1 / 7

Establish a Service Business

Establish a Service Business. Important Considerations Assets Liabilities Owner’s equity and the Accounting Equation . We’ll discuss more about these over the next few slides. Case Development-Step 1: Your Own Business. Decide on a service business A service business

gregghicks
Download Presentation

Establish a Service Business

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Establish a Service Business • Important Considerations • Assets • Liabilities • Owner’s equity • and the Accounting Equation. We’ll discuss more about these over the next few slides.

  2. Case Development-Step 1: Your Own Business • Decide on a service business • A service business • Sells services, not merchandise • Less complex and thus is a preferred scenario when time is limited • For purposes of the provided case, the service business is: • “LightSpeed Networks: A Gaming Service”

  3. Assets, Liabilities, and Owner’s Equity • Asset • Property or economic resources owned by a business or individual • Examples? • Liability • Amounts owed to creditors • Examples? • Owner’s Equity • Owner’s claim to or investment in the assets of a business • Examples?

  4. Case Development-Step 2: Assets • Determine what “things” are needed to start the business • i.e., Cash Account, basic equipment, maybe a vehicle, supplies, etc. • These are “things” that a business has possession and control of; we call these “things” ASSETS.

  5. Case Development-Step 3: Liabilities • Determine what liabilities the business may need to incur. • Plan to purchase at least one item “on-account.” • This entails the use of a liability account, representing the amount owed fora purchase. The amount owed is called a LIABILITY.

  6. Net Worth • The difference between the total ASSET amount and the total LIABILITY amount is defined as NET WORTH. • The business proprietor is the owner • The owner’s name should be included in the capital and drawing accounts • Accounts that represent increases/decreases to the Net Worth. • Typically investments/withdrawals made by the owner.

  7. Accounting Equation • Assets = Liabilities + Owner’s Equity • The accounting equation should never be “out of balance” • If it is, then there is an error in the accounting records that must be located and corrected! • The Balance Sheet is the financial statement that contains the Asset, Liabilities and Owner’s Equity information for a moment in time.

More Related