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c hapter 1 & 2

c hapter 1 & 2. You and the World of Accounting The World of Business and Accounting. Jobs in Accounting. Accounting – The act of identifying, tracking, analyzing, and planning financial transactions.

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c hapter 1 & 2

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  1. chapter 1 & 2 You and the World of Accounting The World of Business and Accounting

  2. Jobs in Accounting • Accounting – The act of identifying, tracking, analyzing, and planning financial transactions. • Accounting Clerks – entry-level job that can vary from specializing in one part of the system to doing a wide range of tasks within the accounting department • Accountant – handles a broad range of responsibilities, makes business decisions, and prepares and interprets financial reports • Certified Public Accountant – an accountant who has met certain education and experience requirements and passed a national test • Networking – making contacts with people to share information and advice

  3. Who Makes a Good Accountant? • Personality – a set of unique qualities that makes us different from all other people • Skills – activities that you do well, they usually come naturally or with little effort • Values – the principles you live by and the beliefs that are important to you • Lifestyle – the way you use your time, energy, and resources

  4. Types of Organizations than Need Accountants • For-Profit Business – operates to earn money for their owners • Profit – the amount of money earned over and above the amount spent to keep the business operating • Loss – spending more money than earned • Not-For-Profit – operate for purposes other than making a profit • Public Accountant (Firm)– provides clients a variety of accounting services including the independent audit, financial planning , and tax return preparation • Audit – the review of a company’s accounting systems and financial statements to confirm that they follow generally accepted accounting principles

  5. Do the Math – pg 12 • Congratulations! The good news is that you’ve decided to attend a local community college after high school. The bad news is that tuition for an 18-week semester is $1,820. You estimate travel expenses of $20 per week and $300 for books and supplies. You plan to work 20 hours a week, earning $6.75 per hour, and you will apply all your paychecks toward college expenses. Social Security and income taxes will take about 15% of your earnings. • What is the total cost for a semester? • Assume that you have already saved $300 toward your first semester’s costs. Approximately how long will it take to save enough to cover our tuition and books for one semester?

  6. Businesses Need Accountants • Free Enterprise System – freedom to produce the goods and services chosen by the business owner based on consumers’ right to choose from the selection offered • Entrepreneur – a person who transforms ideas for products or services into real-world businesses • Accounting System (Manual and Computer) – designed to collect, document, and report on financial transactions affecting the business • Generally Accepted Accounting Principles (GAAP) – set of rules for preparing financial reports put out by The Financial Accounting Standards Board (FASB) and followed by all accountants • Financial Reports – summarized information about the financial status of the business (used to make internal and external decision about the company) • Accounting Period – period of time covered by an accounting report • Going Concern – the idea that the business intends to continue operating

  7. Business Organizational Structures • Sole Proprietorship – a business owned by one person (easiest to start due to little or no legal paperwork) • Partnership – a business owned by two or more persons who agree to operate the business as co-owners • Corporation – a business recognized by law to be a business entity (not connected to any one individual or group of individuals) • Charter – legal permission given by the state in which the business operates which also lays out the rules under which the corporation is to operate • Capital – money supplied/owned by the business used to startup, maintaining day to day operations and paying business owner(s)

  8. Types of Businesses • Service Business – provides a needed service for a fee • Merchandising Business – buys finished products and resells them to individuals or other businesses • Manufacturing Business – buys raw materials, uses labor and machinery to transform them into finished products, and sells the finished products to individuals or other businesses

  9. Reporting Financial Information • Financial Accounting – focuses on reporting information to external users (those not involved in the) day to day operations of the business • Management Accounting – focuses on reporting information to management and internal users of the accounting information

  10. Do the Math pg 32 • Suppose that you bought 500 shares of Pinewood Dairy Corporation for $39 per share several months ago. Yesterday you sold 200 of the shares at the current price of $45 per share. • How much money did you gain or lose on the shares you sold? • What was the gain or loss per share? • Based on the price of $45 per share, what was the market value of your remaining shares yesterday?

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