FIRST WEEK LESSON

BUSINESS ENTERPRISE SIMULATION

FIRST WEEK LESSON 1

OBJECTIVES:
The learners can demonstrate and understanding of the key concepts of Accounting, Business and Management
through identification in potential business opportunities,

TOPIC TO BE DISCUSS:
I. The Key Concepts of Accounting,
II. Business
III. Management through Identification in potential business opportunities

 Accounting
o Narrate the history and origin of accounting
o Define the meaning of accounting
o Describe the nature of accounting
o Explain the function of accounting in business and
o Identify the activities and events where accounting is used in making business decision.
 Nature and Concept of Management
o Meaning of Organization
o Function of Management
o Functions, Roles and Skills
o Evolution of Management Theories
o The Behavioral Management Perspective
o The Quantitative Management Perspective
 Business
o What is Business
o Kinds of Business
o Types of Business
o Planning your Business
o Running your Business
o The Business and Profit

I-HISTORY OF ACCOUNTING
 Skills
 Intelligence &
 Experience
 It started in caves, trees, other safe dwellings
 Living in groups and tribes
 “Barter System”
 The use of money made from minerals
 Modern accounting was born due to increase of trade and commerce.
 The necessity of formulating specific policies and guidelines in maintaining accounts, books and records was
desired.
 1494 = a book written by Luca de Pacioli who was an Italian priest and philosopher , he included in it a section
that explained the basic principles of Double Entry System of Bookkeeping wherein a value that is received
should equal to the value that is parted with.
 Since then, accounting being an art and science; different methods of keeping accounts were practiced by
different industries

WHAT IS ACCOUNTING?
“The art of recording , classifying and summarizing in a significant manner in terms of money,
transactions and events which are, in part of least, of financial character, and interpreting the result
there of.”

a. Art - attain objectives

design process and policies
design appropriate forms & improved controls
know financial results
b. Recording – of transaction in various ways acc. To accounting standard and as required according to the size
of the organization
c. The art of classifying – which is the grouping of transactions or entries of the same nature a one account.
d. The art of summarizing – because an organization has to prepare the financial statements
e. Summarizing in a significant manner – means must be done a way wherein there is sense of importance
and must suit the purpose for which it is done, user friendly
f. In terms of money – because money is the measure and basis in recording the transaction.
g. Transaction and events which are, in part at least, of financial character –
h. Interpreting the result – Time frame projection of the transaction.

 An 'account' is a specific location for recording transactions of a like kind. For example, in the gas-for-cash
transaction above, two accounts are used, a "Cash" account and a "Gas" account. Unused by that example, but
described is an account for "Equipment" which would include the portable gas can and the lawn mower.

THE BASIC TYPES OF ACCOUNTS ARE:

 'Assets:' items of value that the company owns or has right to. Examples include: cash, real estate, equipment,
money or services that others owe you, and even intangible items such as patents and copyrights.
 'Liabilities:' obligations that are owed to other parties. Examples include: wages payable, taxes due, and
borrowed money (also called debt).
 'Equity:' the ownership value of a company. Examples include: common stock and retained earnings (we'll
describe retained earning below in "Financial Statements")
 'Revenues:' the mechanisms where income enters the company (note that revenue and income are not the
same thing--they are used here to describe each other in basic terms only).
 'Expenses:' the costs of doing business. Examples include: salary expense, rent, utilities expense, and interest on
borrowed money.
 'Income:' in U.S. business and financial accounting, the term 'income' is also synonymous with revenue;
however, many people use it as shorthand for net income, which is the amount of money that a company earns
after covering all of its costs.

NATURE OF ACCOUNTING

1. Accounting is a process: A process refers to the method of performing any specific job step by step
according to the objectives, or target.
2. Accounting is an art: Accounting is an art of recording, classifying, summarizing and finalizing the financial
data.
3. Accounting is means and not an end: Accounting finds out the financial results and position of an entity and
 the same time, it communicates this information to its users

4. Accounting deals with financial information and transactions; Accounting records the financial transactions
and date after classifying the same and finalizes their result for a definite period for conveying them to their
users
5. Accounting is an information system: Accounting is recognized and characterized as a storehouse of
information.

