Week 1 Lecture

Introduction to BAS 507 Financial Decision Making and Information Systems

• Discipline Overview: Integration of accounting, finance, and information systems.

• Aim: Explore all three disciplines to decide on a major in semester two.

• Instructor: Sabrina Chung, specializing in accounting.

Course Preparation

• Check Canvas regularly for updates and materials.

• Main Course Coordinator: Nava, to discuss finance in Week 2.

• Expert in Information Systems: Kai Kai, to present in Weeks 5 or 6.

• Workshop supervisors will be assigned; time management suggested for lunch breaks.

Week 1 Topics

• Focus Areas: Business structure, users of information, and budgeting.

• Accessing Materials: Lecture slides and additional resources available on Canvas.

• Recommended Readings: Use online resources or library access for textbooks if needed.

Learning Outcomes

• Understand various business structures: sole trader, partnership, and company.

• Evaluate advantages and disadvantages of each business structure.

• Recognize the importance of accounting in business.

• Identify the users of accounting information.

Business Structures

1. Sole Trader

• Definition: Individual who controls and manages a business independently.

• Examples: Plumber, electrician, hairdresser, influencer.

Advantages:

• Full control over profits and decision-making.

• Flexible work hours.

• Low cost and easy to set up.

Disadvantages:

• Unlimited liability (personal responsibility for business debts).

• Higher personal tax rate compared to corporate tax.

• Difficulty in obtaining loans.

• Business ends with owner's death, no succession.

2. Partnership

• Definition: A business formed by two or more individuals bringing in their skills and investments.

• Examples: Law firms, accounting firms, medical clinics.

Advantages:

• Shared responsibility and resources among partners.

• Diverse skill sets enhance business functionality.

Disadvantages:

• Shared liability for business debts.

• Business dissolution upon a partner's death or withdrawal.

• Necessity of a partnership agreement to prevent future disputes.

3. Company

• Definition: Legal entity that can sell shares; includes private and public companies.

• Examples: Air New Zealand, Meridian Energy.

Advantages:

• Limited liability; personal assets are protected.

• Easier access to capital through the sale of shares.

• Business continuity beyond owner's life.

Disadvantages:

• Extensive regulation and compliance requirements.

• Higher operational costs due to regulatory adherence.

• Corporate tax rates apply regardless of profit.

Importance of Accounting

• Defined as the process of recognizing, measuring, and reporting financial information.

• Known as the 'language of business' since it communicates financial health and performance succinctly.

Users of Accounting Information

Primary Users:

• Management: Internal stakeholders needing data for planning and decision-making.

• Creditors/Banks: Ensure businesses can repay loans.

Other Users:

• Shareholders: Interested in profitability and financial performance.

• Suppliers, employees, government, and broader community stakeholders affect by business decisions.

Budgeting

• Definition: A plan for how to allocate resources and expenditures.

• Importance:

• Helps prevent overspending and tracks financial habits.

• Acts as a roadmap to achieve financial targets.

Benefits:

• Establishes long-term plans and helps set performance targets.

• Identifies resource constraints and minimizes waste.

• Provides profit forecasts to satisfy stakeholders.

Weaknesses:

• Potential inflexibility if strict adherence is required.

• Could limit adaptability in changing circumstances.

Conclusion

• Participants encouraged to engage actively for better understanding.

• Course material and worksheets available for further study.

• Next session: In-depth discussions on partnership businesses in week three.