Topic 1 BA100 Intro
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Transcript of Topic 1 BA100 Intro
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.1
CHAPTER 1INTRODUCTION
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.2
WHAT IS ACCOUNTING?
Accounting can be defined as:
The process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of
that information.
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.3
BRANCHES OF ACCOUNTINGTwo main branches:
Financial Accounting (for external users and focuses on information regarding the whole organization)
Management Accounting (for internal users and centers on costing information for operational decision making purposes )
The focus of BA100 is Financial Accounting
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.4
WHAT ARE THE OBJECTIVES OF ACCOUNTING?
Is the business making a profit or a loss? What is the business worth? What is a transaction worth? How much cash is in the business? How wealthy is the business? How much is the business owed? How much does the business owe? Keeping a financial check on activities.
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.5
Sole tradersPartnershipsClubsManufacturing entitiesCompanies
5
TYPES OF ENTITY
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.6
SOLE TRADER/ PROPRIETOR Single owner
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.7
PARTNERSHIPS Minimum 2 owners
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.8
CLUBS / ORGANIZATIONS
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.9
MANUFACTURING COMPANY
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.10
COMPANIES
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.11
WHAT IS BOOKKEEPING?Bookkeeping is the process of recording data relating to accounting transactions
in the accounting books.
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.12
USERS OF ACCOUNTING INFORMATION Managers Owner(s) of the business A prospective buyer The bank Tax inspectors A prospective partner Investors Creditors
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.13
THE ACCOUNTING EQUATIONResources supplied by the owner = Resources in
the business
Capital = Assets
But if someone else has provided some of the assets:
Capital = Assets - Liabilities
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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12th Edition, © Pearson Education Limited 2012
Slide 1.14ACCOUNTING EQUATION IS LIKE A SCALE…… IT SHOULD ALWAYS BALANCE
ASSETS = CAPITAL + LIABILITIES