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Course Resources

Assignments.

The assignments in this course are openly licensed, and are available as-is, or can be modified to suit your students’ needs. Answer keys are available to faculty who adopt Lumen Learning courses with paid support. This approach helps us protect the academic integrity of these materials by ensuring they are shared only with authorized and institution-affiliated faculty and staff.

If you import this course into your learning management system (Blackboard, Canvas, etc.), the assignments will automatically be loaded into the assignment tool.

You can view them below or throughout the course.

• Module 0: Personal Accounting— Assignment: Creating a Budget
• Module 1: The Role of Accounting in Business— Assignment: Lopez Consulting
• Module 2: Accounting Principles— Assignment: Accounting Principles
• Module 3: Recording Business Transactions— Assignment: Recording Business Transactions
• Module 4: Completing the Accounting Cycle— Assignment: Completing the Accounting Cycle
• Module 5: Accounting for Cash— Assignment: Accounting for Cash
• Module 6: Receivables and Revenue— Assignment: Manilow Aging Analysis
• Module 7: Merchandising Operations— Assignment: Merchandising Operations
• Module 8: Inventory Valuation Methods— Assignment: Inventory Valuation Methods
• Module 9: Property, Plant, and Equipment— Assignment: Property, Plant, and Equipment
• Module 10: Other Assets— Assignment: Other Current and Noncurrent Assets
• Module 11: Current Liabilities— Assignment: Calculating Payroll at Kipley Co
• Module 12: Non-Current Liabilities— Assignment: Non-Current Liabilities
• Module 13: Accounting for Corporations— Assignment: Collins Mfg Stockholders’ Equity
• Module 14: Statement of Cash Flows— Assignment: Kachina Sports Company Cash Flows
• Module 15: Financial Statement Analysis— Assignment: Coca Cola FSA

Discussions

The following discussion assignments will also be preloaded (into the discussion-board tool) in your learning management system if you import the course. They can be used as is, modified, or removed. You can view them below or throughout the course.

• Module 0: Personal Accounting— Discussion: Winning the Lottery
• Module 1: The Role of Accounting in Business— Discussion: The Crafty Coffee Crook
• Module 2: Accounting Principles— Discussion: SoftSheets
• Module 3: Recording Business Transactions— Discussion: Baker’s Breakfast Bars
• Module 4: Completing the Accounting Cycle— Discussion: Closing the Books in QuickBooks
• Module 5: Accounting for Cash— Discussion: Counter Culture Cafe
• Module 6: Receivables and Revenue— Discussion: Maximizing Revenue
• Module 7: Merchandising Operations— Discussion: Inventory Controls
• Module 8: Inventory Valuation Methods— Discussion: LIFO, FIFO, Specific Identification, and Weighted Average
• Module 9: Property, Plant, and Equipment— Discussion: Cooking the Books
• Module 10: Other Assets— Discussion: Other Assets
• Module 11: Current Liabilities— Discussion: Current Liabilities
• Module 12: Non-Current Liabilities— Discussion: Off-Balance Sheet Financing
• Module 13: Accounting for Corporations— Discussion: Home Depot
• Module 14: Statement of Cash Flows— Discussion: Facebook, Inc.
• Module 15: Financial Statement Analysis— Discussion: Financial Statement Analysis

Alternative Excel-Based Assignments

For Modules 3–15, additional excel-based assignments are available below.

Module 3: Recording Business Transactions

• Module 3 Excel Assignment A
• Module 3 Excel Assignment B

Module 4: The Accounting Cycle

• Module 4 Excel Assignment A
• Module 4 Excel Assignment B
• Module 4 Excel Assignment C
• Module 4 Excel Assignment D

Module 5: Accounting for Cash

• Module 5 Excel Assignment

Module 6: Receivables and Revenue

• Module 6 Excel Assignment A
• Module 6 Excel Assignment B

Module 7: Merchandising Operations

• Module 7 Excel Assignment

Module 8: Inventory Valuation Methods

• Module 8 Excel Assignment A
• Module 8 Excel Assignment B
• Module 8 Excel Assignment C

Module 9: Property, Plant, and Equipment

• Module 9 Excel Assignment A
• Module 9 Excel Assignment B

Module 10: Other Assets

• Module 10 Excel Assignment

Module 11: Current Liabilities

• Module 11 Excel Assignment

Module 12: Non-Current Liabilities

• Module 12 Excel Assignment A
• Module 12 Excel Assignment B

Module 13: Accounting for Corporations

• Module 13 Excel Assignment A
• Module 13 Excel Assignment B
• Module 13 Excel Assignment C

Module 14: Statement of Cash Flows

• Module 14 Excel Assignment A
• Module 14 Excel Assignment B

Module 15: Financial Statement Analysis

• Module 15 Excel Assignment

Review Problems

There are also three unit review assignments and a final review. These reviews include a document which sets up the problems and an excel worksheet.

Unit 1 Review Problem (After Module 6)

• Review Problem Document

Unit 2 Review Problem (After Module 8)

Unit 3 review problem (after module 9), final review (after module 15).

• Assignments. Authored by : Cindy Moore and Joe Cooke. Provided by : Lumen Learning. License : CC BY: Attribution

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How to Finance a Business: 4 Options to Consider

• 04 Aug 2020

In entrepreneurship, the old adage “you must spend money to make money” often rings true.

Once you’ve developed an innovative business idea , identified a market need, and created a value proposition , you need to acquire funding to get your company up and running.

The key to financing a business is keeping expenses as low as possible. You also want to ensure invested money is used to gain insight into how to proceed.

In the online course Entrepreneurship Essentials , taught by Harvard Business School Professor William Sahlman, entrepreneurship is described as the process of "spending money to produce information about future possibilities."

For instance, using funds to rent a beautiful office may be tempting, but leveraging it to run tests, conduct market research, or identify more efficient means of production can help you learn about your product, pivot accordingly, and expand your company’s growth potential.

Here’s a guide for assessing startup costs and expenses, along with four business financing options to consider.

Access your free e-book today.

How Difficult Is It to Fund a Startup Business?

Securing adequate funding for your business can be challenging. However, it’s important to remember that starting your own business is a large investment that should be given an appropriate period of time to succeed.

