Introducing Financial Accounting - CCSN Computer Graphics Program
Introducing Financial Accounting - CCSN Computer Graphics Program
Introducing Financial Accounting - CCSN Computer Graphics Program
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Decision Insight<br />
A Decision Feature launches each chapter showing the relevance of accounting for a real entrepreneur. An<br />
Entrepreneurial Decision problem at the end of the assignments returns to this feature with a mini-case.<br />
“We are focused on . . . helping people share information“<br />
<strong>Accounting</strong> for Facebook<br />
PALO ALTO, CA—“Open Society” conjures up philosophical<br />
thoughts and political ideologies. However, for Mark Zuckerberg,<br />
his vision of an open society “is to give people the power to<br />
share and make the world more open and connected.” That<br />
vision led Mark to create Facebook (Facebook.com) from his<br />
college dorm. Today, Facebook is the highest-profile social networking<br />
site. Along the way, Mark had to learn accounting and<br />
the details of preparing and interpreting financial statements.<br />
“It’s all been very interesting,” says Mark. Important questions<br />
involving business formation, transaction analysis, and financial<br />
reporting arose. Mark answered them and in the process<br />
has set his company apart. “I’m here to build something for the<br />
long term,” declares Mark. “Anything else is a distraction.”<br />
Information is the focus—both within Facebook and within<br />
its accounting records. Mark recalls that when he launched his<br />
business, there were “all these reasons why they could not<br />
aggregate this [personal] information.” He took a similar tactic<br />
in addressing accounting information. “There’s an intense focus<br />
on . . . information, as both an ideal and a practical strategy to<br />
get things done,” insists Mark. This includes using accounting<br />
information to make key business decisions.<br />
While Facebook is the language of social networking, accounting<br />
is the language of business networking. “As a company we are<br />
—MARK ZUCKERBERG<br />
very focused on what we are building,” says Mark. “We are adding<br />
a certain amount of value to people’s lives if we build a very good<br />
product.” That value is reflected in its financial statements, which<br />
are based on transaction analysis and accounting concepts.<br />
Facebook’s success is reflected in its revenues, which continue<br />
to grow and exhibit what people call the monetizing of social networking.<br />
“Social Ads are doing pretty well,” asserts Mark. “We are<br />
happy with how we are doing in terms of numbers of advertisers<br />
and revenue.” Facebook also tracks its expenses and asset purchases.<br />
“We expect to achieve . . . profitability next year,” states<br />
Mark. “It means we will be able to fund all of our operations and<br />
server purchases from the cash we generate.” This is saying a lot<br />
as Facebook’s operating expenditures must support nearly 1 billion<br />
photo uploads and 8 million video uploads per day.<br />
Mark emphasizes that his financial house must be in order for<br />
Facebook to realize its full potential—and that potential is in his<br />
sights. “We believe really deeply that if people are sharing more,<br />
then the world will be a more open place where people can understand<br />
what is going on with the people around them.”<br />
[Sources: Facebook Website, January 2011; CNN, October 2008; Mercury<br />
News, April 2009; VentureBeat, March 2008; FastCompany.com, May 2007;<br />
Wired, June 2009]