FUNCTION OF ACCOUNTING IN BUSINESS

 Systematic record keeping: The first and foremost function of accounting is the systematic record keeping of the
financial transactions, on a regular basis.
 Facilitating rational decision making: Another important function of accounting is to communicate the results,
i.e. the net profit or loss to the users, with the help of financial statements, so as to help the interested parties in
rational decision making.
 Legal compliance: The accounting statements must be prepared keeping in mind the compliance with the
relevant laws.
 Protection of business assets: Accounting not only keeps a record of all the business assets but also ensures no
unauthorized use of assets or property belonging to the enterprise.
 Determination of Profit/loss: Accounting plays a very important role in the ascertainment of profit earned or
loss sustained by the enterprise in an accounting period. This is possible only when a proper record of all the
business transactions, revenues and expenses are maintained.
 Ascertaining the profitability, liquidity and solvency of the entity: With the help of the financial statement, i.e.
Balance sheet and profit and loss account, the financial position of the enterprise can easily be ascertained.

BRANCHES OF ACCOUNTING
1. Financial Accounting: It is that branch of accounting, which involves the recording of the transactions, inclined
towards the preparation of trial balance and final accounts.
2. Cost Accounting: Cost account is the accounting discipline, which deals with costs, i.e. the unit costs of the
goods produced and services provided. It helps the management of the organization in  fixing the price,
controlling costs and providing relevant information for the purpose of decision making.
3. Management Accounting: The accounting system which supplies the necessary information to the
management, for rational decision making. The information may be concerned with funds, costs, profits and
losses and so forth. This information is helpful in determining the effect of the decisions and analyzing the
performance of the entity.
4. Tax Accounting: The accounting system that deals with the tax return and its payment, instead of preparation
of final accounts of the enterprise, is called tax accounting.
5. Social Accounting: This branch of accounting is commonly termed as social responsibility accounting. It aims
at unveiling the facilities provided by the entity to the society, in terms of medical, housing, education, and so
forth.

USERS OF ACCOUNTING INFORMATION

1. External
2. Internal

INTERNAL users – It is a person working within the organization. They make actions and decisions pertaining to
the internal activities of the business.

EXTERNAL users – are the business enterprises or individuals who have interest in the business but do not
directly involved themselves in the daily activities of the organization.

NATURE & CONCEPT OF MANAGEMENT

PETER DRUCKER – He is the acknowledged inventor of modern management

To create a customer =” it is the customer who determines what a business is”

CHESTER BARNARD = a formal organization is a system of consciously coordinate activities or forces of two or
more persons.

THREE (3) ELEMENT OF ORGANIZATION

1. Communication
2. Willingness to serve
3. Common purpose

ORGANIZATION =
- it implies structuring and integrating activities that is, people working or cooperating together in
interdependent relationships.
- it is a group of people working together to achieve a common goal.

It is classified as:
1. Goal oriented people with a purpose
2. Psychological systems
3. Technological systems
4. An integration of structured activities
5.
MANAGEMENT
- It is a set of activities directed at an organization’s resources with the aim of achieving
organizational goals in an efficient and effective manner.
JONES & GOERGE – define management as the planning, organizing, leading staffing and controlling of human
and other resources to achieve organizational goals efficiently and effectively.

FUNCTION OF MANAGEMENT
1. Planning = Help maintain managerial effectiveness by serving as guide for future activities.
2. Organizing =Determines how activities and resources are group.
3. Leading = Revolves around encouraging all employees to perform at a high level to help the organization
achieve its vision or goals.
4. Staffing = Involves People that help to manage the organization.
5. Controlling = Helps manager evaluate how well they themselves are performing in the other tasks of
management and take corrective action.

FUNCTION OF MANAGEMENT
o First line managers (lower manager)
o Middle managers
o Top managers

ROLES & FUNCTIONS OF MANAGER

Category Role Activity
A. Informational 1. monitor Seek and receive information, scan periodicals and reports,
maintain personal contacts.
2. disseminator Forward information to other organization members, sends
memos and reports, make phone calls.
3.Spokesperson Transmit information to outsiders through speeches, reports and
memos

B. Interpersonal 1.Figurehead Perform ceremonial and symbolic duties such as greeting visitors,
signing legal documents.
2.Leader Direct and motivate subordinates; train, counsel, and
communicate with subordinate.
3.Liason Maintain information links both inside and outside organization;
use e-mails, phone calls, meetings.