Often, new businesses need to raise funding quickly and efficiently to properly grow and thrive in their given market, but it can be difficult to adhere to various lending requirements without existing financial information. In spite of these challenges, there are various financial resources that can help you get your business off the ground.

Evaluate Startup Costs and Expenses

Before deciding how to finance your business, determine how much money you anticipate needing for startup costs and regular expenses. Whether you run a brick-and-mortar or online business, consider the following when taking stock of expenses:

• Licenses and permits
• Trademarks, copyrights, or patents for your brand and products
• Business insurance
• Legal or accounting assistance
• Rent and utilities (for brick-and-mortar businesses)
• Equipment required for production
• Website platforms
• Marketing materials (both print and digital)
• Shipping supplies
• Subscriptions to content management systems and sales or marketing platforms
• Market research

As your business scales , you may need to expand your expense list to include:

• Employee salaries
• Rent and utilities for office space
• Travel expenses
• Conferences, conventions, and networking events

These lists aren’t exhaustive—every business’s needs are different—but they provide a starting point for you to brainstorm all possible expenses for your startup. When your list is complete, calculate your total estimated startup cost. This number is the amount of funding you’ll need to invest when starting your company.

Before raising capital, it’s also wise to familiarize yourself with how to read and create a balance sheet, income statement, and statement of cash flows. Financial literacy is a critical skill for entrepreneurs , and being aware of these financial statements will ensure you’re taking the necessary steps to become a responsible business owner.

Now, how do you obtain this necessary capital? Here are four sources of funding for your business’s launch.

Related: 6 Questions to Ask Before Starting a Business

How to Finance a Business

1. self-funding.

If your projected expenses add up to a manageable amount, you may be able to fund the business yourself. This can involve taking money from your personal savings account, dipping into your retirement funds, using credit cards and paying back the debt, or asking for donations from friends and family.

Self-funding comes with the risk of long-term debt or losing personal savings and, potentially, money from loved ones. However, it’s a financing option that allows you to retain full ownership over your business, which is often seen as a downside of raising venture capital from investors.

2. Crowdfunding

If you believe your business can garner a fan base, crowdfunding could be a good option. Crowdfunding platforms, such as Kickstarter, Indiegogo, and Patreon enable entrepreneurs to pitch their products and request financial backing.

If people are intrigued and support your product, they can donate to your company in exchange for a free item, discount code, or acknowledgment once your business is up and running. For this reason, crowdfunding is typically a good fit for business-to-consumer startup companies with physical products, although there are exceptions. Each platform has its own terms and conditions, which you should read before selecting one.

Like self-funding, crowdfunding allows you to maintain full ownership of your company, as long as you’re willing to thank your donors with free or discounted products. A few brands that got their start using crowdfunding are Oculus, PopSockets, and Allbirds.

3. Taking Out a Small Business Loan

Applying for a small business loan is another way to secure necessary startup funds. Before applying to banks and credit unions, prepare a business plan, value proposition, expense report, and financial projections for the next five years. Most banks or credit unions will ask to see some combination of these documents when considering your application.

Be sure to weigh the pros and cons of every bank loan offer you receive. Which gives you the lowest interest rate? What are the terms and conditions?

As Sahlman says in Entrepreneurship Essentials , “The terms of financing have a major impact on the success or failure of a venture.”

Related: What Does It Take to Be a Successful Entrepreneur?

4. Raising Venture Capital from Investors

Another avenue for funding your business is raising venture capital from investors.

“Successful companies are always forming hypotheses and testing all aspects of their business,” Sahlman explains in Entrepreneurship Essentials . “Ventures typically need outside investors to run experiments.”

Before reaching out to investors, prepare a business plan, value proposition, financial projections, and a tight, effective pitch deck.

The process of obtaining venture capital has been likened to dating —investors typically want to get to know you and your business before they commit.

One way to start this process is by asking a mutual connection to introduce you to investors. Your contact can serve as a character reference, if needed.

This process can take a while. If you’re looking for quick, easy money to start your business, raising venture capital may not be the right choice. Investors often want to see how you run your company before deciding to invest. Even after they supply funding, they may bide their time to see what you do with the money before investing more.

“Sensible investors stage their commitment to a company—they give enough money to conduct a value-changing test,” Sahlman says. “They preserve the right to abandon the venture by refusing to invest more money. They also design contracts that give them the right to invest more if the test yields encouraging results.”

There’s one factor that sets this option apart: Investors want to own a large, valuable share of your company in return for their investment. This allows them to sell their share in the future, when they predict your company will be worth a lot of money.

In Entrepreneurship Essentials , Sahlman shares Facebook’s journey with various investors and notes that it received $500,000 from angel investor Peter Thiel in its first round of funding in 2004. Just one year later, Facebook received a $12.7 million investment from prominent venture capitalist Jim Breyer.

Resist the urge to go big right away. Perhaps raising venture capital from investors is a second or third step for the funding of your business.

What's the Best Way to Finance Your Business?

Keep in mind that no two businesses are the same—only you know the ins and outs of your company’s needs. By weighing the risks and rewards of each funding option, along with your personal finances, predicted startup costs, and business expenses, you can select the best option for financing your business.

Are you looking to learn more about financing your venture? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn to speak the language of the startup world. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

This post was updated on June 3, 2022. It was originally published on August 4, 2020.

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The Ultimate Guide to Writing Assignments on Corporate Finance

Submit Your Corporate Finance Assignment

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1.1 Role of Corporate Finance

1.2 financial analysis, 1.3 capital budgeting, 2.1 primary and secondary sources, 2.2 using financial databases, 2.3 case studies and real-world examples, 3.1 introduction, 3.3 conclusion, 4.1 formatting guidelines, 4.2 citations and referencing.

