Generally Accepted Accounting Principles
Business Management
GAAP stands for generally accepted accounting principles.
Generally accepted accounting principles are rules and standards for
reporting financial information. These rules and standards are
established and approved by the financial accounting standards board
(Bragg, 2004). These standards and rules are commonly used to
prepare and standardize the reporting of financial statements. The
financial statements which should adhere to GAAP include cash flow
statements, income statements and balance sheets. GAAP rules must
uphold consistency, reliability, comparability and relevance principles.
Consistency here means that all financial information is
supposed to be collected and presented the same within all periods.
Relevance means that information reported in the financial statements
should be perfect so that it can help a person evaluating the report to
make sound decisions regarding the future of the financial state of the
company he may be interested in. Reliability means that information
presented is sensible and can be verified by an independent party.
Comparability means that company financial statements and other
documentation are comparable to similar businesses that are within its
area of trading.
Generally accepted accounting principles ensure that all
companies are treated the same and the financial information they
offer is relevant, consistent, comparable and reliable. GAAP is usually
implemented through two principles namely disclosure and
measurement principles. Disclosure principles are used to determine
the specific values and other information which is essential to be
presented in financial statements. Measurement principles are used to
recognize and establish the way and timing of items that enter the
accounting cycle and effect the financial statements. GAAP is very
crucial to investors and creditors because without it, they will never
know the correct financial information of the companies they are
interested in, since these will companies will be free to decide on what
to depend. Companies will end up painting their report thus misleading
the investors and creditors.
Business management and entrepreneurship are improving
rapidly nowadays and one of the main roles is improving with it also,
which is the line manager. The role of line manager became very
important in the structure of the business entity, because it is the
shortest way for executive or non-executive directors to communicate
with their employees and line manager helps in this situation a lot.
Line manager appeared from the business term “Line Management”
and its aim was to administrate all activities which are hold in the
company and try to maximize level of service providing and output of
products. In the real life line manager normally in charge of activities
and labor’s output or it is responsible for a specific product line, for
example, tea production and he cannot make any alterations in
production of coffee, because normally it will have its own line
manager who is responsible for this product line. The functions of the
line manager may increase and interfere with other management line to
increase the success of an entity. For example, co-operation of line
manager with human resource manager, finance manager or even with
manager who is responsible for risk taking can help to the business to
succeed and meet required goals. However, line manager cannot
function with other managers, if he or she was not asked for it, so the
individuals above the line manager are responsible to allow him or her
to interfere with other managers or not.
 Financial Accounting
Financial accounting and reporting are means to provide
information. If information is to be useful, there must be uncertainty
that can possibly be resolved by such information. To understand why
accounting is useful at all, analyzing accounting information in the
context of certainty would be clearly inappropriate. An information
system provides signals that alter the likelihood of the occurrence of
future events or states of the world that are part of a decision problem.
A decision problem is characterized by states of the world, their
probabilities, actions the decision-maker can choose, results of state-
action combinations, and the utilities the decision-maker receives from
such results. The usefulness of information can only be assessed in the
context of a particular decision problem. Thus, the same information
system may be useful in one context but not in another. General-
purpose financial accounting and reporting is designed primarily to
provide information to people outside the firm, such as investors,
creditors, and customers (Hopwood, Leuz & Pfaff 2004).
These parties are presumably interested in that information and
rely on it for their own decision-making. The firm prepares the
accounting information, and hence is better informed than the users.
Further, some potential users of information have conflicts of interest
with the firm. The information asymmetry generates concerns because
it is not necessarily in the firm’s best interest to provide the
information at all, or to provide it in an unbiased fashion. It is in such a
context that disclosure and earnings management issues arise.
Introducing an auditor as another player with asymmetric information
and potential conflicting interests adds another layer of incentive issue
to be considered. However, there are several features of financial
accounting systems that make them peculiar information systems
(Hopwood, Leuz & Pfaff 2004).
Managing a Family Business
A consistent finding about family business systems—the
business, its owners, and the family in control—is that strong, long-
term business performance also requires strong performance by the
family and by the ownership group. You can't keep a family business
performing well over many years just focusing on the business. Family
unity, united ownership and ownership support of the business are just
too important to ignore or take for granted.
We also know that strong performance of the business, the
ownership group, and the family depends on the effective leadership of
each group. This shouldn't be surprising: good performance of any
group always depends, to a surprising extent, on capable leaders. If
boards of directors of public, anonymously-owned companies didn't
believe that leadership mattered so much, they wouldn't pay such huge
salaries to their CEOs. (By the way, I don't think they are worth that
much, but the point is: having the right leader does matter.)
