Академический Документы
Профессиональный Документы
Культура Документы
1-1
Accounting in
Action
Chapter
1-2
Study
Study Objectives
Objectives
1.
2.
3.
4.
5.
6.
7.
8.
Chapter
1-3
Accounting
Accounting in
in Action
Action
What is
Accounting?
Three
activities
Who uses
accounting
data
Chapter
1-4
The Building
Blocks of
Accounting
Ethics in
financial
reporting
Generally
accepted
accounting
principles
Assumptions
The Basic
Accounting
Equation
Assets
Liabilities
Owners
equity
Using the
Basic
Accounting
Equation
Transaction
analysis
Summary of
transactions
Financial
Statements
Income
statement
Owners
equity
statement
Balance
sheet
Statement of
cash flows
What
What is
is Accounting?
Accounting?
The purpose of accounting is to:
(1) identify,
identify record,
record and communicate the
economic events of an
(2) organization to
(3) interested users.
Chapter
1-5
What
What is
is Accounting?
Accounting?
Three Activities
Illustration 1-1
Accounting process
Who
Who Uses
Uses Accounting
Accounting Data?
Data?
Internal Users
Human
Resources
Finance
Management
IRS
Investors
Marketing
Customers
Chapter
1-7
SEC
Labor
Unions
Creditors
External
Users
Who
Who Uses
Uses Accounting
Accounting Data?
Data?
Common Questions Asked
1. Can we afford to give our
employees a pay raise?
User
Human Resources
Investors
Management
Finance
Marketing
Creditors
Chapter
1-8
Who
Who Uses
Uses Accounting
Accounting Data?
Data?
Discussion Question
Q1-1: Accounting is ingrained in our society and it
is vital to our economic system. Do you agree?
Explain.
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Ethics In Financial Reporting
Standards of conduct by which ones actions are
judged as right or wrong, honest or dishonest, fair
or not fair, are Ethics.
Recent financial scandals include: Enron,
WorldCom, HealthSouth, AIG, and others.
Congress passed Sarbanes-Oxley Act of 2002.
Effective financial reporting depends on sound
ethical behavior.
Chapter
1-10
Ethics
Ethics
Review Question
Ethics are the standards of conduct by which one's
actions are judged as:
a. right or wrong.
b. honest or dishonest.
c. fair or not fair.
d. all of these options.
Chapter
1-11
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Various users
need financial
information
Financial Statements
Balance Sheet
Income Statement
Statement of Owners Equity
Statement of Cash Flows
Note Disclosure
Generally Accepted
Accounting
Principles (GAAP)
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Organizations Involved in Standard Setting:
Securities and Exchange Commission (SEC)
http://www.sec.gov/
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Cost Principle (Historical) dictates that companies
record assets at their cost.
Issues:
Reported at cost when purchased and also over the
time the asset is held.
Cost easily verified, whereas market value is often
subjective.
Fair value information may be more useful.
Chapter
1-14
Assumptions
Assumptions
Monetary Unit Assumption include in the
Forms of
Business Ownership
Corporation.
Chapter
1-15
Forms
Forms of
of Business
Business Ownership
Ownership
Proprietorship
Chapter
1-16
Partnership
Corporation
Generally owned
by one person.
Owned by two or
more persons.
Often small
service-type
businesses
Ownership
divided into
shares of stock
Owner receives
any profits,
suffers any
losses, and is
personally liable
for all debts.
Generally
unlimited
personal liability
Separate legal
entity organized
under state
corporation law
Limited liability
Partnership
agreement
SO 5 Explain the monetary unit assumption
and the economic entity assumption.
Assumptions
Assumptions
Review Question
Combining the activities of Kellogg and General
Mills would violate the
a. cost principle.
b. economic entity assumption.
c. monetary unit assumption.
d. ethics principle.
Chapter
1-17
Forms
Forms of
of Business
Business Ownership
Ownership
Review Question
A business organized as a separate legal entity
under state law having ownership divided into
shares of stock is a
a. proprietorship.
b. partnership.
c. corporation.
d. sole proprietorship.
Chapter
1-18
The
The Basic
Basic Accounting
Accounting Equation
Equation
Assets
Liabilities
Owners
Equity
Chapter
1-19
The
The Basic
Basic Accounting
Accounting Equation
Equation
Assets
Liabilities
Owners
Equity
The
The Basic
Basic Accounting
Accounting Equation
Equation
Assets
Liabilities
Owners
Equity
The
The Basic
Basic Accounting
Accounting Equation
Equation
Assets
Liabilities
Owners
Equity
Chapter
1-22
Owners
Owners Equity
Equity
Illustration 1-6
Chapter
1-23
Owners
Owners Equity
Equity
Illustration 1-6
Chapter
1-24
Using
Using The
The Basic
Basic Accounting
Accounting Equation
Equation
Transactions are a businesss economic events
recorded by accountants.