Writing an assignment on corporate finance necessitates a thorough knowledge of the subject and strong communication abilities. This manual will give you step-by-step instructions to help you create a well-structured and educational assignment, whether you're a finance student or a professional looking to increase your knowledge. This blog post will cover a variety of topics related to writing a corporate finance assignment successfully , such as research, organization, and presentation. You can effectively analyze financial statements and make wise investment decisions if you are aware of corporate finance's role and goals. We will examine the use of primary and secondary sources, financial databases, and real-world examples because thorough research is crucial. Your finance assignment must be properly organized, with an introduction that establishes the context, a body that covers the major topics, and a conclusion that highlights the most important ideas and suggests areas for additional research. To ensure a polished and expert assignment, we will also offer formatting, citation, and presentational advice. You will be prepared to write an engaging corporate finance assignment with the advice given in this blog post.

Understanding Corporate Finance

It is crucial to gain a thorough understanding of corporate finance before starting the assignment writing process. The foundational ideas and principles that form the cornerstone of this specialized field of study are clarified in this section, which also serves as an introduction and overview. Understanding these essential components will help you create a solid foundation for your assignment. A wide range of important subjects are covered by corporate finance, such as capital budgeting, financial analysis, and its function within organizations. If you have a solid grasp of these fundamental ideas, you can approach your assignment with confidence and clarity, ensuring that your insights and analysis are based on a solid knowledge of corporate finance principles. Spend some time learning about and understanding the foundational ideas of corporate finance because they will be the foundation for your assignment.

We will examine the function of corporate finance in an organization in this subsection. To manage a company's financial operations and ensure its long-term success, corporate finance is essential. Maximizing shareholder value, selecting wise investments, controlling risk, and maximizing capital structure are the main goals of corporate finance. Corporate finance seeks to increase the wealth of the company's owners, who are typically shareholders, by maximizing shareholder value. This entails making financial choices that boost the company's overall value and produce favorable returns on investment.

A fundamental component of corporate finance is financial analysis. Assessing a company's financial performance and health entails looking at and interpreting financial statements like balance sheets, income statements, and cash flow statements. Financial analysts can evaluate a company's profitability, liquidity, solvency, and efficiency by examining these statements. Financial metrics and ratios like return on investment (ROI), earnings per share (EPS), and liquidity ratios are frequently used to evaluate a company's financial health and compare it to industry benchmarks. Making decisions about resource allocation, investment strategies, and risk management is made possible by financial analysis, which enables decision-makers to pinpoint the organization's areas of strength and weakness.

Making investment choices to allocate capital to projects and initiatives that create long-term value for the company is a crucial step in the capital budgeting process of corporate finance. It entails assessing different investment opportunities and choosing those that have the best chance of producing a profit. Several techniques, including net present value (NPV), internal rate of return (IRR), and payback period, are frequently used in capital budgeting. By contrasting the present value of anticipated cash flows with the initial investment, NPV evaluates an investment's profitability. The IRR determines the rate of return at which an investment's net present value is equal to zero. The payback period establishes the amount of time that an investment needs to take to recoup its initial cost. To ensure the most effective use of resources and alignment with the company's strategic goals, consideration must be given to variables like expected returns, risk, timeframes, and potential synergies.

Researching Your Assignment

Thorough and efficient research is essential to producing an engaging corporate finance assignment. You can use this section as a reference as you conduct your research and compile the data you need for your assignment. For gaining a thorough understanding of the subject matter and providing your arguments with reliable evidence, conducting in-depth research is essential. It entails using both primary and secondary sources, including academic journals, business filings, financial reports, and reliable websites. The breadth and applicability of your assignment can also be increased by utilizing financial databases, including real-world examples, case studies, and other relevant information. If you adhere to the advice given in this section, you will have everything you need to start a fruitful research project, resulting in a well-informed assignment, backed up by evidence, and offers a thorough analysis of the corporate finance topics you are researching.

For conducting thorough research, it is crucial to recognize the differences between primary and secondary sources. Financial reports, corporate filings, and interviews are examples of primary sources that offer firsthand information. Utilizing primary sources entails getting information directly from the source by visiting official websites or databases. Secondary sources provide analysis and interpretation of primary sources, such as scholarly journals, books, and reliable websites. They offer a wider context as well as professional judgment. It's crucial to evaluate secondary sources' veracity and applicability before using them.

Access to financial data, industry reports, and analyst opinions is available through financial databases like Bloomberg, Thomson Reuters, or FactSet. Understanding the search options and data categories in these databases is necessary for navigating them. They offer thorough company profiles, industry analysis, real-time and historical financial data, and professional insights. Your research will be more thorough and of higher quality if you use financial databases.

Case studies and examples from the real world give your assignment depth, relevance, and utility. It's crucial to locate and examine pertinent cases that relate to your subject. Describe the case's history, major problems, and conclusions. Apply corporate finance theories to financial analysis. Make associations between the case study and more general ideas. Be sure to properly cite your sources to maintain academic integrity. You illustrate the usefulness of corporate finance concepts through the use of case studies and real-world examples.

Structuring Your Assignment

Your assignment's structure is extremely important to effectively communicate your ideas in a logical and organized manner. The suggested structure for your corporate finance assignment is outlined in this section. An introduction, body, and conclusion are the typical components of a well-structured assignment. The introduction provides background information and outlines the goals of your assignment. The body is composed of several thoughtfully constructed paragraphs that explore the main issues and supporting evidence. Each paragraph should build on the one before it and flow naturally. The conclusion summarises the main ideas covered and provides suggestions for additional research. Additionally, ensuring proper formatting, distinct headings, and subheadings improves your assignment's readability and coherence. Following the format described in this section will help you effectively arrange and present your ideas so that your readers can understand the main ideas of your corporate finance assignment.

Setting the scene and drawing the reader in are two important tasks that the introduction section of your assignment performs. It should briefly describe the main aims or objectives of your assignment and discuss the significance of corporate finance. To manage business operations and make wise financial decisions, it is critical to understand corporate finance principles. Give the reader a clear roadmap of the topics you will cover in your assignment by providing a succinct overview of them.

In the body of your assignment, you present your arguments, analysis, and supporting data while delving into the topic at hand. It should be organized with several concise paragraphs, each of which should concentrate on a different corporate finance topic. Each paragraph should begin with a topic sentence that clearly states the main idea. Your arguments should be supported by pertinent data, examples, and evidence. Organize your paragraphs coherently, with seamless transitions between ideas, to ensure a logical flow. This will make it easier for the reader to follow your reasoning and see how various concepts and theories relate to one another.

