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Learning Objectives

Power Notes. Chapter 1. Introduction to Accounting and Business. 1. Nature of a Business 2. The Role of Accounting in Business 3. Business Ethics 4. Profession of Accounting 5. Generally Accepted Accounting Principles 6. Assets, Liabilities, and Owner’s Equity 7. Business Transactions

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Learning Objectives

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  1. Power Notes Chapter1 Introduction to Accounting and Business 1. Nature of a Business 2. The Role of Accounting in Business 3. Business Ethics 4. Profession of Accounting 5. Generally Accepted Accounting Principles 6. Assets, Liabilities, and Owner’s Equity 7. Business Transactions 8. Financial Statements 9. Financial Analysis and Interpretation Learning Objectives C1

  2. Power Notes Chapter1 Introduction to Accounting and Business Slide # Power Note Topics • Accounting – An Information Process • Users of Accounting Information • Profession of Accounting • The Accounting Equation • Business Transactions • Financial Statements • Ratio of Liabilities to Owner’s Equity • 3 • 9 • 11 • 16 • 19 • 53 • 70 Note: To select a topic, type the slide # and press Enter.

  3. Accounting — An Information Process Identification of Users

  4. Accounting — An Information Process Identification of Users User Information Needs

  5. Accounting — An Information Process Identification of Users User Information Needs Accounting System

  6. Accounting — An Information Process Identification of Users User Information Needs Economic Data and Activities Accounting System

  7. Accounting — An Information Process Identification of Users User Information Needs Economic Data and Activities Accounting System Reports

  8. User Decisions Accounting — An Information Process Identification of Users User Information Needs Economic Data and Activities Accounting System Reports

  9. Users of Accounting Information Financial Accounting • investors • creditors • regulators • customers • competitors EXTERNAL USERS

  10. Users of Accounting Information • investors • creditors • regulators • customers • competitors Financial Accounting • owners • managers • employees EXTERNAL USERS ManagerialAccounting INTERNAL USERS

  11. The Accounting Profession Government Industry CPA Firms Staff Accountant Junior Accountant Auditor College Graduates What are the starting rates for new graduates?

  12. The Accounting Profession Government Industry CPA Firms Senior Accountant Chief Accountant Supervisor Staff Accountant Junior Accountant Auditor College Graduates How soon would I get promoted?

  13. The Accounting Profession Government Industry CPA Firms Manager Director Controller Senior Accountant Chief Accountant Supervisor Staff Accountant Junior Accountant Auditor College Graduates What are the top positions in each category?

  14. The Accounting Profession Government Industry CPA Firms Vice President Finance Partner Administrator Manager Director Controller Senior Accountant Chief Accountant Supervisor Staff Accountant Junior Accountant Auditor College Graduates What is the fastest path to top management?

  15. 2 1 10 to 20 years of experience 6 to 8 years of experience 1 2 The Accounting Profession Government Industry CPA Firms Vice President Finance Partner Administrator Manager Director Controller Senior Accountant Chief Accountant Supervisor Staff Accountant Junior Accountant Auditor College Graduates

  16. The Accounting Equation Resources What are an organization’s resources called?

  17. The Accounting Equation Resources = Sources Assets What are the sources of the assets? Cost of resources used in the business

  18. The Accounting Equation Resources = Sources Liabilities Assets Owner’s Equity Resources supplied by creditors and owners Cost of resources used in the business

  19. Business Transactions a. Chris Clark deposits $25,000 in a bank account for NetSolutions. LIABILITIES ASSETS = OWNER’S EQUITY

  20. Business Transactions a. Chris Clark deposits $25,000 in a bank account for NetSolutions. LIABILITIES ASSETS Cash 25,000 = OWNER’S EQUITY

  21. Business Transactions a. Chris Clark deposits $25,000 in a bank account for NetSolutions. LIABILITIES ASSETS Cash 25,000 = OWNER’S EQUITY Chris Clark, Capital 25,000

  22. Business Transactions b. NetSolutions buys land for $20,000. LIABILITIES ASSETS = OWNER’S EQUITY

  23. Business Transactions b. NetSolutions buys land for $20,000. LIABILITIES ASSETS Cash (20,000) = OWNER’S EQUITY

  24. Business Transactions b. NetSolutions buys land for $20,000. LIABILITIES ASSETS Cash (20,000) = OWNER’S EQUITY Land 20,000

