A Greek restaurant owner in Canada had his own system of accounting. He kept his account payable in a cigar box on the left-hand side of his cash register, his daily cash returns in the cash register, and his receipts for paid bills in another cigar box on the right. A truly “manual” system.

When his youngest son  graduated as an accountant, he was appalled by his father’s primitive methods. “I don”t know how you can run a business that way,” he said “How do you know what your profits are ?”

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The operations of a manufacturing business involve the purchase of raw materials (purchasing activity), the conversion of the raw materials into product through the use of the products to customers (sales activity). This overall process is referred to as the operating cycle. Thus, the operating cycle begins with spending cash and it ends with receiving cash from customers. The operating cycle for a manufacturing business is shown below.

Operating cycle differ, depending upon the nature of the business and its operations. For example, the operating cycle of tobacco, distillery and lumber industries are much longer than the operating cycle of the auto mobile, consumer electronics and home furnishing industries. Likewise the operating cycles for retailers are usually shorter than for manufacturers because retailers purchase goods in a form ready for sale to the customer. Of course, some retailers will have shorter operating cycles than others because of the nature of their products. For example, a jewelry store or an automobile dealer normally has a longer operating cycle than a consumer electronics store or a grocery store.

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Financial statements prepared under accounting practices in other countries often differ from those prepaid under generally accepted accounting principles found in the United States. This is to be expected, since cultures and market structures differ from country to country.

To illustrate, BMW Group prepares its financial statements under German law and German accounting principles. In doing so, BMW’s balance sheet reports fixed assets first, followed by current assets. Its also reports owner’s equity before the liabilities. In contrast, balance sheet prepared under U.S. accounting principles report current assets followed by fixed assets and current liabilities followed by longterm liabilities and owner’s equity.

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The business environment is a dynamic one in which there is constant change, with challenges and opportunities. The current technology revolution affects all businesses.

Computer and telecommunication technologies affect the production, storage, and use of information by businesses. Many businesses have developed web sites for use in marketing products and services, and for communicating with stakeholders. New software application range from accounting software that provides updated accounting information to business simulation software capable of gauging the impact of alternative business decisions on operations.

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What are characteristics of entrepreneurs who successfully start and manage a new business ?

It goes without saying that an entrepreneur must have a thorough technical knowledge of the business. For example, a successful computer consultant must have a thorough knowledge of computers. Entrepreneurs must also have basic management skills, such as the ability to organize and interact with others.

Terms that are often used to describe entrepreneurs and examples of some well-known entrepreneurs and their companies are listed below.

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