The conclusion, which is the last part of your assignment, should give a succinct summary of the important ideas raised throughout. Recap the key conclusions and points made in the assignment's body. Put a focus on their importance and consequences in the context of corporate finance. Additionally, highlight the potential directions for future research in the field and provide insights into potential areas for additional analysis or research. Make sure your conclusion effectively concludes your assignment by restating your main thesis and leaving the reader with a positive impression. Finish with a compelling conclusion that highlights the significance of the subjects covered and gives your assignment a sense of closure.

Presenting Your Assignment

Your assignment's presentation is essential to effectively expressing your ideas to the reader. The formatting, citation, and general presentation advice in this section will help your corporate finance assignment make a stronger impression. Consistent margins, font size, line spacing, and citation style are all part of proper formatting standards that guarantee a polished and professional appearance. Correct citations and referencing give your work credibility by acknowledging the sources you used. It's crucial to adhere to established citation formats like APA, MLA, or Chicago. Additionally, your assignment's overall presentation, which includes distinct headings, subheadings, and a logical flow of ideas, ensures coherence and makes it easier for the reader to understand. You can improve the presentation of your assignment by following the suggestions in this section, making it visually appealing, well-organized, and simple to follow. This will increase the overall impact of your corporate finance work.

You must adhere to the formatting requirements outlined in this section by your educational institution. Typically, these guidelines specify the margins, font size, line spacing, and citation style. Following these instructions makes sure that your assignment looks polished and professional. Keep an eye on your headings, subheadings, and numbering to keep your assignment's structure clear and well-organized. The readability of your work is improved by consistency in formatting, which also shows that you pay attention to detail and are committed to professionally conveying your ideas.

Academic integrity requires that you cite all of the sources you used in your assignment. Give due credit to the original authors and support the veracity of your arguments with precise citations and references. Use the citation format recommended by your educational institution, such as APA, MLA, or Chicago. Give instructions on how to cite sources in-text, including how to do so correctly for direct quotes, paraphrased information, and borrowed ideas. Discuss the value of creating an exhaustive reference list that contains every source cited in your assignment. Emphasize the importance of accurately citing your sources to prevent plagiarism and to give readers access to the cited works for additional research or confirmation.

In conclusion, working on a corporate finance assignment requires taking a systematic approach and doing a lot of research. You will be able to create a well-structured and informative assignment by following the detailed instructions provided in this manual. It is essential to understand the foundational ideas of corporate finance, conduct extensive research, and communicate your findings clearly and concisely. You can develop your abilities and become an expert at creating compelling assignments on corporate finance by working diligently and consistently. Remember that comprehension of the subject, thorough research, and effective communication of your insights are all crucial. Be steadfast and let your enthusiasm for the subject come through as you set out to master the art of writing corporate finance assignments. You will undoubtedly succeed in this area of academic or professional pursuit with patience and persistence.

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Principles of Finance

(3 reviews)

Julie Dahlquist, Texas Christian University

Rainford Knight, Florida Atlantic University

Alan S. Adams, Dean College

ISBN 13: 9781951693541

Publisher: OpenStax

Language: English

Formats Available

Conditions of use.

Learn more about reviews.

Reviewed by Kevin Flint, Instructor, James Madison University on 11/14/22

The book provides a comprehensive index, but I did not see a glossary. A list of key terms does appear at the beginning of each chapter. In looking at the contents, the text covers all of the appropriate areas of finance but does seem to sway... read more

Comprehensiveness rating: 4 see less

The book provides a comprehensive index, but I did not see a glossary. A list of key terms does appear at the beginning of each chapter. In looking at the contents, the text covers all of the appropriate areas of finance but does seem to sway into accounting as well, which could be overwhelming to some students. I would have like to have seen more of an incorporation of personal finance into each topic.

Content Accuracy rating: 5

In my review of the text, I did not observe any meaningful errors.

Relevance/Longevity rating: 4

In my opinion, the text will retain relevance for an longer-than-average period of time because there is very little incorporation of current events into the text. While it increases longevity, in my experience, students better connect to topics when they are explained through the prism of current events.

Clarity rating: 4

Finance is a difficult topic to write about and teach. It is often aided by visuals and this text is very limited on visual aids and I think it would be helpful to include more in many of the chapters. There are a lot of charts and graphs but I’m thinking other visuals such as arrows, flow charts, maps, etc. would be helpful. The charts are really good and would appeal to some people. But others may benefit from a more visual experience.

Consistency rating: 5

I did not observe any issues of inconsistency throughout the book.

Modularity rating: 3

Many of the pages of the text feature an overwhelming amount of words and spreadsheets. Given that this is a “Principles” level course, I am assuming that the class would be intended for folks who may be taking finance for the first time and may be more susceptible to being lost on a page with so many words. As I mentioned in the last section, I would work to incorporate more non-spreadsheet visuals into the text.

Organization/Structure/Flow rating: 5

The organization of the book appears logical. The only comment I would have would be to consider incorporating the chapter on Accrual Accounting into the Financial Statement Chapter.

Interface rating: 5

No issues were experienced in navigating the PDF or online version of the text.

Grammatical Errors rating: 5

No material grammatical errors were observed in my review of the book.

Cultural Relevance rating: 5

No issues were noted in this category.

I appreciate the effort made to allow for these types of "Open Textbooks". I would encourage the author in future versions to find more ways to incorporate more visual aids such as maps, arrows, flow charts and illustrations into future versions of text. I understand that this can be challenging given the topic but I do think it would go a long way in working not to overwhelm someone who is picking up a finance textbook for the first time.

Reviewed by Yijia Zhao, Associate Professor, University of Massachusetts Boston on 11/1/22

Comprehensive read more

Comprehensiveness rating: 5 see less

Comprehensive

Relevance/Longevity rating: 5

Very relevant

Clarity rating: 5

well-written

Consistency rating: 4

Modularity rating: 5

Easy-to-read

Well organzied

Interface rating: 4

I found this book to be well-written and easy to understand. I also like the fact that the book incorporates essential knowledge of statistics and its applications in finance.

