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Accounting
description
Transcript of Accounting
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Accounting Introduction
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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.)
What is Accounting?
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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
Poor accounting
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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.
Job Opportunities
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Controller ◦Accountant needed to maintain accounting
systems and supervise accounting personnel.
◦5 or more years of experience◦Professional certification◦Computer skills
Job Opportunities
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Accountants ◦Needed by local businesses.◦Supervise all functions of accounting.◦Good interpersonal skills◦Good communications skills
Job Opportunities
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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
Job Opportunities
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Accounting Clerk◦Records, sorts, and files accounting
information.◦Titles: accounting clerks and payroll clerks◦Do specific accounting activities
Job Opportunities
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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)
**Communication Skills**
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Ethics – principles of right and wrong that guide an individual in making decisions.
Business Ethics – using your personal ethics to make business decisions.
Business Ethics
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Excessive emphasis on profits. Misplaced business loyalty. Personal advancement. Expectation of not getting caught. Unethical business environment. Unwillingness to take a stand.
Why do people act unethically?
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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
Ch.2 -- Starting A Proprietorship
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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
Accounting Equation
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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
How business activities change the accounting equation.
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Assets = Liabilities + Owner’s Equity 0 = 0 + 0Transaction #1: Received cash from owner as an
investment, $10,000.
Assets = Liabilities + Owner’s Equity
Cash = Ben Furman, CapitalBeg. Balance 0 0Trans.#1 +10,000 +10,000
(investment)New Balance 10,000 10,000
Example Transactions
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Assets = Liabilities + Owner’s Equity
Transaction #2: Paid cash for supplies, $1,577.
Cash + Supplies = Ben Furman, Capital
Beg. Balance 0 0 0Trans#1 +10,000 +10,000New Balance 10,000 10,000
Trans#2 - 1,577 +1,577New Balance 8,423 + 1,577
10,000
Total left side: 8,423+1,577=10,000Total Right Side: 10,000
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Assets = Liabilities + Owner’s Equity
Transaction #3: Paid cash for insurance, $1,200.
Cash + Supplies + Prepaid Insurance = BF, Capital
Beg. Balance 0 0 0Trans#1 +10,000 +10,000 (investment)New Balance 10,000 10,000
Trans#2 - 1,577 +1,577New Balance 8,423 + 1,577 = 10,000
Trans#3 - 1,200 +1,200New 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
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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 +1,200New Bal. 7,223 1,577 1,200 =
10,000
C + S + PI = BCS + CapitalTrans#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 = 12,720Total Right Side: 10,000 + 2,720 = 12,720
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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 + 10,000Trans.#5 -1,360 - 1,360New Balance 5,863 4,297 1,200 = 1,360 + 10,000
Total left side: 5,863 + 4,297 + 1,200 = 11,360Total Right Side: 10,000 + 1,360 = 11,360
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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.
BALANCE SHEET
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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
Preparing a Balance Sheet
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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
Preparing a Balance Sheet
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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.
Preparing a Balance Sheet