ACCOUNTING

Accounting

Is an information system that provides reports to stakeholders about the economic activities and

conditions of a business.

ACCOUNTING PROFESSIONS

Private

Non Profit

Controller

Public CPA

Specialize

Financial Accounta

ntManagerial

AccountantCost

Accounting

Following the Rules

Generally Accepted Accounting Principals

(GAAP)

• The rules companies follow when they are reporting their data to others.

Financial Accounting Standards Board (FASB)

• Responsible for developing Accounting Principals

ACCOUNTING EQUATION

Assets Liabilities Owners EquityAssets Liabilities Owners Equity

Assets

Resources Owned by the business

Liabilities

The debts of the business

Owners Equity

The rights of the Owners

T Accounts

Debt Credit

Account Name

Assets

Debit Credit

(Cash, Supplies, and Land)

Liabilities and Owners Equity

Debit Credit

Assets Liabilities Owners Equity

Assets Liabilities Owners Equity

5000 5000

200

200

1700 1700

The owner deposits $5,000 cash into the company.

They purchase $200 worth of supplies and pay for it in cash.

They buy $1,700 worth of office equipment and charge it to pay later.

More Transactionsa) Bob Bingo makes a deposit into his new company

of $15,000.

b) The Business purchases some land for the company for $10,000.

c) The company purchases $1,350 worth of supplies, but we put in on our charge account to pay for it later when they bill us.

d) We did some work for customers and they are paying us $7,500.

e) We have to pay some of our expenses: wages $2,125, rent $800, and utilities $275.

f) The bill for the supplies has arrived, and we need to make a payment. We are going to pay $950 of the $1,350 we owe.

g) At the end of the month Bob Bingo withdrawals $2,000 for personal use.

What are our Account Balances?

AssetsCash $6,350Supplies

$1,350Land $10,000

Liabilities $400

Owners Equity $17,300

Total Assets $17,700 Total Liabilities and Owners Equity

$17,700

Financial Statements

Financial Statements

Income Statement Statement of Owners Equity Balance Sheet Statement of Cash Flows

Income Statement

Summary of revenue and expenses

Statement of Owners Equity

Summary of changes to Owners Equity

Balance Sheet

Lists the Assets, Liabilities, and Owners Equity

Statement of Cash Flow

Summary of the cash receipts and the cash payments