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Accounting

Accounting . Introduction. What is Accounting?. The planning, recording, analyzing and interpreting of financial information. A planned process for providing financial information that will be useful in management is called an accounting system .

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Accounting

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  1. Accounting Introduction

  2. What is Accounting? • The planning, recording, analyzing and interpreting of financial information. • A planned process for providing financial information that will be useful in management is called an accounting system. • Organized summaries of a businesses’ financial activities are called accounting records. • Used by most individuals in everyday life. (Submit tax returns, plan personal spending, etc.)

  3. Poor accounting • Inaccurate accounting records often contribute to business failure and bankruptcy. • Failure to understand accounting info. can result in poor business decisions for both businesses and nonprofit organizations. • Ex: Celebrities • How celebrities spend their money • 9 Celebrities caught in DEBT • Celebrities with the Biggest Money Problems • Top 10 Terrible Financial Choices in the Music Industry • 10 Celebrities who Lost Big Financially

  4. Job Opportunities • Accountants • Plan, summarize, analyze and interpret information. • Prepare various accounting reports and assist owners and managers in making financial decisions. • Supervise the work of other accounting personnel. • Check the accuracy of financial statements. • Some work as members of accounting firms that sell accounting services to the general public.

  5. Job Opportunities • Controller • Accountant needed to maintain accounting systems and supervise accounting personnel. • 5 or more years of experience • Professional certification • Computer skills

  6. Job Opportunities • Accountants • Needed by local businesses. • Supervise all functions of accounting. • Good interpersonal skills • Good communications skills

  7. Job Opportunities • Bookkeeper • Do general accounting work plus summarize and analyze accounting information. • May help small business owners and managers make decisions. • Work without supervision. • Experience in general ledger and payroll. • Experience in supervising accounting clerks. • Electronic spreadsheet and word processing knowledge

  8. Job Opportunities • Accounting Clerk • Records, sorts, and files accounting information. • Titles: accounting clerks and payroll clerks • Do specific accounting activities

  9. **Communication Skills** • Need to effectively communicate to people responsible for making business decisions. • Important because accountants often communicate to people who don’t know accounting. • Phone conversations, one-on-one meetings, group meetings. (Oral Communication) • Memorandums, letters, reports (Written Communication)

  10. Business Ethics • Ethics – principles of right and wrong that guide an individual in making decisions. • Business Ethics – using your personal ethics to make business decisions.

  11. Why do people act unethically? • Excessive emphasis on profits. • Misplaced business loyalty. • Personal advancement. • Expectation of not getting caught. • Unethical business environment. • Unwillingness to take a stand.

  12. Ch.2 -- Starting A Proprietorship • Proprietorship: a business owned by one person. • Don’t mix business records with personal records. • Service Business: performs an activity for a fee. • Examples???? • Painters • Plumbers • Accounting firms • Hospitals • Law firms

  13. Accounting Equation • ASSETS: anything of value that is owned. • EQUITIES: the financial rights to a business. • Liabilities: amounts owed to others. • Owner’s Equity: the amount remaining after the value of all liabilities is subtracted from the value of all assets. • Accounting Equation:Assets = Liabilities + Owner’s Equity • MUST ALWAYS BE IN BALANCE

  14. How business activities change the accounting equation. • Transaction: a business activity that changes assets, liabilities, or owner’s equity. • When you start a business, the accounting equation looks like… Assets = Liabilities + Owner’s Equity 0 = 0 + 0

  15. Example Transactions Assets = Liabilities + Owner’s Equity 0 = 0 + 0 Transaction #1: Received cash from owner as an investment, $10,000. Assets = Liabilities + Owner’s Equity Cash = Ben Furman, Capital Beg. Balance 0 0 Trans.#1 +10,000 +10,000 (investment) New Balance 10,000 10,000

  16. Assets = Liabilities + Owner’s Equity Transaction #2: Paid cash for supplies, $1,577. Cash + Supplies = Ben Furman, Capital Beg. Balance 0 0 0 Trans#1 +10,000 +10,000 New Balance 10,000 10,000 Trans#2 - 1,577 +1,577 New Balance 8,423 + 1,577 10,000 Total left side: 8,423+1,577=10,000 Total Right Side: 10,000

  17. Assets = Liabilities + Owner’s Equity Transaction #3: Paid cash for insurance, $1,200. Cash + Supplies + Prepaid Insurance = BF, Capital Beg. Balance 0 0 0 Trans#1 +10,000 +10,000 (investment) New Balance 10,000 10,000 Trans#2 - 1,577 +1,577 New Balance 8,423 + 1,577 = 10,000 Trans#3 - 1,200 +1,200 New Balance 7,223 1,577 1,200 = 10,000 Total left side: 8,423+1,577+1,200=10,000 Total Right Side: 10,000

  18. Assets = Liabilities + Owner’s Equity Transaction #4: Bought supplies on account from BCS Supplies, $2,720. Cash + Supplies + Prepaid Insurance = BF, Capital Trans#3 - 1,200 +1,200 New Bal. 7,223 1,577 1,200 = 10,000 C + S + PI = BCS + Capital Trans#4 2,720 +2,720 New Bal. 7,223 4,297 1,200 = 2,720 + 10,000 Total left side: 7,223 + 4,297 + 1,200 = 12,720 Total Right Side: 10,000 + 2,720 = 12,720

  19. Assets = Liabilities + Owner’s Equity Transaction #5: Paid cash on account to BCS Supplies, $1,360. Cash + Supp. + Pre. Ins. = BCS + BF, Capital Balances 7,223 4,297 1,200 = 2,720 + 10,000 Trans.#5 -1,360 - 1,360 New Balance 5,863 4,297 1,200 = 1,360 + 10,000 Total left side: 5,863 + 4,297 + 1,200 = 11,360 Total Right Side: 10,000 + 1,360 = 11,360

  20. BALANCE SHEET • Balance Sheet: a financial statement that reports assets, liabilities, and owner’s equity on a specific date. • ASSETS are on the left side of the balance sheet. • LIABILITIES and OWNER’S EQUITY are on the right side of the balance sheet.

  21. Preparing a Balance Sheet • Write the heading. • Name of the business • Name of the report • Date of the report • Prepare the asset section. • Center the word Assets • Under the heading, list each account to the left • List the balances

  22. Preparing a Balance Sheet • Prepare the liabilities section. • Center the word Liabilities • Under the heading, list each account to the left • List the balances • Prepare the owner’s equity section. • Center the words Owner’s Equity • Under the heading, write the account title (Capital) • Write the account balance

  23. Preparing a Balance Sheet • Determine if the balance sheet is in balance. • Add all the assets amounts • Add liabilities and owner’s equity amounts • (If it doesn’t equal, find your errors.) • Complete the balance sheet. • Rule a single line across both amount columns. • Write the totals. • Rule double lines.

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