Reviewed by Randy Beavers, Associate Professor of Finance, Seattle Pacific University on 6/9/22

The textbook covers all the material necessary for students to take the finance section of the business ETS exam. This text goes beyond others, including Chapter 14: Regression Analysis in Finance along with using the programming language, R.... read more

The textbook covers all the material necessary for students to take the finance section of the business ETS exam. This text goes beyond others, including Chapter 14: Regression Analysis in Finance along with using the programming language, R. There is a glossary at the end of each chapter but not overall at the end of the book.

The book incorporates cutting-edge technology with Excel and provides explanations of the CFA level 1 exam.

All of the chapters are laid out the same way with why it matters, the material, summary, key terms, questions in multiple-choice and essay format, and a video activity that could be updated.

The text is very clear with adequate explanations for all problems addressed.

The CFA Institute consideration is not provided for every chapter. Also, not every chapter provides problems. This may be suitable for chapters with most concepts but this is something to address in the future in order to make every chapter have a similar layout (even if it is to say this chapter covers no CFA material).

Modularity rating: 4

It is modular for the most part. However, I noted one exception in Chapter 20 because it used a bond example while assuming students have familiarity from previous chapters concerning bonds and bond terminology.

The text follows the usual path of most other textbooks.

I found no issues regarding the hyperlinks and the additional materials provided there. However, some of the Excel visuals were hard to read.

I saw very few grammatical errors. Sources were cited from both academic and trade journals along with reputable news and other websites.

Cultural Relevance rating: 3

While the authors are diverse, the text does not speak to many issues regarding race and gender. In particular, redlining, the racial wealth gap, the while male majority dominance in finance, nor other issues in diversity, equity, inclusion, and belonging were considered. I would suggest the next edition focus on addressing this in each chapter and also consider a separate chapter about this topic.

I would appreciate work to help instructors put this in their LMS, but I plan to use some of the materials in my Business Finance classes moving forward as a supplement and not as the main text.

Table of Contents

• Why it Matters
• 1.1  What Is Finance?
• 1.2  The Role of Finance in an Organization
• 1.3  Importance of Data and Technology
• 1.4  Careers in Finance
• 1.5  Markets and Participants
• 1.6  Microeconomic and Macroeconomic Matters
• 1.7  Financial Instruments
• 1.8  Concepts of Time and Value
• Multiple Choice
• Review Questions
• Video Activity
• 2.1  Business Structures
• 2.2  Relationship between Shareholders and Company Management
• 2.3  Role of the Board of Directors
• 2.4  Agency Issues: Shareholders and Corporate Boards
• 2.5  Interacting with Investors, Intermediaries, and Other Market Participants
• 2.6  Companies in Domestic and Global Markets
• CFA Institute
• Why It Matters
• 3.1  Microeconomics
• 3.2  Macroeconomics
• 3.3  Business Cycles and Economic Activity
• 3.4  Interest Rates
• 3.5  Foreign Exchange Rates
• 3.6  Sources and Characteristics of Economic Data
• 4.1  Cash versus Accrual Accounting
• 4.2  Economic Basis for Accrual Accounting
• 4.3  How Does a Company Recognize a Sale and an Expense?
• 4.4  When Should a Company Capitalize or Expense an Item?
• 4.5  What Is “Profit” versus “Loss” for the Company?
• 5.1  The Income Statement
• 5.2  The Balance Sheet
• 5.3  The Relationship between the Balance Sheet and the Income Statement
• 5.4  The Statement of Owner’s Equity
• 5.5  The Statement of Cash Flows
• 5.6  Operating Cash Flow and Free Cash Flow to the Firm (FCFF)
• 5.7  Common-Size Statements
• 5.8  Reporting Financial Activity
• 6.1  Ratios: Condensing Information into Smaller Pieces
• 6.2  Operating Efficiency Ratios
• 6.3  Liquidity Ratios
• 6.4  Solvency Ratios
• 6.5  Market Value Ratios
• 6.6  Profitability Ratios and the DuPont Method
• 7.1  Now versus Later Concepts
• 7.2  Time Value of Money (TVM) Basics
• 7.3  Methods for Solving Time Value of Money Problems
• 7.4  Applications of TVM in Finance
• 8.1  Perpetuities
• 8.2  Annuities
• 8.3  Loan Amortization
• 8.4  Stated versus Effective Rates
• 8.5  Equal Payments with a Financial Calculator and Excel
• 9.1  Timing of Cash Flows
• 9.2  Unequal Payments Using a Financial Calculator or Microsoft Excel
• 10.1  Characteristics of Bonds
• 10.2  Bond Valuation
• 10.3  Using the Yield Curve
• 10.4  Risks of Interest Rates and Default
• 10.5  Using Spreadsheets to Solve Bond Problems
• 11.1  Multiple Approaches to Stock Valuation
• 11.2  Dividend Discount Models (DDMs)
• 11.3  Discounted Cash Flow (DCF) Model
• 11.4  Preferred Stock
• 11.5  Efficient Markets
• 12.1  Overview of US Financial Markets
• 12.2  Historical Picture of Inflation
• 12.3  Historical Picture of Returns to Bonds
• 12.4  Historical Picture of Returns to Stocks
• 13.1  Measures of Center
• 13.2  Measures of Spread
• 13.3  Measures of Position
• 13.4  Statistical Distributions
• 13.5  Probability Distributions
• 13.6  Data Visualization and Graphical Displays
• 13.7  The R Statistical Analysis Tool
• 14.1  Correlation Analysis
• 14.2  Linear Regression Analysis
• 14.3  Best-Fit Linear Model
• 14.4  Regression Applications in Finance
• 14.5  Predictions and Prediction Intervals
• 14.6  Use of R Statistical Analysis Tool for Regression Analysis
• 15.1  Risk and Return to an Individual Asset
• 15.2  Risk and Return to Multiple Assets
• 15.3  The Capital Asset Pricing Model (CAPM)
• 15.4  Applications in Performance Measurement
• 15.5  Using Excel to Make Investment Decisions
• 16.1  Payback Period Method
• 16.2  Net Present Value (NPV) Method
• 16.3  Internal Rate of Return (IRR) Method
• 16.4  Alternative Methods
• 16.5  Choosing between Projects
• 16.6  Using Excel to Make Company Investment Decisions
• 17.1  The Concept of Capital Structure
• 17.2  The Costs of Debt and Equity Capital
• 17.3  Calculating the Weighted Average Cost of Capital
• 17.4  Capital Structure Choices
• 17.5  Optimal Capital Structure
• 17.6  Alternative Sources of Funds
• 18.1  The Importance of Forecasting
• 18.2  Forecasting Sales
• 18.3  Pro Forma Financials
• 18.4  Generating the Complete Forecast
• 18.5  Forecasting Cash Flow and Assessing the Value of Growth
• 18.6  Using Excel to Create the Long-Term Forecast
• 19.1  What Is Working Capital?
• 19.2  What Is Trade Credit?
• 19.3  Cash Management
• 19.4  Receivables Management
• 19.5  Inventory Management
• 19.6  Using Excel to Create the Short-Term Plan
• 20.1  The Importance of Risk Management
• 20.2  Commodity Price Risk
• 20.3  Exchange Rates and Risk
• 20.4  Interest Rate Risk

