but I can’t expect them to change their ways.” I say, “You’d better get them to change their ways or you could be out of a job”!

Oddly enough, small business owners are reluctant if not skeptical in getting help for their business. To this day, I have yet to figure that one out. Why don’t small business owners look for help?

I firmly believe that business is business regardless of the size of the company, the annual revenues, or the number of employees. Keep in mind that the largest businesses in the world were once small businesses and today they are worth a great deal of money. All businesses “managed” their way to the top, regardless of the industry.

I have seen numerous multi-million dollar businesses in every industry, to include contractors, restaurants, service companies, and manufacturing companies. And I have also worked for companies that are worth billions and billions of dollars. They all have one thing in common: They all run the same some just have more revenue than the other.

I have always said that no matter what you produce to sell, HOW you produce it is what is of paramount importance to the growth of your business.



Your business is not too small or too large for a review of its current business processes. I have not met a business owner, a president or CEO of a company who can tell me that their business is running so smoothly that they don’t need to change. That is simply not true.

The natural stirring of the U.S. economy is what causes the need for change in all businesses of all sizes and I guarantee that if you are not constantly rethinking your business strategies, your competition is.

Can you say that your business is flexible enough to manage your competition and stay ahead of the curve, or that your business can handle the daily economic fluctuations in the U.S.?



Ask yourself some of the following questions.

1.Have your total revenues gone up or down from last year?

2.Has your profitability gone up or down from last year?

3.Where is the next dollar coming from?

4.Are you tired of going to work?

5.Do you have adequate inventory levels?

6.How many employees report to you on a daily basis?

7.Do your employees actually do what you ask and expect of them?

8.Do you have a management team in place?

9.Is there business expenses you wish you didn’t have?

10.Does every employee in your company have a specific job function that justifies their labor burden?

11.Do you remember when owning your business was fun for you and your family?

12.Do you believe your company operates as smoothly and efficiently as it could?

13.Do you have a long-range plan?

14.Do your employees share your vision of the business?

15.Who do your employees go to when there is a problem?

16.If you actually met me, would you be able to tell me that your business doesn’t need to change, or that it is truly profitable?

If you are ready to move your business forward, get some help. Believe it not, the success of your business is important to this great Nation.

Queenzfinest


Right now I’m majoring in business management but also thinking about doing a double major with economics. I’ve done a little bit of research and it seems like something I might like but I’m not that good at math and was wondering if there is alot of math, statistics, etc. Not only that, but would that be a plus when I start applying for jobs, or should I combine management with something else like marketing?

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Dave


I’m on a team in which some people regularly question what other team members are doing. Sometimes the boss hands and assignment to one team member and a few others get upset because the first team member isn’t doing what they expected or they don’t know what he is doing.

So I’m wondering… is it good management practice to ensure that all team members know what other team members are doing?

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More expert business advice from yourBusinessChannel, after we travelled the globe seeking the best entrepreneurs to interview. In our travels we meet and interview many well known entrepreneurs, who are more than willing to share their insights and advice. In this business television network show, you’ll hear about what it takes to succeed from some of the best known UK entrepreneurs Jacqueline Gold, Chief Executive of Ann Summers, Tim Smit, Co-Founder of the Eden Project, Julien Metcalfe …