session 5: finance 101

Session 5: Finance 101
The accounting basics, financial statements made easy

Randy Helm from Servus Credit Union came by and spoke about small business finance.

A great website to check out for business financing/ loans through the government is www.strategis.ic.gc.ca. Look for the Canada small business financing program link on the right hand side of the page. Find out how and where to apply for a CSBF loan. Eligible small businesses for the CSBF program.

3 types of banks in Alberta.
1. Chartered banks, banks like TD, CIBC, big banks. Goal is to satisfy majority share holders.
2. ATB Financial- Government owned, positioned in small communities throughout the province, (Taber, Picture Butte, Magrath) Grassroots.
3. Credit Union- Co-op principles, profit sharing,

Register at a corporate registry for your company name.

Better to go with a corporation right off the bat than do a joint partnership because of the security you can get through legal protections.

CRAIG-
Craig first explained the three basic accounting terms, what they mean/stand for when broken down.
ASSETS
• Something of value. –property owned, or a building
• Current asset (cash, car)
• Accounts receivable –money owed by Ex: renters,
• Inventory –items in store, stock on shelves, already purchased
• Prepaids?- Having already paid for car insurance, or rent, or a car payment before it was due.

LIABILITY
• Debt owed- anything, bills, money owed that needs to be paid
• Current liabilities- phone bill, internet bill, etc..
• Accounts payable- similar to current liabilities, money owed
• Long term liabilities-

EQUITY
• The worth- overall worth of the company.
• Original money invested
• Plus any profits
• Not cash!!


PRACTICE

DOUBLE ENTRY SYSTEM
Asset = liabilities + equity
• ALWAYS two entries (at least)
• Keep the equation balanced



Investing $$ = Financing $$

Investing $$ = DEBT + EQUITY

Stuff = Owe + own

Asset = liabilities + equity



Amortization = depreciation on equity/inventory over time. Ex: A computer that costs $1000 dollars in 1998 doesn’t cost $1000 in 2010.

Assets = Liabilities + (plus) Owners Equity
Capital – (minus) Withdrawals + Revenue – (minus) Expenses

Assets= L + (C-W + R-E)

The main thing to remember about this equation is the double entry system. You must always keep the equation balanced on both sides of the equal sign.