Ancillary Material

About the book.

Designed to meet the scope and sequence of your course,  Principles of Finance  provides a strong foundation in financial applications using an innovative use-case approach to explore their role in business decision-making. An array of financial calculator and downloadable Microsoft Excel data exercises also engage students in experiential learning throughout. With flexible integration of technical instruction and data, this title prepares students for current practice and continual evolution. 

About the Contributors

Dr. Julie Dahlquist is a professor of professional practice in the Finance Department of the Neeley School of Business at Texas Christian University. She holds a PhD from Texas A&M University, an MA from St. Mary’s University, a BBA from the University of Louisiana at Monroe, and a Chartered Market Technician® (CMT) designation. Previously, she served on the finance faculties of the University of Texas at San Antonio and St. Mary’s University. She has extensive international experience teaching finance to undergraduate, graduate, and executive MBA students in programs in Mexico, Austria, Germany, Switzerland, Italy, Belgium, Greece, and South Korea. Dr. Dahlquist is president of the Technical Analysis Educational Foundation (TAEF), which works with universities to include technical analysis as an integral part of their finance curricula. She has coauthored Technical Analysis: The Complete Resource for Financial Market Technicians (with Charles Kirkpatrick, 3rd edition, FT Press, 2015) and has contributed to many other scholarly publications. Her research has appeared in Financial Analysts Journal, Managerial Finance, Applied Economics, Working Money, Financial Practices and Education, and the Journal of Financial Education. Dr. Dahlquist has served as editor of the Journal of Technical Analysis, a member of the editorial board of the Southwestern Business Administration Journal, and a reviewer for several other journals.

Dr. Rainford Knight is adjunct faculty in the Finance Department of the College of Business at Florida Atlantic University and the director of its Financial Analyst Program, which he founded in partnership with Bloomberg in 2011. He holds a BBA, an MBA, and a PhD in finance from Florida Atlantic University. Dr. Knight is a member of the CFA Institute and a former director of the CFA Society of South Florida. He has extensive experience teaching finance at the undergraduate, graduate, and executive levels. Previously, he served on the finance faculty of Fairleigh Dickinson University. Dr. Knight has coauthored articles on corporate sustainability, cost-benefit analyses, mutual fund returns, and CEO compensation. He also has significant private industry experience in corporate finance, investment management, and hedge funds. He has been an adviser to CEOs of small to midsize companies on a variety of issues, including restructurings, valuation, financing, and acquisitions. Internationally, he was part of the consulting team advising a sovereign government on the restructuring of its financial sector and has also made presentations regarding financial sector restructuring to central banks in Latin America. Since 2021, Dr. Knight has been CEO and cofounder of Transparency Invest, which supports accountability in organizations

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Setting Up Accounting for Small Businesses

Basic bookkeeping for small businesses, financial statements for small businesses, tax considerations for small businesses, software and tools for small business accounting, outsourcing accounting services for small businesses, best practices for small business accounting, what are the benefits of using accounting software for small businesses, what are the best practices for maintaining accurate financial records, what types of records do small businesses need to keep, the bottom line.

• Corporate Finance

Accounting for Small Businesses: A Comprehensive Guide to Financial Management

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

• Understanding Small Business Taxes: A Comprehensive Guide
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Accounting is an instrumental part of running a small business . Implementing systems and best practices for keeping track of expenditures and revenues is key to managing cash flow . Without these systems in place, it’s all too easy to lose track of funds or create the financial records necessary to file taxes and apply for small business financing, if necessary.

Proper accounting for small businesses encompasses a number of important tasks.

Key Takeaways

• Accounting is crucial for small businesses to effectively manage their finances.
• Setting up accounting systems involves opening a business bank account, choosing an accounting method, setting up a chart of accounts, and determining the fiscal year.
• Basic bookkeeping includes tracking expenses, recording transactions accurately, documenting receipts, and reconciling bank statements.
• Financial statements such as the income statement, balance sheet, and cash flow statement provide insights into a small business’s financial health.
• Small businesses need to understand their tax obligations, track deductible expenses, and file taxes on time.

Accounting as a small business owner begins with laying a proper foundation. That includes four key activities:

• Opening a small business bank account
• Choosing an accounting method (cash or accrual)
• Setting up a chart of accounts
• Determining the fiscal year for the business

Here’s a closer look at each step.

Opening a Small Business Bank Account

Opening a business bank account allows you to separate business and personal spending, which can be helpful when it’s time to file taxes if you plan to deduct eligible expenses. To open a bank account for a small business, you’ll generally need to have the following:

• Employer Identification Number (EIN) or a Social Security number if you operate as a sole proprietor
• Business formation documents
• Ownership agreements
• Business license, if your state requires one to do business

You’ll also need a minimum opening deposit if the bank requires one. Minimum deposit requirements can depend on the type of business account and whether you’re opening the account at a traditional bank, credit union, or online bank.

Remember to compare the fees, features, and benefits associated with different business bank accounts to find the one that best aligns with your needs.

