Financial Management Exam Notes:
Title: Page Number:
Chapter: 1 2
Chapter: 2 7
Chapter: 3 9
Chapter: 5 10
Chapter: 7 11
Chapter: 9 13
Chapter: 10 17
Chapter: 11 19
Chapter: 12 21
Chapter: 13 22
Chapter: 15 24
Chapter: 16 25
Glossary: 28
Chapter One: Intro to accounting:
1|Page
,Accounting is concerned with gathering, analysing, recording, reporting +
interpreting of financial info that will be used during decision making.
Elements of accounting:
Gathering: Bringing together all relevant info.
Analysing: Determining how the info impacts the business.
Recording: Inputting the info in the appropriate accounting process.
Reporting: Summarising of financial info for it to be used.
Interpreting: Preparing an analysis of info to allow for decision-
making.
G.A.R.R.I.
Internal Users:
Owners.
Managers.
Employees + Representatives.
External Users:
Customers.
Competitors.
Lenders.
Government.
Suppliers.
Main Purpose of Accounting: Is to provide users with financial info that
will assist them in making informed decisions.
Stakeholder: A person, group, organisation/ member that can impact or
can be impacted by the company.
Forms of business ownership:
Sole Trader.
Partnership.
Close Corporation (CC).
Company Private or Public.
Sole Trader Owner:
2|Page
, Single owner, supplied all capital to start the business.
No legal formalities expect license to trade.
Taxed on personal grounds.
Business is NOT a distinct legal entity.
Advantages:
Easy to start.
Owner is independent.
Flexibility in decision- making.
Disadvantages:
Limited access to capital.
May not have all required skills.
Lack of continuity of operations.
Partnership Partners:
Legal relationship between 2-20 people.
Purpose to carry a business to make a profit.
Each partners profit is taxed on personal grounds
Advantages:
More partners = More capital.
Can contribute skills.
Easier to expand business as a result.
Disadvantages:
Jointly + Severally liable.
Ownership of each partner not easily transferrable. (New
partnership must be formed.)
Still limited expansion due to limited access to funds.
Close Corporation Members:
Legal entity unique to SA.
Not possible to register new CCs.
1-10 members.
Taxed in its own hands at company’s tax rate.
Advantages:
Limited liability.
Personal liability only under certain breaches.
No audit requirement by law.
CC may own shares in other companies.
Disadvantages:
10 Members max.
3|Page
Title: Page Number:
Chapter: 1 2
Chapter: 2 7
Chapter: 3 9
Chapter: 5 10
Chapter: 7 11
Chapter: 9 13
Chapter: 10 17
Chapter: 11 19
Chapter: 12 21
Chapter: 13 22
Chapter: 15 24
Chapter: 16 25
Glossary: 28
Chapter One: Intro to accounting:
1|Page
,Accounting is concerned with gathering, analysing, recording, reporting +
interpreting of financial info that will be used during decision making.
Elements of accounting:
Gathering: Bringing together all relevant info.
Analysing: Determining how the info impacts the business.
Recording: Inputting the info in the appropriate accounting process.
Reporting: Summarising of financial info for it to be used.
Interpreting: Preparing an analysis of info to allow for decision-
making.
G.A.R.R.I.
Internal Users:
Owners.
Managers.
Employees + Representatives.
External Users:
Customers.
Competitors.
Lenders.
Government.
Suppliers.
Main Purpose of Accounting: Is to provide users with financial info that
will assist them in making informed decisions.
Stakeholder: A person, group, organisation/ member that can impact or
can be impacted by the company.
Forms of business ownership:
Sole Trader.
Partnership.
Close Corporation (CC).
Company Private or Public.
Sole Trader Owner:
2|Page
, Single owner, supplied all capital to start the business.
No legal formalities expect license to trade.
Taxed on personal grounds.
Business is NOT a distinct legal entity.
Advantages:
Easy to start.
Owner is independent.
Flexibility in decision- making.
Disadvantages:
Limited access to capital.
May not have all required skills.
Lack of continuity of operations.
Partnership Partners:
Legal relationship between 2-20 people.
Purpose to carry a business to make a profit.
Each partners profit is taxed on personal grounds
Advantages:
More partners = More capital.
Can contribute skills.
Easier to expand business as a result.
Disadvantages:
Jointly + Severally liable.
Ownership of each partner not easily transferrable. (New
partnership must be formed.)
Still limited expansion due to limited access to funds.
Close Corporation Members:
Legal entity unique to SA.
Not possible to register new CCs.
1-10 members.
Taxed in its own hands at company’s tax rate.
Advantages:
Limited liability.
Personal liability only under certain breaches.
No audit requirement by law.
CC may own shares in other companies.
Disadvantages:
10 Members max.
3|Page