C. Decisional 1.Enterpreneur Initiate improvement projects; identify new ideas delegate

responsibility to other
2.Disturbance Handler Take corrective action during disputes or crises; resolve conflicts
among subordinate; adapt to environment crises.
3.Resource Allocator Decide who gets resources: schedule, budget, priorities.
4.Negotiator Represent department during negotiation of union contacts,
sales, purchases, budgets, represent departmental interests.

SKILLS OF A MANAGER
o Samson & Draft -That they will be relying on their subordinates most of the time, rather than other
way around
o Hill – by definition a stretch assignment, is even more demanding that they had anticipated. That
the skills and methods required for success as an individual contributor and those required for
success as an individual contributor and those required for success as a manager are starkly
different.
THREE CATEGORIES OG MGT.
o Conceptual skills – cognitive ability to see the org. as a whole & the rel. bet. Its parts.
 o Human Skills – managers ability to work with & through other people and to work effectively as a
group member
o Technical Skills – involves the specialized procedure s, techniques, and knowledge to get the job
done. Team leader and lower lever manager.

EVOLUTION OF MANAGEMENT THEORIES

o Perspective or Theories
o Variables
o Kast and Rosenzweig – the body of knowledge developed through theory and research, should be
translatable into more effective organizational design & mgt. practice.

CONTRIBUTOR PIONEERING IDEAS

Robert Owen Advocated concern for the working and living condition of workers
Charles Babbage Built the first practical mechanical calculator and prototype of modern computers;
predicted the specialization of mental work; suggested profit sharing
Henry R. Towne Outlined the importance of management as a science and called for the development og
management principles.

THE CLASSICAL MANAGEMENT PESPECTIVE:

A. Scientific Mgt. – This is an approach within the classical mgt. perspective that emphasizes the
scientific study of work methods in order to improve worker efficiency.
 Frederick Taylor – introduce 4 Principles of Scientific Mgt.
 Frank and Lilian Gilbreth – Bricklaying & Shape the field of industrial psychology –
personnel mgt.
 Henry Grantt – Gantt Chart , a graphic aid planning, scheduling, and control that is still
use today.
B. Bureaucratic Mgt. – This is an approach that emphasizes the needs for organizations to operate
in a rational manner rather than relying on the arbitrary whims of owners and managers.
 Max Weber – outlined his famous principles of bureaucracy, a formal system or
organization and administration designed to ensure efficiency and effectiveness.
C. Administrative Mgt. – This is an approach that focuses on principles that can be used by
managers to coordinate the internal activities of organizations.
 Henry Fayol – Delineated the Five Functions of Management such as planning,
organizing, commanding, coordinating, and controlling.

THE BEHAVIORAL MANAGEMENT PERSPECTIVE:

o Early Behaviorists
 Hugo Munsterberg – Published, Psychology & Industrial Efficiency in 1913
 Mary Parker Follet – Attributed much greater significance to the functioning of groups in
organizations than proponents of the classical view of management.

A. THE HAWTHORNE STUDIES - are perhaps the most-cited research in the applied behavioral
science area, this studies pointed out that workers are more complex than economic theories of
the time proposed.
B. THE HUMAN RELATION MOVEMENT – Bartol & Martin – assert that the key to productivity
from a managerial point of view appeared to lie in showing greater concern for workers so that
they would feel more satisfied with their jobs and be willing to produce more.
C. ABRAHAN MASLOW & DOUGLAS MCGREGOR - Advance theory suggesting that people are
motivated by a hierarchy of needs, including monetary incentives and social acceptance.
 D. CONTEMPORARY BEHAVIORAL SCIENCE IN MGT. – Contemporary theorists on mgt. have noted
that many assertions of the human relationists were simplistic and provided inadequate
descriptions of work behavior.

Sel
f
act
ual
iza
tio
Esteem
n

Social Belongingness

Safety & Security

Physiological

ORGANIZATIONAL BEHAVIOR – Has been defined as “The study of human behavior, attitudes, and performance
within an organizational setting , drawing on theory, methods, and principles from such disciplines as
psychology, sociology, and cultural anthropology to learn about individual, groups, structure and processes”

THE QUANTITATIVE MANAGEMENT PERSPECTIVE

A. Management Science
B. Operational Management
CONTEMPORARY MANAGEMENT PERSPECTIVE
A. The System Perspective
B. The Contingency Perspective