WEEK 27-UNDERSTANDING-FINANCE-AND-ACCOUNTING

Objectives

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Understanding Finance and Accounting

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2

Introduction

Assets and Liabilities

Use of Technology

Summary

Profits, Costs, and Revenues

Introduction

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Assets and Liabilities

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Assets

Liabilities

1

Assets are resources owned, while liabilities are debts owed.

House, Car, Savings,...

Mortgage, Student loans,...

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What is Net Worth?

Definition: Net worth is the difference between what you own (assets) and what you owe (liabilities).

Example 1: If you have assets worth $10,000 and liabilities of $4,000, your net worth is:

Net worth =$10,000-$4,000 =$6,000

Net Worth = Assets - Liabilities

It's worth to note that the equation is linear because the exponent of x is 1, and the other terms are just numbers.

Profits, Costs, and Revenues

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Revenue is the income generated from normal business operations. Costs are the expenses incurred.

Revenue: $500

Costs: $300

Example 2: A bakery sells $500 worth of bread (revenue) and spends $300 on ingredients and wages (costs)

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Business operations might be like sales of goods or services.

What is Profit?

Definition: Profit is the financial gain obtained

Example 1: For the previous example:

Profit=$500-$300 =$200

+$200 of profit/gain

Profit = Revenue - Costs

The revenue from a business activity should exceeds the expenses, costs, and taxes involved in sustaining the activity. Otherwise, we are in losses.

Use of Technology

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Imagine that you're planning a shopping trip and made the following list:

Also, you decide to sell these items online at the following prices:

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Profit of Items Sold

Example 3: Let's calculate the total profit after selling those items.

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Check out the results clicking on "Answer" in the interactive image.

1. From a computer, open gmail, then click on Sheets icon (Green):

2. Create a new Google sheets file:

3. Copy the content shown in the image of the right.

4. Calculate totals by inserting the following commands: Total cost in B6: =sum(B2:B5) Total revenue in C6: =sum(C2:C5)

5.In B7 cell calculate the profit subtracting B6 from C6: Write in B7: =C6-B6

Chart of Costs and Revenue

Example 3: Now let's create a chart showing costs and revenues.

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Check out the results clicking on "Chart" in the interactive image.

1. Click on Answer.

2. In your spreadsheet created in the previous exercise select all the table:

3. Click on Insert>>Chart

4. In the right panel select column chart:

5. You should see a diagram like this: Note that costs are changed by their negative ones.

balance sheet

income Statement

liabilities

net-worth

Profit

Assets

costs

revenue

Summary:Finance and Accounting

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Net Worth = Assets - Liabilities

Profit = Revenue - Costs

Welcome 6th graders!

A journey soon begin through Social Science experiences!

Great job!

See you next time

9TH-UNDERSTANDING-FINANCE-AND-ACCOUNTING-EN © 2024 by CASURID is licensed under CC BY-NC-ND 4.0

"MA.912.FL.2 Develop an understanding of basic accounting and economic principles."MA.912.FL.2.1 Given assets and liabilities, calculate net worth using spreadsheets and other technology.MA.912.FL.2.2 Solve real-world problems involving profits, costs and revenues using spreadsheets and other technology.ELD.K12.ELL.MA.1 English language learners communicate information, ideas and concepts necessary for academic success in the content area of Mathematics.

It is highly advised to have:

MATERIAL

• Grid paper.
• Pencils of different colors.
• Eraser.
• A rule.
• A calculator.
• Geogebra installed on your phone/tablet/computer (or use online version).