Business Fundamentals: Assets, Financial Statements, and Controls

Posted on Jun 28, 2025 in Business Administration and Innovation Management

Unit 5: Understanding Business Assets

Tangible Assets

A tangible asset has a physical form, meaning it can be seen and touched. Examples include machinery, buildings, land, and vehicles. Current tangible assets include cash and merchandise.

Intangible Assets

An intangible asset is, by nature, non-physical. Examples include patent rights, goodwill, and trade secrets. While not physical objects, they are highly valuable to a business.

Types of Intangible Assets:

  • Legal Intangibles: Protected by law, such as patents, copyrights, and trademarks.
  • Competitive Intangibles: Often centered around a company’s goodwill, which includes valuable factors like reputation, popularity, or business location.

Duration of Intangible Assets

Not all intangible assets last forever. For example, patents and copyrights have expiration dates, while others, like goodwill, may have no time limit.

Key Asset Terminology

  • Trade Secret (Secreto Comercial): Knowledge such as recipes or designs.
  • Patent Right (Derechos de Patente): The legal protection of an idea or invention (e.g., Google, Movistar, Adidas).
  • Goodwill (Reputación): Represents a company’s reputation, popularity, and location.
  • Copyright: The legal protection of written materials (e.g., translations, adaptations, music).
  • Amortization: The gradual reduction of the value of an asset.

Unit 6: Profit & Loss Statement Essentials

Key Terms in Profit & Loss Statements

  • Supplier (Proveedor): A provider of goods or services.
  • EBIT (Earnings Before Interest and Tax): Ganancia antes de intereses e impuestos.
  • Operating Earnings (Ganancias Operacionales): The money retained after fixed and variable expenses. Operating profit is the result of taking operational income and subtracting operational costs and expenses.
  • Fixed Expenses (Gastos Fijos): Costs that do not change from month to month.
  • Total Margin (Margen Total): Sales revenue minus variable expenses.
  • Wholesaler (Venta al por Mayor): A company that distributes products to retailers.

Unit 7: Internal Controls & Financial Misconduct

Internal Control Measures

  • Require two signatures on any cash disbursement to protect against misappropriation.
  • Conduct surprise inventory audits to help detect theft and falsification of records.
  • Require two managers to approve any write-offs to prevent bribes and fraud.
  • Rotate employees and instruct them to look for suspicious activities.
  • Match all receiving reports with the general ledger to prevent short-counts.

Common Financial Misconduct Terms

  • Theft (Robo): An offense concerning property or someone’s rights.
  • Fraud (Fraude): Economic deception with the intention of making a profit.
  • Forgery (Falsificación): Doing or making false information in company records.
  • Embezzlement or Misappropriation (Malversación): The appropriation of money or goods entrusted to one’s care.
  • Hold Accountable (Responsable de Algo): To be responsible for something.
  • Deceit (Engaño): The act of lying or intentionally misleading.
  • Shoplift (Hurtar en Tienda): To steal goods from a shop.
  • Kickback (Contragolpe): A bribe paid in return for favorable treatment.
  • Pilfering (Ratería): Stealing small amounts of goods.
  • Signature (Firma): A person’s name or mark representing it.
  • Bribe (Soborno): Money or favor given or promised to influence the judgment or conduct of a person in a position of trust.
  • General Ledger (Libro Mayor): The main accounting record of a business.