Financial Accounting
Principles
Statistics & Risk
Management
Copyright © Texas Education Agency, 2012. All rights reserved.
1
“Copyright and Terms of Service
Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as
the property of the Texas Education Agency and may not be reproduced without the express written permission of the
Texas Education Agency, except under the following conditions:
1) Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of
the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission
from the Texas Education Agency;
2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual
personal use only without obtaining written permission of the Texas Education Agency;
3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any
way;
4) No monetary charge can be made for the reproduced materials or any document containing them; however, a
reasonable charge to cover only the cost of reproduction and distribution may be charged.
Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any
entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain
written approval from the Texas Education Agency and will be required to enter into a license agreement that may
involve the payment of a licensing fee or a royalty fee.
Call TEA Copyrights with any questions you have.
Copyright © Texas Education Agency, 2012. All rights reserved.
2
Sole Proprietor vs. Corp
 Sole Proprietor or “S” Corp
– Taxed as earned whether taken as
wages or NOT (retained).
– Unlimited Liability
 Corporation (“C” type)
– Earnings Taxed at Corporate Rate.
– Limited Liability (Maybe)
– Easy Capitalization (Sometimes)
Copyright © Texas Education Agency, 2012. All rights reserved.
3
Public Vs. Private
 Public
– Board of Directors
– Extensive Regulations
• Sarbanes–Oxley Act of 2002
 Private
– Less Accountability
– Easier to Pierce the Liability Veil
http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act
Copyright © Texas Education Agency, 2012. All rights reserved.
4
Non-Profit Vs. Profit
 Some Serious Tax Advantages
– Salaries can still be BIG.
– No Dividends Paid Out.
– Can still Service Loans
Copyright © Texas Education Agency, 2012. All rights reserved.
5
Risk Management
• Employs objective analysis
methodologies including Descriptive
and Inferential Statistics to identify
opportunities and reduce monetary
risks.
Copyright © Texas Education Agency, 2012. All rights reserved.
6
Raw Data is Meaningless
 Categorizing/Measuring Data
– Nominal (Gender)
– Ordinal (Zip Codes)
– Interval (Sales by Year)
– Ratio (Profit 0 to unlimited)
Copyright © Texas Education Agency, 2012. All rights reserved.
7
Summing the Data
 Sum Up Total Sales
 Sum Up Total Expenses
 Sum Up Totals Assets
 Sum Up Totals Loans
 Sum Up Total Investments
Copyright © Texas Education Agency, 2012. All rights reserved.
8
Compare Data Over Time
 Income This Month
 Over Last Month
 Same Period Last Year
Copyright © Texas Education Agency, 2012. All rights reserved.
9
Organize Data by Category
 Breakout Revenue
– Product Sales
– Service Sales
– Interests
– Other Revenue
Copyright © Texas Education Agency, 2012. All rights reserved.
10
Organize Data by Category
 Breakout Expenses
– Payroll
– Taxes
– Utilities
– Insurance
– Bad Debt
Copyright © Texas Education Agency, 2012. All rights reserved.
11
Compare Data to Population
 Your Sales/Expense Data
– To your Local Competition
– To the Industry
– To the Economy
Copyright © Texas Education Agency, 2012. All rights reserved.
12
Extended Data Calculations
 Gross Profit
 Net Profit
 Percentages (Sales/Gross)
 Ratios (Acid Test)
Copyright © Texas Education Agency, 2012. All rights reserved.
13