The goal of most investors is to maximize their wealth by making intelligent investment
decisions.
The investment decisions are in terms of return and risk.
Return; Returns are the fundamental measure of Investment performance which is measured in
terms of profit and capital appreciation. In real estate finance returns are in the following components;
-Rental income
-Capital appreciation
-Opportunity costs
Measurement of Return;Profit + capital appreciation i.e. using the Holding period yield
Risk;Investment risk can be defined as the possibility that future cash flows and therefore returns and values will be different from what was expected when the investment was undertaken.
A risk refers to the probability of earning a return greater or less than the expected return.
Probability distributions provide the foundation for risk measurement since probability distribution defines the likelihood of certain events occurring.
The greater the risk, the greater must be the potential compensation.
Saturday, August 20, 2011
Thursday, August 11, 2011
Inherent Strategies Of Small Business
Small firms are more geared towards developing an entrepreneurial spirit (Character of the entrepreneur) is key in the development and success of the small enterprises.
In most large firms the face of the entrepreneur keeps disappearing into policies, procedures, systems and this way the employees may loose the vision and objectives of the firm.
The face of an entrepreneur CEO must keep on being seen by employees and management in order to be accountable for the operations and to accomplish the objectives
Making an organisation social-economic venture
Where employees can meet their emotional needs. Small business are good in this because of small no of people in the enterprise. This enhances motivation, team spirit . In large organisation one the major challenges is the social distance that employees may have between them and their managers.
These inhibitions may turn to be a vice in achieving the objectives of organisations. Employees closeness to their entrepreneurial boss is an advantage because he is their role model, and they learn fast than where there are social distances,
In industrial relations :
Small firms have learnt to mange people in simple ways in order to avoid industrial strives and complex industrial cases. This they do by either employing on commission or casual or contract basis.
In most large firms the face of the entrepreneur keeps disappearing into policies, procedures, systems and this way the employees may loose the vision and objectives of the firm.
The face of an entrepreneur CEO must keep on being seen by employees and management in order to be accountable for the operations and to accomplish the objectives
Making an organisation social-economic venture
Where employees can meet their emotional needs. Small business are good in this because of small no of people in the enterprise. This enhances motivation, team spirit . In large organisation one the major challenges is the social distance that employees may have between them and their managers.
These inhibitions may turn to be a vice in achieving the objectives of organisations. Employees closeness to their entrepreneurial boss is an advantage because he is their role model, and they learn fast than where there are social distances,
In industrial relations :
Small firms have learnt to mange people in simple ways in order to avoid industrial strives and complex industrial cases. This they do by either employing on commission or casual or contract basis.
Wednesday, August 10, 2011
Here Are Inherent Advantages And Strategies Of Small Ventures
Here Are Inherent Advantages And Strategies Of Small Ventures that you should know about;
1) Functions as small units
Large firms have learnt there is an advantage of breaking the entire unit into small units for purposes of efficiency.
In small firm’s smallness bring efficiency in decision making process, closes monitoring of transactions, and reduces the complexity of processes. Small units of management may be done in building small business units in different locations, separating operations into products, or limited line of products etc. This has lately been borrowed by large enterprises.
2) Adopting internal changes in small doses:
Due to fear of the unknown, small fires adopt changes very gradually, e.g. introduction of new products or technology until they are sure the operations not affected by the new changes.
Large firms on the hand like making drastic changes internally, while they have the capacity some changes may be too drastic affecting even the most key staff, thereby making the enterprise go down. Introducing change in doses could work well for big enterprises while keeping in line with the objectives.
1) Functions as small units
Large firms have learnt there is an advantage of breaking the entire unit into small units for purposes of efficiency.
In small firm’s smallness bring efficiency in decision making process, closes monitoring of transactions, and reduces the complexity of processes. Small units of management may be done in building small business units in different locations, separating operations into products, or limited line of products etc. This has lately been borrowed by large enterprises.
2) Adopting internal changes in small doses:
Due to fear of the unknown, small fires adopt changes very gradually, e.g. introduction of new products or technology until they are sure the operations not affected by the new changes.
Large firms on the hand like making drastic changes internally, while they have the capacity some changes may be too drastic affecting even the most key staff, thereby making the enterprise go down. Introducing change in doses could work well for big enterprises while keeping in line with the objectives.
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Friday, December 18, 2009
Sales Ledger
Hello, we will cover the importance of having a sales ledger in this article, so that you arm yourself with the necessary knowledge that an entrepreneur needs to know.
This is a type of ledger which records the sales made on credit to the customers. This is very important because as the business expands, it will require that some goods be sold on credit terms.
1. When there are many sales transactions on credit basis, then it will be very difficult to master all sales transactions hence the need for a sales ledger in accounts which is used to record the details of various customers who have been given credit on goods. For example; If you are dealing with the sales of women's shoes and you buy them in large quantities, then you go ahead and sell the large quantities to your customers on credit basis. E.g. Customer x purchases women's shoes worth 200,000$ on credit. You will need to open for customer x an account under the sales ledger account and record the amount on the debit side of customer X's account. When customer X pays partially for the women's shoes, then you will post that amount on the credit side of X's account thus reducing what that customer owes you.
