College

Accounting

College

Accounting

Heintz & ParryHeintz & Parry2020thth Edition Edition

Heintz & ParryHeintz & Parry2020thth Edition Edition

Introduction to AccountingIntroduction to Accounting

11ChapterChapter

1

Describe the purpose of

accounting

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\AA048430.JPG

The Purpose of AccountingThe Purpose of Accounting

To provide:

• Financial information about the current operations and financial condition of a business to individuals and organizations

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\256021.jpg

Who Are the Users of Accounting Information?Who Are the Users of Accounting Information?

• Owners

• Managers

• Creditors

• Government Agencies

2Describe the

accounting process.

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\AA048434.JPG

The Accounting ProcessThe Accounting Process

Accounting is a system of:

• Gathering financial information about a business and reporting this information to users

Step OneStep One

Looking at events that have taken place and thinking about how they affect the business.

ANALYZING

Step TwoStep Two

Entering financial information about events into the accounting system.

RECORDING

Step ThreeStep Three

Sorting and grouping similar items together rather than merely keeping a simple, diary-like record of numerous events.

CLASSIFYING

Step FourStep Four

The aggregation of many similar events to provide information that is easy to understand.

SUMMARIZING

Step FiveStep Five

Telling the results. Use of numbered tables in accounting is common.

REPORTING

Step SixStep Six

Deciding the meaning and importance of the information in various reports.

INTERPRETING

3

Define GAAP and describe the process used by FASB to develop these principles.

GAAPGAAP

• Generally Accepted Accounting Principles (GAAP)

• Developed by the Financial Accounting Standards Board (FASB)

• Procedures and guidelines to be followed in the accounting and reporting process

Process Used by FASB to Develop GAAPProcess Used by FASB to Develop GAAP

• Identify an accounting issue

• Place on the agenda

• Research an issue

• Issue a discussion memorandum

• Hold public hearings

• Issue an exposure draft

• Issue a Statement Of Financial Accounting Standards (SFAS)

4

Define three

types of

business

ownership

structures.

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\200022011-001.jpg

Three Types of Ownership StructuresThree Types of Ownership Structures

• Sole proprietorship

• Partnership

• Corporation

Use a call out box like this or like below.

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\360009C.jpg

Sole ProprietorshipSole Proprietorship

• One owner

• Owner assumes all risk

• Owner makes all decisions

Use a call out box like this or like below.

PartnershipPartnership

• Two or more partners

• Partners share risks

• Partners may disagree on how to run the business

CorporationCorporation

• Stockholders

• Stockholders have limited risk

• Stockholders may have little influence on business decisions

5

Classify different types of

businesses by activities.

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\200023529-001.jpg

Types of BusinessesTypes of Businesses

• Service business

• Merchandising business

• Manufacturing business

Service BusinessService Business

A business that provides a service.

Travel Agency

Physician

Computer Consultant

Merchandising BusinessMerchandising Business

A business that buys a product from another business to sell to customers.

Department Store

Jewelry Store

Pharmacy

Manufacturing BusinessManufacturing Business

A business that makes a product to sell.

Automobile Manufacturer

Toy Factory

Furniture Maker

6

Identify

career

opportunities

in accounting.

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\360001A.jpg

Career Opportunities in AccountingCareer Opportunities in Accounting

• Accounting clerk

• Bookkeeper

• Para-accountant

• Accountant

Accounting ClerkAccounting Clerk

• Record, sort, and file accounting information

• Often specialize in one area (such as cash, payroll, accounts receivable, accounts payable, inventory, or purchases)

• Usually have at least one year of accounting education

BookkeepersBookkeepers

• Supervise the work of accounting clerks

• Help with daily accounting work

• Summarize accounting information

• Help managers and owners interpret accounting information

• Usually have one to two years of accounting education and experience as an accounting clerk

Para-AccountantsPara-Accountants

• Provide many accounting, auditing, or tax services under the direct supervision of an accountant

• Have two years of accounting education or significant accounting and bookkeeping experience

AccountantsAccountants

• Design the accounting information system

• Focus on analyzing and interpreting information

• Look for important trends in the data

• Study the impact of alternative decisions

• Enter the field with a college degree in accounting

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\AA048502.JPG

Accounting CareersAccounting Careers

• Public accounting

• Private accounting

• Governmental and not-for-profit accounting

• C:\Documents and Settings\janderson\Desktop\Photos to use for Heintz PPT\AA048448.JPG

Public AccountingPublic Accounting

• Offer services to the public

• CPA (Certified Public Accountant)

• Auditing, Taxation, Management Advisory Services

Private AccountingPrivate Accounting

• Employees of private businesses

• Controller

• Accounting Information Systems; Financial, Cost, and Tax Accounting; Budgeting; and Internal Auditing

• CMA (Certified Managerial Accountant)

• CIA (Certified Internal Auditor)

Governmental and Not-for-Profit AccountingGovernmental and Not-for-Profit Accounting

• Work in all levels of government

• Also employed by universities, hospitals, charities, etc.

• Gather and report financial information