Because there is not only a business, but also an ownership
group and a family that need capable leadership, a family business
system is much more complicated than other kinds of business
organizations. Leading these systems is also much more complicated.

Business Ethics
Business ethics (also known as Corporate ethics) is a form of
applied ethics or professional ethics that examines ethical principles
and moral or ethical problems that arise in a business environment. It
applies to all aspects of business conduct and is relevant to the conduct
of individuals and business organizations as a whole. Most people
agree that high ethical standards require both businesses and
individuals to conform to sound moral principles. However, some
special aspects must be considered when applying ethics to business.
To survive, businesses must make a profit. If profits are realized by
misconduct then the life of the business may be short lived. The
business must balance their desires for profits against the needs and
desires of society. Maintaining this balance can be difficult. To help
with this, society has developed rules – both legal and implicit – to
guide the business in their efforts to earn profits in ways that will not
harm individuals or society as a whole. (Ferrell, Fraedrich, Ferrell,
2002.)
One difference between an ordinary decision and an ethical one
lies in “the point where the accepted rules no longer serve, and the
decision maker is faced with the responsibility for weighing values and
reaching a judgement in a situation which is not quite the same as any
he or she faced before”. (Ferrell, Fraedrich, 1994) Ethics is not simply
a glorified intellectual game, of no practical relevance. We become
moral individuals by practice; good at being truthful by habitually
telling the truth; becoming honest by trying always not to be dishonest.
There is nothing abstract about business ethics. It is simply another
tool to help the practical business man or woman deal with the
endlessly recurring moral dilemmas of business life. There is a
connection between our perception of the world and the way in which
we make decisions in the world. If managers believe that they are and
ought to be rational egoists, concerned only with maximizing profit,
they will take the decisions accordingly. If, on the other hand, they are
aware of moral theories and social policies that affect their own
societies and the wider world, then they will be likely to make rather
different and more sophisticated judgements, (Vallance, 1995).
The Importance of Personal Finance
The primary reason many students suffer financially throughout their
college years is that they are often impulsive, mostly due to being young and
relatively inexperienced in living on their own. Most students do not fully
understand the true extent of expense when living solo, often leading them to
put less value on money for necessity rather than amenities. A lack of
inhibition is to be expected to some extent, and there’s not much that can be
done about it outside of life experience itself. Personal financing is an
excellent alternative, due to its inherent nature of bringing money to the
forefront of the student mind. The first step to solving any one problem, in
this case, a student’s lack of awareness or experience on an issue, is to make
the issue obvious so that it can be studied and accounted for. In this light,
personal finance is important to students simply so that they may realize just
how vital financial management is when living on your own.
Naturally, personal finance serves a very important functional
purpose for students as well. Once the need for personal finance makes itself
obvious, that usually equates to budgeting. Budgeting one’s finances is one
of the most effective ways of countering the impulsiveness of youth,
primarily by not condemning it outright. Being able to spend money on
things one does not need but does enjoy shouldn’t be criticized, so long as it
is done in moderation and secondary to necessities, which budgeting helps
facilitate. By taking the time to partition one’s resources according to their
needs, not only does a student learn the details of their living expenses, but
they ensure that they can be met. Furthermore, this partitioning of money lets
the student know exactly how much they have left over to satisfy their
secondary wants following their primary needs. In this way, personal finance,
and the budgeting it entails accounts for a student’s needs but does not
punish them for also satisfying their wants, within reason. Not only does this
lead to greater financial stability for them, but it helps keep them content as
well.
Finally, and perhaps most importantly, personal finance helps
facilitate fiscal responsibility in students that have, for the most part, been
able to rely on the financial abilities of their parents throughout most of their
lives. There is much to learn about the financial world, especially once you
are living on your own.
 Organizational Management
Organizational management is a management activity that aims
to fulfill the company’s goal by handling adequately all the processes
and resources available. It is a discipline whose main objective is to
plan, organize and execute activities that achieve the company’s pre-
established aspirations.
Organizational management is a concept wide enough to cover
an entire organization. It is also an activity that is normally carried by
senior executives, that have a broad knowledge and influence
throughout the entire organization. This activity is frequently guided
by a set of goals that must be achieved in order to fulfill the company’s
long-term vision. By managing all the available resources properly, the
administrators can guide the company towards these goals.
