Beruflich Dokumente
Kultur Dokumente
Engineering Economy
ENGECOA – T42, 1st Term, SY ’09-’10
• Accounting is often referred to as the
language of business
• Engineers need to learn about a firm’s
accounting practice so that they can
communicate better with management
Accounting Fundamentals (1/4)
• Real Estate
• Business interests
• Partnership interests
• Shares in closely held corporations
Liabilities: What You Owe
• Operating activities
• Operating cash flows represent those cash
flows related to the production and sales
of goods or services
• All non-cash expenses (such as
depreciation and change in working
capital) are added back to net income
(after tax)
The Cash Flow Statement (3/3)
• Investing activities
• Include purchasing of new fixed assets,
reselling old equipment, or buying and
selling financial assets
• Financing activities
• Any activity related to raising capital to be
used in business
• e.g. borrow from banks, sell more stocks or
bonds, pay off existing debts
Accounting Entries (1/3)
• Direct materials
• Materials that can be conveniently and
economically charged directly to the cost of the
product
• Should be readily measurable
• Should be of the same quantity in identical
products
• Should be used in economically significant
amounts
• Materials that do not meet the criteria above
are classified as indirect materials
The Elements of Cost (3/3)
Direct Materials
Cost of
Goods Sold
Factory Overhead Cost of
Cost of
Goods Sold
Goods Sold
Cost Accounting Example (2/5)