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

Economic Rationality

Economic rationality assumes that households and businesses use their scarce resources to maximize their own utility or profit, respectively. It is used to model economics to explain and predict the behavior of economic agents.

Households

Function: Consumer target

Objective: Maximize their own welfare by choosing goods that satisfy them according to their preferences and their limited budget.

Businesses

Function: Production

Objective: Maximize profits through effective utilization of available resources to produce goods and services as profitably as possible.

Public Sector

Function: Regulation system

Objective: Maximize the general welfare by using available resources to produce required public goods and services and reducing inequalities.... Continue reading "Economic Rationality: Households, Businesses, and the Public Sector" »

Activity-Based Costing (ABC) Fundamentals

Background of ABC Costing

The background of Activity-Based Costing (ABC) stems from the principles established by management accounting experts Robin Cooper and Robert Kaplan. They asserted that the cost of goods must include the cost of all necessary activities employed, not just manufacturing costs.

This means that traditional product costs (raw material, labor, and manufacturing overhead) are supplemented by costs incurred through efforts made for non-manufacturing activities, such as:

• Sales
• Distribution
• Service
• Post-sales support

Defining Activity-Based Costing

ABC is a methodology that assigns costs to products or services based on the consumption of activities. Key characteristics include:

• Manufacturing

Marketing and Business

The Concept of Marketing

Marketing is the process of creating, communicating, and distributing value to satisfy consumer needs and establish lasting exchange relationships. It focuses on acquiring new customers while retaining existing ones, as they generate the majority of sales revenue. Marketing stimulates demand but does not create the need.

Marketing Guidelines

Marketing strategies vary depending on the market situation. Key approaches include:

• Production Orientation

  Focuses on lowering production costs to offer lower-priced products (e.g., Henry Ford's approach).

• Product Orientation

  Emphasizes producing the highest quality products, applicable when demand exceeds supply (e.g., early mobile phones).

• Sales Orientation

  Prioritizes

Defining Economic Science

Economics is the science that studies how economic agents rationally utilize scarce resources to meet alternative needs to achieve specific objectives.

Rationality, Effectiveness, and Efficiency

Rationally means seeking effectiveness and efficiency:

• Effectiveness: Achieving a specific goal.
• Efficiency: Achieving that goal while using the least amount of resources possible.

Objectives of Economic Agents

Economic agents pursue distinct objectives:

• Families: Maximizing utility (welfare) through consumption.
• Companies: Producing goods and services to maximize profit (benefit).
• Public Administration: Spending or investing to maximize the welfare of its citizens.

Economic Activity, Goods, and Services

Economic activity is the specific... Continue reading "Fundamentals of Economic Science and Market Structures" »

Key Production Function Activities

Procurement

Provides the necessary materials for production, including supplier selection and purchasing management.

Manufacturing

Manages the production process, transforming various production factors into a final product.

Quality Control

Verifies that the manufactured product possesses the characteristics desired by customers.

Current Trends in Production and Operations

Global Outlook

Companies are no longer limited to producing for a single country; they can produce in different countries or organize their production globally.

Just-In-Time (JIT) Production

Businesses no longer produce in large quantities for storage. Instead, they aim to offer products precisely when demanded by the client, necessitating rapid production.... Continue reading "Optimizing Business Production and Operations" »

Understanding Key Financial Components

Active Non-Current Assets

Intangible Assets

• Research and Development
• Administrative concessions, industrial property, and transfer rights
• Computer software

Fixed Assets

• Land and natural resources (not specified)
• Construction (not specified)
• Technical installations
• Machinery
• Cranes
• Furniture
• Equipment for process information
• Other tangible assets

Investment Property

• Land and natural resources (specified)
• Construction (specified)

Long-Term Financial Investments

Current Assets

Stocks

• Commercial
• Raw materials
• Current Products
• Finished Products

Receivables

• Customers
• Debtors
• Public Finance debtors
• Organizations-Social Security debtors

Available

• Banks and credit institutions
• Safety

Financial Returns

Financial (ROI, ROA): BAII / Total Assets:... Continue reading "Understanding Assets, Liabilities, and Financial Ratios" »

Principles of Management

• Division of Work
• Authority and Responsibility
• Discipline
• Unity of Command
• Unity of Direction
• Subordination of Individual Interest to General Interest
• Remuneration of Personnel
• Centralization
• Scalar Chain
• Order
• Equity
• Stability of Tenure of Personnel
• Initiative
• Esprit de Corps

Planning

The role of management in defining goals, determining strategies to achieve them, and integrating and coordinating activities through plans.

Organizing

A management function that involves determining which tasks need to be done, who performs them, how they are grouped, who reports to whom, and where decisions are made.

Personnel Integration

This involves staffing positions within the organizational structure and maintaining those positions with qualified... Continue reading "Core Concepts of Business Management" »

Mandatory Accounting and Tax Books

Required Books for Micro and Small Companies (General Law)

The following books are required for micro and small companies under the General Law:

1. Journal;
2. General Ledger (or "Reason");
3. Inventory Register;
4. Merchandise Entry Register;
5. Services Rendered Register;
6. Services Taken Register;
7. Other registers, for specific cases.

Simplified Chart of Accounts Structure

Consider the Plan of Accounts currently in force:

1. The Chart of Accounts, even simplified, should be prepared taking into account the specific nature, size, and type of activities and operations carried out by micro and small businesses, and in accordance with their information control needs related to fiscal and managerial aspects.
2. The Simplified Chart of Accounts

Definition: Checking Account

A checking account (current account) is an irregular deposit contract for money, with additional service agreements provided by the cash custodian. Under the current account contract, the bank, savings bank, or credit union receives funds on behalf of the owner of the account, provides custody, and agrees to make payments according to instructions for amounts up to the balance.

Irregular (Deposit Ownership) Contracts

An irregular deposit is one in which the depositary (receiver) acquires ownership of the thing deposited and agrees to return to the depositor (person who delivered it) at the expiration of the contract, otherwise the same nature and value. In irregular deposits the depositary becomes owner of the funds... Continue reading "Bank Accounts, Deposits and Account Types" »

Classification by Legal Form

All companies must have a legal form, which is determined, among other things, by the number of people involved in creating it, by the capital provided, and by the size. We can distinguish:

1. Sole Trader: When the owner of the company is the only person who assumes all risk and is responsible for managing the business.
2. Companies (Societies): Where people decide to invest in a company, they may form a society. At present in Spain, the following types of companies exist:
   • Sociedad Anónima (S.A.)
   • Sociedad Anónima Laboral (S.A.L.)
   • Sociedad de Responsabilidad Limitada (S.L.)
   • Sociedad Cooperativa de Responsabilidad Limitada
   • Sociedad Colectiva
   • Sociedad Comanditaria
   • Regular Venture Contract Accounts

Classification by Activity Sector

Economic... Continue reading "Key Criteria for Classifying Business Organizations" »