Student life does not generally afford a great deal of free time to pursue your
ID: 2646229 • Letter: S
Question
Student life does not generally afford a great deal of free time to pursue your personal interests; however, at one point, you may have considered turning a personal interest or hobby into an official enterprise. Today, you have finally decided to turn that hobby into a business but have realized that you need start-up capital from a lender or investor.
To obtain funding, you need to convince a lender / investor that your business is more than a hobby. You need to demonstrate that you have a firm grasp of your business, the accounting practices that impact your business, the controls needed to safeguard assets, and which accounting system will produce accurate and relevant financial information.
Describe the type of business you have created including:
The product or service, and general staffing plan. Provide a rationale for your plan.
The form of your business and the benefits it offers your particular business,
A chart of accounts specific to your business, including a rationale as to the selection of each account. (Note: The chart of accounts is a blueprint of your business for the lender/investor. It should report the expected resources that you will consume in your business (assets), the sources of those resources (liabilities and equity), the sources of revenue, and expenditures that you expect to incur to earn those revenues. You may build a detailed chart that includes business units, divisions, product lines, etc.)
Explanation / Answer
Product being offered: Pre-school for children in the age group 2 years to 6 years.
There is a dearth of good pre-schools in the locality where i am planning to open the school in question. Children of this locality have to travel a distance to avail good education, causing an inconvenience to their parents. The parents will prefer sending their kids to a quality pre-school near their own locality. This is the rationale.
General staffing plan:
10 teachers will be required for 80 students (1:10 teacher student ratio)
3 female attendents, 2 drivers, 1 security guard, and 2 sweepers will also be required.
Chart of accounts: assets:
Land and building - 100,000
computer and printer - 5,000
3 vans @ 5,000 each - 15,000
toys and equipments - 30,000
furniture - 20,000
Total assets = 170,000
Liabilities:
Owner's equity - 100,000
Bank loan - 70,000
Total liabilities = 170,000