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BUSINESS SIMULATION :

PREPARING CLASSES

INTRODUCTION

Anne CHANTEUX
anne.chanteux@ulg.ac.be

HEC - ULg 1

CONTENT

Principles of financial accounting

Elements of cost accounting and


budgetary control

Strategy and performance measurement

HEC - ULg 2

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OBJECTIVES OF THESE
PREPARING CLASSES
Learn a common language

Refresh some accounting and budgeting


concepts (which will be used in the business
simulation)

Be aware of the importance of using


management tools to make better decisions
and to measure achievment of objectives
HEC - ULg 3

ORGANIZATION
OF THE CLASSES
CLASSES 1 & 2 : PART 1
Financial accounting

CLASSES 2 & 3 : PART 2


Cost accounting and budgetary control
Strategy and performance measurement

CLASS 4 :
Test on the content of classes 1-2-3 (which will be included in
the global note of business simulation)
Presentation of the business simulation (including practical
organization)
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INTRODUCTION

The enterprise :
organization, economic unit
involves people and materials
object : production and/or exchange of goods and
services
Aims to make profits in order to remunerate :
work
capital

HEC - ULg 5

INTRODUCTION

The enterprise :
organisation, economic unit
Involves people and materials
object : production, exchange of goods and
services
Aims to make profits in order to remunerate :
work
capital

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INTRODUCTION
The Companys Life.

Gather financial Gain new


resources financial resources

Change the resources Commercialize the


into investments goods or the services

Employ the Start the production


personnel process
HEC - ULg 7

INTRODUCTION

The Company: Cycles and flows

Investment cycle (long cycle).


Operating cycle (short cycle).
Varies according to the company :
Commercial company
Industrial company

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INTRODUCTION
The Company : Cycles and flows
Financial cycle :
All the operations of receipt and disbursement of the two
former cycles
Monetary flows

Goods and services flows Goods and services


flows
Upstream Downstream
market market

Cash flows Cash flows


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INTRODUCTION
The company
Major operating tasks :
Marketing
Production
Finance
Human resources management
Accountings role :
Involves all the functions
Provides information

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INTRODUCTION
Accounting.
Role :
Covers all the activities of the Company
Gathers and classifies the information
Shows it in a structured manner
Management tool
Types of accounting :
Financial accounting
Cost accounting
Budgetary accounting
HEC - ULg 11

INTRODUCTION
Financial Accounting :
Compulsory for all companies.
Follows specific rules
=> Annual statutory (social) financial statement
Presents the situation of the company :
its result (P&L : profits and losses),
its assets and debts, rights and commitments
(Balance Sheet)
Aims at informing the third parties.
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INTRODUCTION
Cost accounting :
Optional.
Varies according to the company.
It displays the situation of the companys costs
and margins, it helps to establish an acute
analysis of cost effectiveness (profitability), and
leads the way to better grounded decisions.
=> Cost price and margin calculation.
Aims at informing the managers.

HEC - ULg 13

INTRODUCTION
Budgetary Accounting :
Optional, however actually it exists only on the basis
of cost accounting .
It varies according to the company.
It allows a comparison between forecasts and
realization, an acute analysis of ascertained
variances, adjustment measures, and a more
dynamic management.
It aims at informing the managers.

HEC - ULg 14