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Tutorial:Business Academy Topic: Economic aspect of business activity Prepared by:Ing. Marcela Zlatnkov Projekt Anglicky v odbornch pedmtech, CZ.1.07/1.3.09/04.0002 je spolufinancovn Evropskm socilnm fondem a sttnm rozpotem esk republiky.

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Business activity has two aspects tangible and economic. TANGIBLE ASPECT Business inputs Business Outputs material, raw materials, production products Workforce services Fixed assets ECONOMIC ASPECT Costs Business Profit sales, other income

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They represent consumption of factors of production for a particular purpose expressed in monetary units It is monetary expression of all business inputs We must distinguish expenditures from costs, not every expense is cost It is necessary to monitor costs in the company because incurred costs reduce profit

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1.BY TYPES - They express structure of the necessary costs of entry into business - They are used in the 5th account class of the accounting plan - They include for example consumed purchases, services, personal costs, depreciations, financial costs 2. FOR PURPOSES OF FINDING OUT ECONOMY RESULTS - Operating costs - Financial costs - Extraordinary costs

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3. BY RELIANCE ON CHANGE IN VOLUME OF PRODUCTION - permanent (fixed) costs do not change with the change in volume of production, they change in a leap after some time, e. g. rent - variable (changing) costs vary with the change in volume of production. This involves further division: proportional total costs vary directly with the change in volume of production, e.g. Consumption of basic material progressive total costs are rising faster than volume of production, e.g. increase in production causes pay of bonuses for work degressive total costs are rising more slowly than volume of production, e.g. Better use of factors of production, reduction of losses

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4. PURPOSE ( CALCULATION ) DIVISION - direct (unit) it can be determined directly on the calculation unit, such as consumption of basic material - indirect (overhead) they cannot be determined directly on the calculation unit, we have to divide them, such as energy consumption 5. IN TERMS OF DEVELOPMENT - production those expended on production of certain product - circulation those expended on the sale of own products

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They are sums expressed in monetary units, that the company received from its activities Main part of revenues are sales of own outputs and goods Another part of revenues are financial revenues, such as surplus in cash box in the case of stocktaking and extra revenues Company revenues are found out when the amount of output is multiplied by its price We must distinguish revenues from income, not every income is revenue

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1. BY TYPES- these are revenues arranged in the 6th account class of the accounting plan, such as revenues from own outputs and goods, change in state of intercompany inventory, activation of assets developed by own activity, other operating revenues 2. FOR PURPOSES OF FINDING OUT ECONOMY RESULTS - operating revenues - financial revenues - extraordinary revenues 3. BY INTERCOMPANY DEPARTMENTS it is about assignment of revenues to individual intercompany departments, such as production revenues, management revenues, sales revenues

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It expresses level of company management in crowns It is found out by comparing costs and revenues Result of efficiency is the most important indicator which characterizes company management It is detected: by non-accounting by use of profit and loss records by accounting with help of profit and loss account Revenues Costs Profit Revenues Costs Loss Revenues Costs = Result of management (profit) Income tax

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1/ Consider, whether the following costs belong to operational, financial or extraordinary: a/ interests of loan b/gross wages of employees c/material damages due to flood d/ bank fees e/ material consumption f/ depreciation of DM 2/ Indicate which of the following revenues belong to operational, financial or extraordinary: a/ sales of selling goods b/ credited interests on deposits c/sales for provided services 3/ The company has spent in the past period total costs on its activity 2 560 000,- crowns. 24 000 pieces of goods were sold in the sales price of 137,- crowns per piece. Find out the result of company management.

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Biovec, K. Pehled uiva k maturitn zkouce z ekonomiky. Fortuna, 2004. ISBN 80- 7168-747-2. varcov Jena, ing a kolektiv, Ekonomie, strun pehled. Ing. Jena varcov, Ph.D., CEED nakladatelstv a vydavatelstv, 2006. ISBN 80-903433-3-3. Klnsk Petr, Munch Otto, Ekonomika pro obchodn akademie a ostatn stedn koly 1- 4. Fortuna, 2003, ISBN 80-7168-862-2.