Notes, summaries, assignments, exams, and problems for Economy

MA 1

What Is a Company?

Companies are the foundation of our economic system. A company is an entity that integrates a set of items organized and operated to achieve a set of goals through the implementation of a particular economic activity.

All this must be addressed and organized by a figure known as the entrepreneur.

• Types of Companies: Depending on the size (small, medium, and large), scope (local, national, and multinational), or economic activity (primary, secondary, tertiary).

Sole Trader: A person who conducts a business activity on their own.

Functions and Objectives of a Company

Features:

• Creation of value: New gadgets, mobile devices, etc.
• Social function: Companies provide the necessary income to live through wages paid to employees or the

Advertising

: publicidad

Brand

: marca: a commercial name

Budget

: Presupuesto: an amount of money to be used

Company profile

: perfil d la empresa

Competitors

: competidores: company selling similar products to you

Consumer goods

: bb d consume: a product for normal life

Customers

: clients

Employ

: dar trabajo: to give job

Employees

: empleados: people who work for a company

Expand

: xpandir: to become bigger

Figures

: cifras: a company total annual sales

File

: archivo: to organize papers and documents so they are easy to find

Financial advise

: asesoramnto financero

Found

: fundar: to create

Head office

: sede

Household white goods

: electrodmstics electrodomestical appliances used at home such at a fridge (nevera)

Improve

: Mejorar: to make something better

Launch

: lanzar... Continue reading "Business Vocabulary and Definitions" »

Understanding Spanish Taxation

Under Spanish tax law, taxes are levies imposed without a direct counter-provision, based on acts, facts, or legal-economic situations that demonstrate the taxpayer's economic capacity. The Spanish tax system categorizes these levies into three main types:

• Taxes: Payments required without any direct consideration or specific service in return.
• Rates: Charges levied for the provision of specific public services or for the use of public domain.
• Special Contributions: Imposed when a public work or service results in an increase in the value or a special benefit to the taxpayer's property.

Taxes themselves are further classified into two primary types:

• Direct Taxes: These are levied directly on the taxpayer's assets, income,

Company Financial Cycles

Companies constantly carry out investments. A business begins with the input from one or more members of a sum of money with which to make different investments. The company acquires, on the one hand, elements of fixed assets: plant, machinery, etc. And, secondly, circulating elements: raw materials and other supplies. With these investments and hiring labor, the company begins its activity. Thanks to the production and marketing functions carried out, it manufactures and sells a product. When the company charges the amount of sales, it returns to money. This process is repeated continuously throughout the life of the company. This gives rise to two cycles: the long cycle and the short cycle.

The Long Cycle

The long cycle... Continue reading "Understanding Company Financial Cycles and Resources" »

Economic Goods

Finished Goods: These are products that consumers purchase to satisfy their needs.

• Free Goods: Abundant in nature (e.g., water, soil, air).
• Economic Goods: Limited in quantity, requiring financial sacrifice to obtain (e.g., oil, timber, gold).

Services and Assets

Services: Intangible assets (e.g., bartender services, healthcare, education).

Assets: Tangible products (e.g., tables, clothing, food).

Types of Produced Goods

• Goods Used in Production: Used to create finished products.
• Part of the Product: Consumed during production (e.g., furniture-making materials).
• Not Part of the Product: Used but not consumed (e.g., ovens, machines).

Consumer Goods

Consumer Goods: Finished products ready for consumption (e.g., clothing, televisions).

Goods

Crisis Management

What is a Crisis?

A crisis is an extraordinary event or series of events that negatively impact an organization's product integrity, reputation, or financial stability, or the health and welfare of workers, the community, or the general public.

Examples of Crises:

• Product recall
• Plane crash
• Public sexual harassment complaint
• Hostage situation
• Product contamination
• Market/stock crash
• Indefinite strike
• Lawsuits

Crises are not always unexpected. Often, the organization is aware of the situation before the public.

Types of Crisis Responses

1. Defensive Responses

These are less effective if the organization is held responsible for the crisis.

a. Attacking the Accuser

This involves questioning the crisis's validity, challenging the logic and facts... Continue reading "Crisis Management: Defensive & Accommodative Responses" »

Accounting Books

Accounting books chronologically record all the financial transactions that take place in a company.

Inventory Book and Financial Statements

1. Initial assessment
2. Quarterly balance sheets of amounts and balances of checking
3. Annual accounts

Minute Books

Required if it is a company.

Generally Accepted Accounting Principles and Standards

1. Code of remaining trade and commercial law, SME PGC
2. PGC
3. Its sectoral adjustments
4. Standards development on what has been established
5. Other standards of Spanish law

Annual Accounts

1. Balance Sheet: The company's financial situation at a certain financial close.
2. Income Statement: The company's performance during an exercise, the result of its activity.
3. Statement of Changes in Net Worth: Changes in the composition of the

Opportunity Cost and Production Possibilities

Scarcity, a relative concept, necessitates choice. Opportunity cost is what we forgo to obtain something else. The production possibilities frontier illustrates that economics is the science of choice. It highlights key concepts:

1. Lack of resources
2. Opportunity Cost
3. Potential output

Applications of the Production Possibilities Frontier

Economic efficiency involves leveraging resources optimally. Economic growth means increasing productive capacity.

Productive Sectors and Exchange

Productive sectors:

• Primary: Activities related to nature, such as agriculture, fisheries, livestock, and forestry.
• Secondary: Includes manufacturing, mining, construction, and energy sectors; transforming raw materials into manufactured

Understanding the Supply Function

The supply function involves comparing the materials required for a company's operations and managing their storage, initiating every production or marketing process. It encompasses three key aspects: purchasing, storage, and inventory management.

Key Aspects of Supply

• Purchasing: The responsibility for making purchases lies with the production or sales department, considering factors such as price, quality, delivery time, payment terms, and service.
• Storage: This role involves having warehouses to store purchased products until needed by the production department. An organized space is essential to keep purchased or manufactured products.
• Inventory Management: Developing an inventory management system is crucial

Understanding the Balance Sheet and Business Heritage

The foundation of financial understanding lies in grasping a company's heritage, which represents its entire group of properties, rights, and obligations.

Defining Business Heritage

• Assets: These are the material and immaterial elements owned by the company that have economic value.
• Receivables (Rights): What third parties (natural or legal persons) owe to the company.
• Obligations (Liabilities): What the company must return or pay to third parties.

A company's heritage is fundamentally split into Assets, Liabilities, and Equity. The core accounting equation states:

Assets = Liabilities + Equity

• Assets: Composed of the goods and rights (the positive side of the company's financial position).
• Liabilities: