You Are an Entrepreneur - Assignment Example

? Assignment 2: You Are an Entrepreneur! Table of Contents Table of Contents 2 Answer 3 Answer 2. 6 Answer 3. 7 Answer 4. 8 Answer 5. 9 Answer 6. 10 References 11 Answer 1. a. Photography has been an area of great personal interest since my childhood. Apart from my studies, photography was my hobby and I practiced it in my idle times and in holidays. At this point of time, I consider turning my hobby into an official interest since it is a known fact that a person can be a success in field in which he has love and passion and wills to do the job with his acute interest and efficiency. Thus, I decide to start a business of photography in which I shall be the sole proprietor. Photography is a service offered to the client who are interested and require it. For starting the business at first I need to obtain a business license from the state and local authority so as to operate my photography business. Secondly I need to design a logo that will help to showcase my work and will represent me. Thirdly, I need to develop a photography business site of my own which will carry my photographs’. It will act as a link to reach various clients residing in different places of the state. For full marketing of my work, business cards are also required along with the photography business site. Next I shall approach for a rented flat where I shall open the studio. I have to also purchase and arrange for the different equipments that are required for starting photography as a business. The equipments will be camera, lens, computer, editing software, lightning devices, tripod stand, and sundry equipment. I will also have to employ 2 persons who will help me in my business operations. b. The photography business undertaken by me would be a sole proprietorship business. A photography business may operate in several forms, such as, working at weddings, a portrait studio, freelancing for media outlets, taking photos for children’s and individuals who want the service for their personal requirement, and making gallery of quality photographs. The line of business is an area of personal interest and an area which have been my hobby from all the past years till date. The business will allow me to apply my own thoughts and perceptions with which I shall be able to make it more prosperous. I shall be able to instill my ideas into my works which in the coming future would help me to gain a handful of revenue and I expect to attain success in the competitive market with the help of it along with my hard work. c. The chart of accounts as per the proposed business is- Note: The costs for all the above items have been assumed as per the market. License is required for starting any business and is to be obtained from the state and the local authorities. Preparation of logo design, photography business website and business card is required for creating an image and marketing the business which I am going to enter. As a flat is to be taken in rent so rent is to be paid which would act as a recurring expenditure for the business. So as to build a studio and an office, interior decoration is required which would attract clients. Choosing the right camera is an important part for starting the business. I shall choose a camera of Cannon 60D and 18-55mm which will be able to meet the requirements of the business. The camera is a digital single lens reflex camera (DSLR) that is used by the professionals. The camera supports interchangeable lenses so as to use as per the type of work that is to be performed. At the initial stage of starting the business I shall buy only one extra lens, i.e. lens of 50mm 1.4. Considering the financial constraint it was decided that other lens as per requirement will be either taken in rent or purchased based on the revenue earned from business. The other accessories required for staring a photography business apart from camera are Lightning, Tripod, Sundry Equipment, Calibration, computer and processing and editing software. Table and chairs is required for meeting the office purpose. Photography business at times requires the availability of artificial lightning to be present in the studio. A tripod stand is required to keep the camera steady. Sundry Equipment is an equipment which serves the purpose of a remote control during timed exposures to trigger the shutter without causing the camera to shake. A good computer, editing software and calibration is required for the business. Editing software for editing the photos taken is required to be installed in the computer. Calibration allows the photographer to get a better image of the photo after the image has been printed. Some amount of cash is to be maintained in hand so as to begin a business. The resources required for meeting the requirements will be obtained by taking loan from father, relatives and private loan. Some amount of capital is also to be instilled into the business by the proprietor (i.e. me). Banks are not approached for the purpose of loan because banks might not be ready to loan a small sole-proprietorship business with a small capital, without having a definite view on the revenue that would be earned from the business. Private loan can be obtained since it carries a greater percentage of interest than bank’s charge. Answer 2. The business of photography would be a sole proprietorship business. For the purpose of business accounting methods it is decided to use International Financial Reporting Standards (IFRS). The principles of IFRS would be used in the accounting perspective of the business. As per the IFRS, the financial statements of the business shall include a statement of financial position showing the assets and liabilities at the reporting date, a statement of income for the period displaying all items of income and expenses for the period, and notes that will comprise a summary of significant accounting policies and other explanatory information. The notes shall disclose the domicile and legal form of the business, and the nature of operations and activities that the business would undertake. The financial statements must include the name of the business, the reporting date and period, and the reporting currency. Changes in accounting policies is required in a business only if changes results in financial statements that would provide a more reliable and relevant information about the financial position of the business, the effect of transactions and financial performance of the business. The changes can be incorporated in the income statement by changing the nature of analysis of the expenses. A change from presenting a single statement of income and retained earnings to a separate statement can also be incorporated. Answer 3. Note: The values for all the above items have been assumed as per the market. Answer 4. Protecting the assets of the business is a major responsibility to the owner of the business since it determines the value of the business as well as its prospects. Development of internal control leads to minimization of possibility of errors and fraud. One way to implement internal control on the assets and resources of my business is by keeping a proper check on the accounts and transactions of the business. It will increase internal expertise in financial accounting thereby reducing the risks of misstatement in financial information. On maintaining a proper check the proprietor will be able to track the transaction the business have entered within the period, thereby regulating the profits arising from business. Another way to implement internal control is by creating the provision of depreciation on the assets of the business. As per the line of business, it can be said that the assets are the prime revenue earning resource to the business apart from the human capital that will use the assets. So maintenance and proper control of assets is important for the benefit, growth and prospects of the business. Answer 5. The way by which I shall use the recommended internal control measures in the business are- Maintaining a proper check on the accounts and transactions of the business can be materialized by the help of the following- All the financial aspects involved in all the transactions must be directly under my supervision. All the transactions must be accounted properly and accurately. Any bank transaction must be immediately recorded in the books on accounts inspite of waiting for the arrival of the bank statement. Bank reconciliation statement is to be prepared for each month. A proper record of all the orders and contracts needs to be maintained. The different activities performed in the business must be under my direct supervision and as per my decision. I shall keep a notice that assets of the business are properly depreciated in the books of accounts by the accountant who is to be employed in my business. The depreciation is to be maintained as per the standards of IFRS which is being followed for maintaining the accounting methods of the business. I must have knowledge about the depreciation policies in IFRS, so that I may guide the accountant in this respect and be able to prevent any mistakes. Answer 6. My business of photography will be a sole proprietorship business. So the concept and aspects of corporate governance will not affect my business. My business will be solely under my control and all the actions will be affected as per my perceptions and decisions. My business will be affected by only the policies and regulations of the government of US and the guidelines and provisions of IFRS. The US government has set some regulations so as to protect the environment and hold owners responsible for the amount of power they have in the business. As per the US government norms, the advertisement and marketing procedures used by me for my business must be true and fair, and I must be honest in my services with no intention to betray my clients. My services and advertisements must be true to me activities. My employees must be satisfied under my guidance and I should try to be a good leader. I must maintain the privacy of my business, and environmental compliance. References American Institute of Certified Public Accountants (AICPA). (2007). The Importance of Internal Controls in Financial Reporting Safeguarding Plan Assets. Retrieved from: . International Accounting Standards Board (IASB). (2013). IFRS for SMEs. Retrieved from:: . sdibt.edu.cn. (2011). Introduction to Financial Statements and Other Financial Reporting Topics. Retrieved from: . TMM Real Estate Development Plc. (2007). Pro-forma Consolidated Financial Statements 31 December 2006. Retrieved from: . Read More