2. Figures that are posted on the debit side of various customers are used to determine sales on credit for a given period of time. This is used to determine the total sales of that financial period when you combine it or add it to the cash sales of the same financial period.
3. This account is also used to reconcile debtor's control account, which produces the total debtors account receivable for a given period of time.
4. A sales ledger can also be used by the accounts auditors to detect teaming and lading.
I hope the above information was of help to you.
This is a type of ledger which records the sales made on credit to the customers. This is very important because as the business expands, it will require that some goods be sold on credit terms.
1. When there are many sales transactions on credit basis, then it will be very difficult to master all sales transactions hence the need for a sales ledger in accounts which is used to record the details of various customers who have been given credit on goods. For example; If you are dealing with the sales of women's shoes and you buy them in large quantities, then you go ahead and sell the large quantities to your customers on credit basis. E.g. Customer x purchases women's shoes worth 200,000$ on credit. You will need to open for customer x an account under the sales ledger account and record the amount on the debit side of customer X's account. When customer X pays partially for the women's shoes, then you will post that amount on the credit side of X's account thus reducing what that customer owes you.
2. Figures that are posted on the debit side of various customers are used to determine sales on credit for a given period of time. This is used to determine the total sales of that financial period when you combine it or add it to the cash sales of the same financial period.
3. This account is also used to reconcile debtor's control account, which produces the total debtors account receivable for a given period of time.
4. A sales ledger can also be used by the accounts auditors to detect teaming and lading.
I hope the above information was of help to you.
Sunday, November 8, 2009
ACCOUNTING
Accounting is vital for organistaions that need to know when they are making growth or just losses. Its vital to know how far the company can go and its growth potential. Therefore its vital for everybody to atleast know a little bit of accounting..
Wednesday, October 21, 2009
Monday, October 12, 2009
WHY YOU SHOULD LEARN ABOUT ACCOUNTING....
Hello friend. How are you? I hope all is well with you. Today I decided to take a closer look at accounting. What is its importance? Why need accounting knowledge?
Accounting plays a dynamic role in the success of any business enterprise. A business unit, for example an online women’s store, started by its owners to increase their wealth by making some business transactions. These transactions may be of diversified nature e.g. retail or wholesale trade, import and export of goods, selling of goods and services on the internet. All these transactions involve the process of purchase and sale of goods against any money consideration. There are three main types of business enterprise. These are;
-Sole proprietor
-Partnership
-Limited Liability Company
Every business enterprise is treated as a separate entity from its owners for accounting purposes. Accounting principles are applied by all these business enterprises to achieve their objectives. The main functions of accounting include the following:-
I. Confirmation or Verification of Profit and Loss; the main purpose of any business is to make a profit. Unless you are a weirdo or just doing it for charity; which is very unlikely….i think. Anyway, for this purpose, accurate and complete recording of all business transactions is essential because this information will be helpful to determine whether there was a profit or loss in any trading period. No business can survive in the long period without making considerable profits.
II. Facilitation of credit transactions; Most of the business transactions are made on credit basis. In this case, goods are purchased or sold without cash payment. These transactions are made on the basis of promises to make payments in future. Without credit transactions, business cannot be expanded beyond certain limits. If goods are purchased from a supplier on credit basis then the supplier is known as the creditor. Similarly, if goods are sold to a customer on credit then this customer is known as the debtor. Accounting records facilitate such credit transactions because these records will determine the amounts due to the creditors and due to the debtors.
III. Tax assessment; Taxes are imposed by the government in all countries. These taxes can be classified as income tax, excise tax and custom duty. For the accurate assessment of tax, accounting records must be maintained properly, otherwise, a business enterprise may be required to pay high tax to the government.
IV. Evaluation Of Assets and Liabilities; Every business enterprises has some assets and liabilities. Assets mean the possessions of business and liabilities are those amounts which are due to other persons. A statement of assets and liabilities can be prepared on any particular date which is known as the balance sheet.
If a business enterprise needs some loan from any bank or any other financial institution then this balance sheet is required by the prospective creditors. Similarly, this balance sheet will be required by the prospective investors or buyers on any business enterprise before making any decision.
V. A tool for control; a business enterprise can maximise its profit by increasing the gap between income and expenses. Proper control on unnecessary expenses and misappropriation of funds is essential. A proper and accurate accounting system will be helpful to maintain this control.
VI. A foundation n for further planning; For the further explanation for any business, a business enterprise can formulate its own plans on the basis of present and past achievements. Accounting records can provide sufficient data relating to sales, profit, investments etc for making decisions about the future programmes.
That is all for today friend. See you soon and have a nice day!
WHY YOU SHOULD LEARN ABOUT ACCOUNTIN G....