  25. Business Transactions c. NetSolutions buys supplies for $1,350, agreeing to pay the supplier in the near future. LIABILITIES ASSETS = OWNER’S EQUITY

  26. Business Transactions c. NetSolutions buys supplies for $1,350, agreeing to pay the supplier in the near future. LIABILITIES ASSETS Supplies 1,350 = OWNER’S EQUITY

  27. Business Transactions c. NetSolutions buys supplies for $1,350, agreeing to pay the supplier in the near future. LIABILITIES ASSETS Accounts Payable 1,350 Supplies 1,350 = OWNER’S EQUITY

  28. Business Transactions d. NetSolutions earns fees of $7,500, receiving cash. LIABILITIES ASSETS = OWNER’S EQUITY

  29. Business Transactions d. NetSolutions earns fees of $7,500, receiving cash. LIABILITIES ASSETS Cash 7,500 = OWNER’S EQUITY

  30. Business Transactions d. NetSolutions earns fees of $7,500, receiving cash. LIABILITIES ASSETS Cash 7,500 = OWNER’S EQUITY Fees Earned 7,500

  31. Business Transactions e. NetSolutions paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275. LIABILITIES ASSETS = OWNER’S EQUITY

  32. Business Transactions e. NetSolutions paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275. LIABILITIES ASSETS Cash (3,650) = OWNER’S EQUITY

  33. Business Transactions e. NetSolutions paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275. LIABILITIES ASSETS Cash (3,650) = OWNER’S EQUITY Expenses (3,650)

  34. Business Transactions f. NetSolutions pays $950 to creditors on account. LIABILITIES ASSETS = OWNER’S EQUITY

  35. Business Transactions f. NetSolutions pays $950 to creditors on account. LIABILITIES ASSETS Cash (950) = OWNER’S EQUITY

  36. Business Transactions f. NetSolutions pays $950 to creditors on account. LIABILITIES ASSETS Accounts Payable (950) Cash (950) = OWNER’S EQUITY

  37. Business Transactions g. At the end of the month, the cost of supplies on hand is $550. LIABILITIES ASSETS = OWNER’S EQUITY

  38. Business Transactions g. At the end of the month, the cost of supplies on hand is $550. LIABILITIES ASSETS Supplies (800) = OWNER’S EQUITY

  39. Business Transactions g. At the end of the month, the cost of supplies on hand is $550. LIABILITIES ASSETS Supplies (800) = OWNER’S EQUITY Supplies Expense (800)

  40. Business Transactions h. Chris Clark withdraws $2,000 in cash. LIABILITIES ASSETS = OWNER’S EQUITY

  41. Business Transactions h. Chris Clark withdraws $2,000 in cash. LIABILITIES ASSETS Cash (2,000) = OWNER’S EQUITY

  42. Business Transactions h. Chris Clark withdraws $2,000 in cash. LIABILITIES ASSETS Cash (2,000) = OWNER’S EQUITY Chris Clark, Drawing (2,000)

  43. Transaction Summary LIABILITIES ASSETS Cash 5,900 Supplies 550 Land 20,000 OWNER’S EQUITY =

  44. Transaction Summary LIABILITIES ASSETS Accts. Payable 400 Cash 5,900 Supplies 550 Land 20,000 OWNER’S EQUITY =

  45. Transaction Summary LIABILITIES ASSETS Accts. Payable 400 Cash 5,900 Supplies 550 Land 20,000 OWNER’S EQUITY = C. Clark, Capital 25,000 C. Clark, Drawing (2,000) Fees Earned 7,500 Wages Expense (2,125) Rent Expense (800) Supplies Expense (800) Utilities Expense (450) Misc. Expense (275)

  46. OWNER’S EQUITY Effects of Transactions on Owner’s Equity

  47. OWNER’S EQUITY Effects of Transactions on Owner’s Equity decreased by

  48. OWNER’S EQUITY Effects of Transactions on Owner’s Equity decreased by Owner’s withdrawals Expenses

  49. OWNER’S EQUITY Effects of Transactions on Owner’s Equity increased by

  50. OWNER’S EQUITY Effects of Transactions on Owner’s Equity increased by Owner’s investments Revenues

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