SOURCES OF FINANCE FOR BUSINESS

Jun 21st, 2015
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Introduction: Whether you are thinking of starting up your own business or if an existing business is thinking of expanding, it is likely that money will be needed. The money needed to start a business is called business finance. Where do businesses get the finance to start a business or to finance expansion?

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BASICSMeaning of Accounting: According to American Accounting Association Accounting is "the process of identifying, measuring and communicating information to permit judgment and decisions by the users of accounts".Users of Accounts: Generally 2 types. 1. Internal management.2. External users or Outsiders- Investors, Employees, Lenders, Customers,Government and other agencies, Public. Sub-fields of Accounting:Book-keeping: It covers procedural aspects of accounting work and embraces record keeping function.Financial accounting: It covers the preparation and interpretation of financial statements.Management accounting: It covers the generation of accounting information for management decisions.Social responsibility accounting: It covers the accounting of social costs incurred by the enterprise.Fundamental Accounting equation: Assets = Capital+ Liabilities.Capital = Assets - Liabilities.Accounting elements: The elements directly related to the measurement of financial position i.e., for the preparation of balance sheet are Assets, Liabilities and Equity. The elements directly related to the measurements of performance in the profit & loss account are income and expenses.Four phases of accounting process:Journalisation of transactionsLedger positioning and balancing Preparation of trail balance Preparation of final accounts. Book keeping: It is an activity, related to the recording of financial data, relating to business operations in an orderly m

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