Internal Organization

Debts

(also called liabilities) are amounts of money that your company owes to other people or companies, such as banks, lenders, or suppliers that you haven't paid yet.

What are debts, assets, and equity?

Assets are things your company owns that are worth money, such as cash, equipment, vehicles, materials, inventory, and real estate. Debts (also called liabilities) are amounts of money that your company owes to other people or companies, such as banks, lenders, or suppliers that you haven't paid yet. Equity is the amount of money that the company is worth to its owners. This is calculated by subtracting the company's debts from its assets.

How often should you record the transactions related to your business?

Daily

What are flat, hierarchical, and matrix organizations?

Flat organization means there are few or no levels of managers in between the top people who run the company and the employees. Hierarchical organization means that the company has many different levels of management, and each person in the company reports to one other person. Matrix organization means the company is organized by both product and function, so each employee reports to two or more managers.

expense journal

a journal where you write down your company's bills and expenses.

Assets

are things your company owns that are worth money, such as cash, equipment, vehicles, materials, inventory, and real estate.

What are five common ways to organize a company?

by function, product, location, process, or customer

What are six of the types of records your company is likely to need?

company checkbook, expense journal, income statement, balance sheet, employee records, customer information

balance sheet

shows the assets, debts, and your equity in the company on a specific date.

income statement

shows the income and expenses for the company for a specific period of time.

organizational chart

shows the organization of the company and the relationships between people and departments in the company.

Hierarchical organization

that the company has many different levels of management, and each person in the company reports to one other person.

Equity

the amount of money that the company is worth to its owners. This is calculated by subtracting the company's debts from its assets.

Matrix organization

the company is organized by both product and function, so each employee reports to two or more managers.

Flat organization

there are few or no levels of managers in between the top people who run the company and the employees. This type of organization is common in small companies.