Second Semester Course Code : BBA-1204 Course Title : Principles Accounting

1. Second Semester Course Code: BBA-1204Course Title: Principles Accounting Prepared By Md. Masukujjaman Lecturer Northern University Bangladesh

2. Text Book….. • Accounting Principles, 7th Edition • Weygandt • Kieso • Kimmel

3. Reference Book: Fundamental Accounting Principles 17th Edition Larson Wild Chiappetta

4. Accounting in Business Chapter 1

5. CHAPTER 1 ACCOUNTING IN ACTION • 1 Explain what accounting is. • 2 Identify users and uses of accounting. • 3 Understand why ethics is a fundamental business concept. • 4 Explain the meaning of generally accepted accounting principles and the cost principle. After studying this chapter, you should be able to:

6. CHAPTER 1 ACCOUNTING IN ACTION • 5Explain the meaning of the monetary unit assumption and the economic entity assumption. • 6 State the basic accounting equation and explain the meaning of assets, liabilities, and owner’s equity. • 7 Analyze the effect of business transactions on the basic accounting equation. • 8 Understand what the four financial statements are and how they are prepared. After studying this chapter, you should be able to:

7. is a system that information that is Definition & Importance of Accounting Accounting Identifies Records Relevant Communicates Reliable to help users make better decisions. Comparable

8. Accounting Activities • Identifying Business Activities • Recording Business Activities • Communicating Business Activities

9. Internal Users External Users • Lenders • Shareholders • Governments • Consumer Groups • External Auditors • Customers • Managers • Officers • Internal Auditors • Sales Staff • Budget Officers • Controllers Users of Accounting Information

10. External Users Financial accounting provides external users with financial statements. Users of Accounting Information Internal Users Managerial accounting provides information needs for internal decision makers.

11. QUESTIONS ASKED BY INTERNAL USERS STUDY OBJECTIVE 2

12. QUESTIONS ASKED BY EXTERNAL USERS

13. What is the correct accounting process sequence ? • identification, communication, recording. • recording, communication, identification. • identification, recording, communication. • communication, recording, identification.

14. The accounting process is correctly sequenced as • identification, communication, recording. • recording, communication, identification. • identification, recording, communication. • communication, recording, identification.

15. Financial Managerial Taxation • Preparation • Analysis • Auditing • Regulatory • Consulting • Planning • Criminal investigation • General accounting • Cost accounting • Budgeting • Internal auditing • Consulting • Controller • Treasurer • Strategy • Preparation • Planning • Regulatory • Investigations • Consulting • Enforcement • Legal services • Estate planning • Lenders • Consultants • Analysts • Traders • Directors • Underwriters • Planners • Appraisers • FBI investigators • Market researchers • Systems designers • Merger services • Business valuation • Human services • Litigation support • Entrepreneurs Accounting-related Opportunities in Accounting

16. Accounting Jobs by Area Auditing Taxation Management consulting NGO’s, SEC

17. Ethics Ethics—A Key Concept Beliefs that distinguish right from wrong Accepted standards of good and bad behavior

18. Guidelines for Ethical Decision Making • Make ethical decision • Identify ethical concerns • Analyze options Use personal ethics to recognize ethical concern. Consider all good and bad consequences. Choose best option after weighing all consequences.

19. Relevant Information Affects the decision of its users. Reliable Information Is trusted by users. Comparable Information Is helpful in contrasting organizations. Generally Accepted Accounting Principles Financial accounting practice is governed by concepts and rules known as generally accepted accounting principles (GAAP).

20. Setting Accounting Principles Financial Accounting Standards Board is the private group that sets both broad and specific principles. The Securities and Exchange Commission is the government group that establishes reporting requirements for companies that issue stock to the public.