Choosing an Accounting Method

Your accounting method determines how you report income and deduct expenses for the year. The Internal Revenue Service (IRS) allows you to choose between two options: cash and accrual . Here’s how they compare.

• Cash method . With the cash method, you report income in the year that you receive it and deduct expenses in the year that you pay them.
• Accrual method . With the accrual method, you would report income in the year that you earn it, regardless of when it’s received.

If you select one accounting method and then decide that you’d like to change it after filing your taxes, you’d need to complete IRS Form 3115 to formally do so.

Setting Up a Chart of Accounts

A chart of accounts is a list of all accounts available for recording transactions in your accounting software program if you use one or a general ledger if you don’t. To create this chart, you’d first organize your accounts into specific categories, then further break your organization down into relevant subaccounts.

Each category is assigned a range of numbers that are used to track individual accounts. For instance, if you have a category for business asset accounts, your organization might look like this:

• Asset: Checking account, 1005
• Asset: Savings account, 1015
• Asset: Money market account, 1020

You’d follow this system for all of the account categories that you have. Common categories include asset, liability, equity, revenue, and expense accounts.

Determining the Fiscal Year

A fiscal year is 12 consecutive months for which accounting activity is recorded. Small business owners can decide when their fiscal year begins and ends; the only rule is that it must be 12 consecutive months.

For instance, you might choose to start your fiscal year on July 1 and have it end on June 30 of the following calendar year. Or you may choose a more traditional approach and have your fiscal year follow the standard calendar year, depending on what works best for your business. If you operate a seasonal business, for instance, then you may choose to begin your fiscal year at the beginning or end of your peak sales season.

Basic bookkeeping for small business owners revolves around a core set of tasks, all of which are designed to help you keep track of where funds are going. The most important bookkeeping practices include:

• Tracking small business expenses
• Recording transactions accurately
• Documenting and filing receipts
• Reconciling bank statements

In terms of which expenses to track for a small business, the short answer is all of them. Anything that you spend money on—whether it’s your monthly lease payment, utilities, office supplies, or postage fees—should be recorded in your accounting system. And those transactions should be recorded accurately to ensure that you have the correct amounts when you’re ready to deduct business expenses on your taxes.

The IRS encourages small business owners to maintain proper documentation for expenses, such as receipts showing the amount spent, the date, the payment method, and what was purchased.

Taken separately, those tasks can be time-consuming. When utilizing a comprehensive bookkeeping software program, they become easier. The best bookkeeping software syncs with your business bank account and payroll systems so that you’re easily able to import and export transaction history. We’ll cover some of the best business bookkeeping software options a little later.

Financial statements can yield valuable insights into how well your small business is managing income and expenses. You’ll also need to present up-to-date financial statements to lenders if you plan to apply for small business financing at some point.

There are three financial statements that all small businesses should consider creating.

• Income statement (profit and loss statement) . An income statement shows a business’s expenses, income, losses, and gains over a set period. These figures are used to determine your net profit or net loss accordingly.
• Balance sheet . A balance sheet records a business’s assets, liabilities, and shareholder equity. In simple terms, this financial statement will tell you what your business owns and what it owes.
• Cash flow statement . A cash flow statement provides a snapshot of how cash moves in and out of the business. It can also tell you how well your business is equipped to pay its bills.

If you’re already using an accounting software program for small businesses, you may be able to generate these statements automatically using the expense and income information you’ve already entered.

Running a small business means you have to file a tax return and pay what you owe, if anything, to the IRS. Businesses will need to pay federal and state taxes, as well as any local taxes that may apply. There are five types of small business taxes at the federal level:

• Self-employment tax
• Estimated tax
• Employer tax

Your business structure determines which types of tax you must pay . Remember that if you have employees, you’ll also need to account for payroll tax . If you’re unsure about your tax obligations, you may want to talk to a professional accountant or tax expert for advice.

Small businesses that are required to pay estimated quarterly taxes but fail to do so may be assessed a penalty by the IRS.

Deducting Business Expenses

The IRS allows business owners to deduct a number of expenses. Deductions reduce your taxable income for the year. Some of the expenses you may deduct include:

• Business meals
• Business travel
• Business insurance
• Home office expenses
• Utilities and rent for business premises
• Inventory purchases
• Vehicle purchases or eligible vehicle expenses
• Employee benefits
• Retirement plan contributions

Again, you’ll need to keep track of all of these expenses and maintain the proper records for each one. Keeping accurate records serves two purposes:

• It ensures that you’re deducting the right amounts when you file your taxes.
• It allows you to prove your deductions should your business be selected for a tax audit.

If you’re using tax filing software , you may have the option to organize and store receipts electronically.

Software programs, apps, and tools can save your business time and potentially money if you’re able to ensure more accurate accounting. Using a software program can also eliminate the need to retain a full-time accountant, which can add to your business expenses.

Additionally, accounting software can help you to:

• Create cost predictions
• Run forecasts to determine the potential return on business investments
• Manage inventory
• Manage payroll
• Send and receive invoices
• Track accounts payable and receivables

There are numerous software options for small businesses, with QuickBooks and FreshBooks being two of the most popular. When deciding which software program to use for accounting, it helps to first consider what your business needs. You can then compare different programs to evaluate the range of features and benefits that are included, and the overall cost of using it.

While you could handle accounting for your small business on your own, you may consider outsourcing it to an accounting pro .

In terms of the advantages of doing so, letting someone else handle your accounting means you have one less thing to worry about. Instead of crunching numbers, you’ll be free to focus on other tasks that are necessary to run or scale your business. An accountant can also ensure greater accuracy and may be more knowledgeable about the tax code and reporting requirements.

The disadvantage is that outsourcing means your business’s financial information is being viewed by someone else, which you may or may not be comfortable with. Aside from that, you also have to consider what you might pay to hire an accountant on a full-time or part-time basis.

In terms of how to choose an accountant, you may ask other business owners you know for a referral. If you’re able to get a few names, you can schedule meetings with those that look promising. During your meeting with them, consider asking the following questions to get a better idea of how well they align with your business:

• How long have you worked in the accounting field?
• Are you a certified public accountant (CPA), or do you hold any other professional credentials?
• What type of small business owners do you typically work with?
• What’s the full range of services you provide?
• How much do you charge, and how are the fees structured?
• How often will we communicate, and what is your preferred communication method?

