+ AIM Why is Accounting important to study if you want to work in business? DO NOW What is a good...
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+ AIM Why is Accounting important to study if you want to work in business? DO NOW What is a good definition of Accounting?
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Transcript of + AIM Why is Accounting important to study if you want to work in business? DO NOW What is a good...
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AIMWhy is Accounting important to study if you want to work in business?
DO NOWWhat is a good definition of Accounting?
+Why is it important to study accounting, even if you don’t want to be an accountant?
+THE ACCOUNTING PROFESSION• Public Accountants
Service to the general public through the services they perform.
• Private AccountantsIndividuals in companies involved in activities including cost and tax accounting, systems, and internal auditing.
• Not For Profit AccountantsReporting and control for government units, foundations, hospitals, labor unions, colleges/universities, and charities.
+ What about other jobs/professions that use accounting info?
What are some other professions that use accounting information as an important part of their job?
Work together to create a list, be ready to explain how that profession uses accounting info.
+What is the difference between a service business and a manufacturing business?
SERVICE
MANUFACTURING
+Service or Manufacturing?
The Gap
Glendale Medical Center
Handy Man
Ford Motor Company
The Chase Manhattan Bank
Michigan City Animal Hospital
Prudential Insurance Company of America
Bethlehem Steel Corporation
+
Proprietorship Partnership Corporation
Owned by two or more persons.
Often retail and service-type businesses
Generally unlimited personal liability
Partnership agreement
Ownership divided into shares of stock
Separate legal entity organized under state corporation law
Limited liability
Forms of Business OwnershipForms of Business Ownership
Generally owned by one person.
Often small service-type businesses
Owner receives any profits, suffers any losses, and is personally liable for all debts.
+
MUST ALWAYS BALANCE!
AssetsAssets LiabilitiesLiabilitiesOwners’ EquityOwners’ Equity= +
The Basic Accounting Equation
+
AssetsAssets LiabilitiesLiabilitiesOwners’ EquityOwners’ Equity= +
Anything of value
Resources a business owns.
Provide future services or benefits.
Cash, Supplies, Equipment, Prepaid Insurance, etc.
AssetsAssets
The Basic Accounting Equation
+
AssetsAssets LiabilitiesLiabilitiesOwners’ EquityOwners’ Equity= +
Amount owed by a business
Claims against assets (debts and obligations).
Creditors - parties to whom money is owed.
Accounts payable, Notes payable etc.
LiabilitiesLiabilities
The Basic Accounting Equation
+
AssetsAssets LiabilitiesLiabilitiesOwners’ EquityOwners’ Equity= +
The amount remaining after the value of all liabilities is subtracted from the value of assets
Ownership claim on total assets.
Referred to as residual equity.
Capital, Drawings, etc. (Proprietorship or Partnership).
Owners’ EquityOwners’ Equity
The Basic Accounting Equation
+Asset or Liability/OE?
Let’s see how much you have learned……
+Create a list of accounts for yourself and their $ values.
Assets
Liabilities
Owner’s Equity (Assets – Liabilities)
+Practice Exercise
Assets = Liabilities + Owner’s Equity
$30,000 $13,000
$60,000 $20,000
$51,000 $25,000
