FUNDAMENTALS OF ACCOUNTING II By the end of the topic you should be able to: Some firms may manufacture or produce goods rather than buy due tosavings in operational costs. (i.e. it is cheaper to produce the goodsrather than buy). Due to additional costs involved in the productionprocess, additional information is reported in the final … Read more

DIVIDEND THEORIES AND POLICY NOTES Dividend policy of a firm determines what proportion of earnings is paidto holders by way of dividends and what proportion is ploughed back inthe firm for investment purposes. If a firm’s capital budgeting decisionis independent of its dividend policy, a higher dividend payment willentail a greater dependence on external financing. … Read more

CAPITAL BUDGETING AND RISK- Risk Analysis NOTES Risk is inherent in almost every business decision. More so in capitalbudgeting decision as they involve costsand benefits extending over a long period of time during which manythings can change in unanticipated ways. A research and developmentproject may be more risky than an expansion project and the latter … Read more

CAPITAL BUDGETING (INVESTMENT DECISIONS) NOTES Capital budgeting deals with the allocation of funds to competingprojects they involve commitment of funds toreceive future benefits. 2.1 Characteristics of Capital Budgeting Decisions Steps in Investment Decisions 2.2.1 Generating Investment ProposalsUsually, investment proposals are generated by other departments, notthe finance department. E.g. the marketing department will generateproposal on new … Read more

FUNDAMENTALS OF ACCOUNTING 1 NOTES The Nature and Purpose of Accounting Definition Accounting is defined as the process of identifying,measuring and reporting economic information to the users of thisinformation to permit informed judgmentMany businesses carry out transactions. Some of these transactions havea financial implication i.e. either cash is received or paid out.Examples of these transactions … Read more

AGENCY THEORY NOTES Agency refers to the relationship which submits between two parties, oneparty called the principal engages another one called agent and givesagent authority and mandate to act on the principal’s benefit. Theactions of agent are binding on the principal. In finance, stockholdersare owners of the firm and are therefore the principal. However, theyare … Read more

THE FINANCIAL SYSTEM IN PERSPECTIVE NOTES 3.0 IntroductionSaunders and Cornett (2001) define financial markets as structuresthrough which funds flow. This definition off course encompasses bothfinancial institutions (FIs) and capital markets as structures throughwhich funds flow. Financial markets can be distinguished along two majordimensions primary marketsThis are markets in which users (firms) rise funds through new … Read more

SOURCES OF COMPANY FINANCE 2.0 IntroductionCompanies have different alternatives for obtaining funds that is usedto finance investment project. They can issue debt or equity securitiesto archive this goal. Some times lease is also used as an alternativefor long term financing. The source of finance has an implication oncost of funds. To this end this chapter … Read more

Financial Management NOTES 1.0 IntroductionFinancial management is that managerial activity which is concerned withthe planning and controlling of the firm’s financial resourcesIt involves the decision of the three decisions of the firm i.e. Together they determine the value of the firm to its shareholders. Thefinance manager makes use of certain analytical tools in the analysis,planning … Read more

FINANCIAL STATEMENT ANALYSIS NOTES 4.0 Financial Analysis Financial analysis is a process by which an accountant or financemanager or any other interested party identifies the financial strengthor position of a company by comparing the relationship between items inthe balance sheet and those in the profit and loss account. Thusfinancial analysis is of paramount importance to … Read more

COST OF CAPITAL (BASIC EVALUATION MODELS) NOTES 6.0 IntroductionOne of the key components of capital budgeting decision is the cost ofcapital. Capital is the term for fund that firm uses. Capital can beraised from creditors and owners. To properly evaluate potentialinvestment firms must know how much their capital cost. The cost ofcapital is the compensation … Read more

CAPITAL BUDGETING (PROJECT APPRAISAL) NOTES 5.0 IntroductionAny prudent financial manager will be concerned as to how efficiently hecan allocate funds at his disposal to various ventures available in theinvestment market. to a company , investment should be a continuousprocess if it is to survive in the future. it is important because itaffects ; The most … Read more

RESOURCE NEEDS FOR ENTREPRENEURSHIP NOTES In this lecture we shall discuss the sources of business finance whichinclude equity finance, debt finance – loan, bills of exchange.,factoring ,trade debtors ,accrued expenses ,credit card buying (plasticmoney) ,debenture finance, invoice discounting (confidential factoring),factoring ,sale and lease –back ,sale of an asset, and purchase. General objectivesBy the end of … Read more

ORGANIZATIONAL FORMS NOTES In this lecture we shall discuss the various forms of businessorganizations including sole proprietorship, partnership, companies,public corporations, parastatal bodies and co-operative societies. General ObjectivesBy the of the course the learner should be able to identify and explainvarious legal forms of businesses available in Kenya At the end of thislecture you should be … Read more

MARKETING REQUIREMENTS ASSESSING AND SELECTING A SUITABLE MARKET NOTES Marketing Functions and strategies Marketing consists of a multitude activities that include decisionsabout the company’s The ultimate equal is to facilitate exchange between an enterprise andits customers. This exchange relationship exists as one party becomeswilling to give something of value in order to receive something ofvalue. … Read more

EVALUATING ENTREPRENEURIAL OPPORTUNITIES NOTES 2.1 Procedures of Starting a Business 2.1.1 Means of Generating a Business Idea 2.1.2 Identifying a NeedA need can be an opportunity and indeed a consumer buys to satisfy need. Abraham Maslow in his humanistic hierarchy of needs, physical needs to very high personalized needs. Therefore identifying an unidentified or unserved … Read more

CURRENT ISSUES IN ENTERPRENEUSHIP NOTES Business Ethics Sources of Moral Principles Doctrines: primarily religion & politics that have there over yearssince the beginning of the history e.g Value and normsValues and norms of a given society are related to religious tendencies,customs and traditions that vary from society to society. Code and standardsCodes and standards formulated … Read more

BUSINESS PLAN DEVELOPMENT NOTES Planning for the Business Venture Planning is a predetermine cause of action. It is a statement outliningan organizational mission and future direction, short and long termperformance, targets and strategies. Planning as a formal documentcontain a mission statement description of the firm’s goods andservices, a market analysis, financial projectionsand description of management … Read more

ATTRIBUTES OF ENTREPRENEURS AND ENTREPRENEURIAL CAREERS NOTES Definition of Entrepreneurship and Entrepreneurs Definition an entrepreneur An entrepreneur is basically a person who identifies a businessopportunity, harshness and obtains the resources necessary to initiate asuccessful basis activity. The entrepreneur implements the ideaUndertakes to operate the business An entrepreneur is therefore acentral key individual in the society … Read more

What is Statistics? The word ‘statistics’ is defined by Croxton and Cowden as follows:- “The collection, presentation, analysis and interpretation of thenumerical data.”This definition clearly points out four stages in a statisticalinvestigation, namely: In addition to this, one more stage i.e. organization of data is suggested What is Business Statistics? It is the science of … Read more