You might choose to work with a virtual bookkeeper if you’re comfortable connecting via Zoom call or email. The fees may be lower, but be sure to ask about their background and experience before entering into an agreement to contract their services.

Following best practices can minimize room for errors in your small business accounting and help you to keep better records. What those practices look like may vary from business to business, but at a minimum, it’s a good idea to include the following:

• Maintain separate bank accounts and credit cards for business and personal spending.
• Ensure accuracy in business record-keeping.
• Regularly review financial statements.
• Seek professional advice when needed.
• Back up and secure records.

Setting up a document management system can help with organizing your records so that they’re easier to review. There are different ways to organize files, depending on what you need to store.

You might choose to use document management software to keep track of key financial information and statements. You’ll want to periodically back up your files and ensure that you’re adhering to security protocols so your information isn’t compromised. For example, if you need to save a copy of a document separately from other files, you may put it in its own password-protected folder inside your document management software.

Using accounting software can allow you to save time when managing the books for your business. You can sync financial accounts to easily import transaction history, track expenses, double-check transactions for accuracy, and generate important financial statements.

Some of the best ways to ensure accuracy in financial records include keeping business and personal accounts separate, using an accounting software program to track cash flow, regularly updating financial statements, and conducting an annual audit to review your business’s financial history.

Small businesses need to keep accurate records relating to any expenses they incur, particularly for expenses they plan to deduct. It’s also important to keep records of any agreements with vendors and suppliers, bank statements, documents showing payment of estimated quarterly taxes, and annual tax returns.

The importance of accounting for small businesses can’t be underestimated. Whether you’re starting a brand-new business or you have some experience under your belt, creating a solid accounting plan can help you monitor and maintain your financial health.

U.S. Small Business Administration. “ Open a Business Bank Account .”

Internal Revenue Service. " Publication 538 (01/2022), Accounting Periods and Methods ."

Internal Revenue Service. “ About Form 3115, Application for Change in Accounting Method .”

Internal Revenue Service. “ What Kind of Records Should I Keep .”

U.S. Securities and Exchange Commission. “ Beginners’ Guide to Financial Statement .”

U.S. Small Business Administration. “ Pay Taxes .”

Internal Revenue Service. “ Estimated Taxes .”

Internal Revenue Service. " Credits and Deductions for Businesses ."

Internal Revenue Service. “ Guide to Business Expense Resources ."

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Business: 45-790: Management Presentations: Strategy Assignment

• Stock Pitch Assignment
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Expert introductions to major topics in business, management, finance, economics, and philosophy

Below are example handbooks and other books on strategy from the two above-mentioned databases:

• Handbook of Strategy and Management
• Dictionary of Strategy: Strategic Management A-Z
• The Oxford Handbook of Strategy: A Strategy Overview and Competitive Strategy

Strategy Business Cases

• Sage Business Cases This link opens in a new window Provides access to over 3,000 business cases spanning a wide range of business disciplines from leadership to strategy

Below are examples of business cases that focus on various aspects of strategy:

• Vitalena Health Promotion Centre: In Search of a Positioning Strategy
• British Telecom: Searching for a Winning Strategy
• Dual Innovation Strategy to Create a Competitive Advantage for Bloomage Biotech
• Interplay Between Organisational Culture and Strategy: The Case of Magnum Photos (1947-1996)
• LinkedIn Learning This link opens in a new window LinkedIn Learning provides thousands of training videos and tutorials. CMU students, faculty, and staff have unlimited access to the entire library.

Within LinkedIn Learning, follow these steps:

1. Search for business strategy  in the search box at the top.

2. Use the filters at the top to narrow results (e.g., Level = beginner, intermediate, etc.)

3. Click on the video and begin!

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The August jobs report reinforces 'waning vigor' in the labor market and the Fed should deliver a big rate cut, JPMorgan says

• The US added 142,000 jobs in August, bringing the unemployment rate down slightly to 4.2%.
• JPMorgan chief economist Michael Feroli said the data points to the "waning vigor" of the labor market.
• Feroli said that a 50 basis point rate cut would be the right move for the Fed.

The highly anticipated August jobs report points to the marked slowdown of the US labor market and should prompt the central bank to deliver a bigger rate cut, JPMorgan chief economist Michael Feroli said.

"The August employment report reinforced the sense of waning vigor in labor market activity," Feroli said in a note following the August nonfarm payrolls report.

The report shows the US added 142,000 jobs in August, bringing the unemployment rate down to 4.2% from 4.3%.

Those numbers were in line with expectations and followed a  surprise uptick  in unemployment in July that triggered worries of a recession and sparked a steep  market sell-off  in early August.

Since then, analysts have expected the August jobs report to weigh heavily on the pace and depth of rate cuts from the Federal Reserve.

Investors see the highest odds for a 25 basis point cut, but Feroli says the need for a more drastic cut to curb the cooling labor market.

Related stories

"We still think cutting 50bp at the September meeting is the right thing to do. Policy is restrictive, downside employment risks are growing, and upside inflation risks are ebbing," Feroli said.

It remains unclear if the Fed will cut so much right off the bat, though, Feroli noted.

"Fed speakers agree that multiple cuts are warranted, though they haven't openly endorsed catching up to the curve as soon as possible," Feroli said. "So, while we are still calling for a 50bp cut at the next meeting as we think it's good policy, we don't have full confidence that the Committee agrees just yet."

Speaking just after the jobs data was released , New York Fed president John Williams advocated for rate cuts, though didn't indicate how steep he thought might be appropriate at this month's meeting.

"The stance of monetary policy can be moved to a more neutral setting over time depending on the evolution of the data, the outlook, and the risks to achieving our objectives," he said.

Fed Chair Jerome Powell also nodded to rate cuts at the Jackson Hole symposium last month. He said the central bank does not "seek or welcome further cooling in labor market conditions" in his comments.

Williams said the August jobs data is "consistent with what we've been seeing — a slowing economy and a cooling off in the labor market."

Watch: Nearly 50,000 tech workers have been laid off — but there's a hack to avoid layoffs

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