Hello friend. How are you? I hope all is well with you. Today I decided to take a closer look at accounting. What is its importance? Why need accounting knowledge?
Accounting plays a dynamic role in the success of any business enterprise. A business unit, for example an online women’s store, started by its owners to increase their wealth by making some business transactions. These transactions may be of diversified nature e.g. retail or wholesale trade, import and export of goods, selling of goods and services on the internet. All these transactions involve the process of purchase and sale of goods against any money consideration. There are three main types of business enterprise. These are;
-Sole proprietor
-Partnership
-Limited Liability Company
Every business enterprise is treated as a separate entity from its owners for accounting purposes. Accounting principles are applied by all these business enterprises to achieve their objectives. The main functions of accounting include the following:-
I. Confirmation or Verification of Profit and Loss; the main purpose of any business is to make a profit. Unless you are a weirdo or just doing it for charity; which is very unlikely….i think. Anyway, for this purpose, accurate and complete recording of all business transactions is essential because this information will be helpful to determine whether there was a profit or loss in any trading period. No business can survive in the long period without making considerable profits.
II. Facilitation of credit transactions; Most of the business transactions are made on credit basis. In this case, goods are purchased or sold without cash payment. These transactions are made on the basis of promises to make payments in future. Without credit transactions, business cannot be expanded beyond certain limits. If goods are purchased from a supplier on credit basis then the supplier is known as the creditor. Similarly, if goods are sold to a customer on credit then this customer is known as the debtor. Accounting records facilitate such credit transactions because these records will determine the amounts due to the creditors and due to the debtors.
III. Tax assessment; Taxes are imposed by the government in all countries. These taxes can be classified as income tax, excise tax and custom duty. For the accurate assessment of tax, accounting records must be maintained properly, otherwise, a business enterprise may be required to pay high tax to the government.
IV. Evaluation Of Assets and Liabilities; Every business enterprises has some assets and liabilities. Assets mean the possessions of business and liabilities are those amounts which are due to other persons. A statement of assets and liabilities can be prepared on any particular date which is known as the balance sheet.
If a business enterprise needs some loan from any bank or any other financial institution then this balance sheet is required by the prospective creditors. Similarly, this balance sheet will be required by the prospective investors or buyers on any business enterprise before making any decision.
V. A tool for control; a business enterprise can maximise its profit by increasing the gap between income and expenses. Proper control on unnecessary expenses and misappropriation of funds is essential. A proper and accurate accounting system will be helpful to maintain this control.
VI. A foundation n for further planning; For the further explanation for any business, a business enterprise can formulate its own plans on the basis of present and past achievements. Accounting records can provide sufficient data relating to sales, profit, investments etc for making decisions about the future programmes.
That is all for today friend. See you soon and have a nice day!
Thursday, October 8, 2009
TEAMING AND LADDING
Hello friend! I hope you are doing well. Today I am going to talk about teaming and lading in accounting. In one of the articles I have previously written, I mentioned these terms. So what is teaming and lading?
I. It is a type of fraud. Yes, a type of fraud. Why do I say this? It is because it is usually done by the cashier in an organisation.
II. It takes place in an organisation with many debtors in its accounts.
III. So how does this type of fraud take place? I will give you an illustration using an example; If XYZ limited has the following debtors, namely; Wanjiru & Company, Smith & Company and Otieno & Company. When Wanjiru & Company brings in money for clearing a debt it has with or owes the organisation, the cashier will not record that amount as paid in the accounts. She or he will take that amount of money and use it for his or herself. When Smith & Company also comes and brings an amount of money to pay off the debt it has with the same organization, the cashier will take this amount and use it to reduce the amount owed by Wanjiru & Company. When Otieno & Company also comes to pay their debt off in the same organisation, the cashier will use this amount to reduce the debt owed by Smith & Company. Therefore there will always be a gap in the book of accounts because the cashier had misappropriated the funds.
That is it for today! I hope you did find this information helpful. Thank you and come again!
Tuesday, October 6, 2009
USES OF A CREDIT NOTE IN ACCOUNTING
Hello friend...i hope you are doing well. Today i am going to teach you about the uses of a credit note in accounting. Credit notes are a type of source documents in accounting. I hope it will shed more light on the same. This document is used to reduce overcharge. An overcharge is where the invoice had been overstated either by the creditor or the seller. There are different types of credit notes. These include;
I. Outgoing credit note; this is used to reduce credit sale made to the creditors. It is issued when goods sold on credit to the debtors are returned by them. This implies that the amount owed by the debtors to the organization is reduced. Outgoing credit notes are recorded on sales returned inward book.
II. Incoming credit note; This is issued by the creditors to the business. When you purchase goods on credit from the suppliers then some of the goods are returned by you to the supplier, then the amount that you are supposed to pay the supplier is reduced. This is done by the supplier on issue of a credit note. Lastly, all the incoming credit note is recorded on the purchases return day book.
I hope that information was of use to you...Have a nice day!
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