21. Now Future Objectivity Principle Accounting information is supported by independent, unbiased evidence. Cost Principle Accounting information is based on actual cost. Going-Concern Principle Reflects assumption that the business will continue operating instead of being closed or sold. Principles of Accounting It demands more than one person’s opinion/ verification

22. Revenue Recognition Principle • Recognize revenue when it is earned. • Proceeds need not be in cash. • Measure revenue by cash received plus cash value of items received. Monetary Unit Principle Express transactions and events in monetary, or money, units. Money is a common denominator in Business. Business Entity Principle A business is accounted for separately from other business entities, including its owner. Principles of Accounting

23. Proprietorship Partnership Corporation Business Entity Forms

24. Exh. 1.8 Characteristics of Businesses * * * Proprietorships and partnerships that are set up as LLC’s provide limited liability.

25. Owners of a corporation are called shareholders (or stockholders). When a corporation issues only one class of stock, we call it common stock (or capital stock). Corporation

26. = + Assets Liabilities Equity Accounting Equation Liabilities & Equity Assets

27. Assets Cash Accounts Receivable Notes Receivable Resources owned or controlled by a company Vehicles Land Buildings Store Supplies Equipment

28. Liabilities Accounts Payable Notes Payable Creditors’ claims on assets Wages Payable Taxes Payable

29. Equity Owner Withdrawals Owner Investments Owner’s claims on assets Revenues Expenses

30. Assets Liabilities Equity _ _ = + Owner Capital Owner Withdrawals + Revenues Expenses Expanded Accounting Equation

31. DRAWINGS AS A BUILDING BLOCK • Drawings • are withdrawals of cash or other assets by the owner for personal use • decrease owner’s equity

32. INCREASES AND DECREASES IN OWNER’S EQUITY • INCREASES DECREASES Withdrawals by Owner Investments by Owner Owner’s Equity Revenues Expenses

33. Transaction Analysis • Exchange of economic consideration between at least two parties. • Economic consideration include products, services, money, rights to collect money (A/R,B/R)

34. TRANSACTION IDENTIFICATION PROCESS STUDY OBJECTIVE 6

35. The accounting equation must remain in balance after each transaction. = + Assets Liabilities Equity Transaction Analysis Equation

36. The accounts involved are: (1) Cash (asset) (2) J. Scott, Capital (equity) Transaction Analysis J. Scott, the owner, contributed $20,000 cash to start the business.

37. Transaction Analysis J. Scott, the owner, contributed $20,000 cash to start the business.

38. The accounts involved are: (1) Cash (asset) (2) Supplies (asset) Transaction Analysis Purchased supplies paying $1,000 cash.

39. Transaction Analysis Purchased supplies paying $1,000 cash.

40. The accounts involved are: (1) Cash (asset) (2) Equipment (asset) Transaction Analysis Purchased equipment for $15,000 cash.

41. Transaction Analysis Purchased equipment for $15,000 cash.

42. Transaction Analysis Purchased Supplies of $200 and Equipment of $1,000 on account. The accounts involved are: (1) Supplies (asset) (2) Equipment (asset) (3) Accounts Payable (liability)

43. Transaction Analysis Purchased Supplies of $200 and Equipment of $1,000 on account.

44. Transaction Analysis Borrowed $4,000 from 1st American Bank. The accounts involved are: (1) Cash (asset) (2) Notes payable (liability)

45. Transaction Analysis Borrowed $4,000 from 1st American Bank.

46. Transaction Analysis The balances so far appear below. Note that the Balance Sheet Equation is still in balance. Now let’s look at transactions involving revenue, expenses and withdrawals.

47. Transaction Analysis Rendered consulting services receiving $3,000 cash. The accounts involved are: (1) Cash (asset) (2) Revenues (equity)

48. Transaction Analysis Rendered consulting services receiving $3,000 cash.

49. Transaction Analysis Paid salaries of $800 to employees. The accounts involved are: (1) Cash (asset) (2) Salaries expense (equity) Remember that the balance in the salaries expense account actually increases. But, equity actually decreases because expenses reduce equity.

50. Transaction Analysis Paid salaries of $800 to employees. Remember that expenses decrease equity.