These resources include financial resources, staff, facilities,
business relationships, knowledge, processes and techniques that are
part of the company’s assets, either tangible or intangible. Most
academics agree that organizational management deals with four main
stages: planning, organizing, leading and controlling. Planning and
organizing refers to all activities carried as preparation for what will be
done. Leading is executing the plans through the previously organized
resources and controlling means to evaluate results obtained and adjust
accordingly.
Taxation
Taxation is a term for when a taxing authority, usually a
government, levies or imposes a tax. The term "taxation" applies to all
types of involuntary levies, from income to capital gains to estate
taxes. Taxation is differentiated from other forms of payment, such as
market exchanges, in that taxation does not require consent and is not
directly tied to any services rendered.
The government compels taxation through an implicit or
explicit threat of force. Taxation is legally different than extortion or a
protection racket because the imposing institution is a government, not
private actors. The most basic function of taxation is to fund
government expenditures. Varying justifications and explanations for
taxes have been offered throughout history. Early taxes were used to
support ruling classes, raise armies and build defenses. Often, the
authority to tax stemmed from divine or supranational right.
Later justifications have been offered across utilitarian,
economic or moral considerations. Proponents of progressive levels of
taxation on high-income earners argue that taxes encourage a more
equitable society. Higher taxes on specific products and services, such
as tobacco or gasoline, have been justified as a deterrent on
consumption. Advocates of public goods theory argue taxes may be
necessary in instances in which the private provision of public goods is
considered sub optimal, such as with lighthouses or national defense.
 Examining the Advantages and
Disadvantages of Incorporating a Business
In 1819, Chief Justice Marshall of the United States Supreme
court said: “A corporation is an artificial being, invisible, intangible,
and existing only in contemplation of the law.” In the Webster’s
College Dictionary corporation is defined as “an association of
individuals, created by law and having an existence apart from that of
its members as well as distinct and inherent powers and liabilities.” A
corporation is divided into many units called shares of stock. The
owners of the stock are called stockholders or shareholders. One of the
advantages of incorporating a business is that because a corporation
has a legal existence, shares can be sold at any time without affecting
the operations of the corporation. Also, shares can be bought at any
time. Another big advantage of incorporating a business is that
corporation have limited liabilities. This means that the corporation is
responsible for its own acts and obligations under the law. This
characteristic protects the stockholders of the corporation because the
only financial loss that they may suffer is limited to the amount
invested. Also, the creditors of the corporation cannot go beyond the
assets of the corporation to satisfy their claims. The stockholders or the
shareholders are the ones who have control over the management of a
corporation’s operation and activities. They are the ones who elect the
board of directors, and the board of directors are responsible to the
stockholders. Also, the board of directors are responsible for the
management of the day-to-day operation of the corporation. They also
decide when and how much of their income to give to the stockholders
or shareholders. Another characteristic that can be an advantage of
incorporating a business is that corporations may be organized for
nonprofit organizations such as colleges, hospitals, and others
humanitarian purposes. However, most of the corporations are
organized to earn a profit for stockholders. The biggest disadvantage
of a corporation is that corporations are subject to taxes. Corporations
are not like proprietorship and partnership forms of organization; they
must pay federal income taxes. Also, stockholders must pay income
taxes on any dividends distributed to them.
Efficiency and Effectiveness in
Management
Efficiency in a company or organization is the ability to
produce using the least input. The input may be in the form of energy,
money, time, and other various raw materials in a company. The
produce is referred to as the output. Therefore, efficiency is fully
described as, the ability to maximize output with less amount of input.
With efficiency, a company is expected to use the limited resources to
maximize their production. Efficiency ensures that the output is
achieved in the best and cheapest way.
Efficiency dictates that an operation in an organization must be
done in a precise manner. The staff in an organization must spend the
least time doing their duties knowing that time is a limited resource.
An individual in managerial posts must ensure that communication in
an organization takes the shortest and most direct way to the intended
people. Also, the manner of documentation in an organization must be
well chosen to save time in case someone wants to refer to a particular
document.
Effectiveness refers to a long-term assessment of how
something is successful in providing the result. The result might not be
the exact wanted results, but its closeness to wanted result can be taken
as a success. From the results, the personnel responsible can know
whether the means they used in their production is sufficient enough to
be employed in the future.
Effectiveness deals with strategy formation. In attempts to
improve productivity in a company, the long-term results must be
monitored and new methods of production formulated. The
development of new strategies helps in making a company have an
advantage over other competitors. Customers or clients’ preferences
changes with time, and therefore, to keep your first customers plus
new customers, a company must satisfy them effectively. Research
must be conducted to know what exactly the customers expect and
want.