Chapter
1-25
Transactions
Transactions (Question?)
(Question?)
Q1-15: Are the following events recorded in the
accounting records?
Owner
An employee
is hired.
withdraws
cash for
personal use.
Event
Supplies are
purchased
on account.
Criterion
Record/
Dont Record
Chapter
1-26
Transactions
Transactions
Discussion Question
Q1-18: In February 2010, Paula King invested
an additional $10,000 in her business, Kings
Pharmacy, which is organized as a proprietorship.
Kings accountant, Lance Jones, recorded this
receipt as an increase in cash and revenues. Is
this treatment appropriate? Why or why not?
See notes page for discussion
Chapter
1-27
Transactions
Transactions Analysis
Analysis
Transaction (1). Investment By Owner. Ray Neal decides
to open a computer programming service which he names
Softbyte. On September 1, 2010, he invests $15,000 cash in
the. The effect of this transaction on the basic equation is:
Chapter
1-28
Transactions
Transactions Analysis
Analysis
Transaction (2). Purchase of Equipment for Cash. Softbyte
purchases computer equipment for $7,000 cash.
Chapter
1-29
Transactions
Transactions Analysis
Analysis
Transaction (3). Purchase of Supplies on Credit. Softbyte
purchases for $1,600 from Acme Supply Company computer
paper and other supplies expected to last several months.
Chapter
1-30
Transactions
Transactions Analysis
Analysis
Transaction (4). Services Provided for Cash. Softbyte
receives $1,200 cash from customers for programming
services it has provided.
Chapter
1-31
Transactions
Transactions Analysis
Analysis
Transaction (5). Purchase of Advertising on Credit.
Softbyte receives a bill for $250 from the Daily News for
advertising but postpones payment until a later date.
Chapter
1-32
Transactions
Transactions Analysis
Analysis
Transaction (6). Services Provided for Cash and Credit.
Softbyte provides $3,500 of programming services for
customers. The company receives cash of $1,500 from
customers, and it bills the balance of $2,000 on account.
Chapter
1-33
Transactions
Transactions Analysis
Analysis
Transaction (7). Payment of Expenses. Softbyte pays the
following Expenses in cash for September: store rent $600,
salaries of employees $900, and utilities $200.
Chapter
1-34
Transactions
Transactions Analysis
Analysis
Transaction (8). Payment of Accounts Payable. Softbyte
pays its $250 Daily News bill in cash.
Chapter
1-35
Transactions
Transactions Analysis
Analysis
Transaction (9). Receipt of Cash on Account. Softbyte
receives $600 in cash from customers who had been billed
for services [in Transaction (6)].
Chapter
1-36
Transactions
Transactions Analysis
Analysis
Transaction (10). Withdrawal of Cash by Owner. Ray Neal
withdraws $1,300 in cash from the business for his personal
use.
Chapter
1-37
Transactions
Transactions Analysis
Analysis
Summary of Transactions
Chapter
1-38
Illustration 1-8
Tabular summary of
Softbyte transactions
Financial
Financial Statements
Statements
Companies
Companies prepare
prepare four
four financial
financial statements
statements from
from
the
the summarized
summarized accounting
accounting data:
data:
Income
Statement
Chapter
1-39
Owners
Equity
Statement
Balance
Sheet
Statement
of Cash
Flows
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Review Question
Net income will result during a time period when:
a. assets exceed liabilities.
b. assets exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses.
Chapter
1-40
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Income Statement
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Illustration 1-9
Financial statements and
their interrelationships
Chapter
1-42
Financial
Financial Statements
Statements
Illustration 1-9
Financial statements and
their interrelationships
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial
Statements
Statements
The ending
balance in
owners equity
is needed in
preparing the
balance sheet
Illustration 1-9
Financial statements and
their interrelationships
Chapter
1-44
Financial
Financial Statements
Statements
Balance Sheet
Illustration 1-9
Financial statements and
their interrelationships
Chapter
1-45
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial
Statements
Statements
Illustration 1-9
Financial statements and
their interrelationships
Chapter
1-46
Financial
Financial Statements
Statements
Statement of Cash Flows
Information for a specific period of time.
Answers the following:
1. Where did cash come from?
2. What was cash used for?
3. What was the change in the cash balance?
Chapter
1-47
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Chapter
1-48
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Review Question
Which of the following financial statements is
prepared as of a specific date?
a. Balance sheet.
b. Income statement.
c. Owner's equity statement.
d. Statement of cash flows.
Chapter
1-49
SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Discussion Question
SO 8 Understand the four financial statements and how they are prepared.
Accounting
Accounting Career
Career Opportunities
Opportunities
Public Accounting
Careers in auditing and taxation serving the general public.
Private Accounting
Careers in industry working in cost accounting, budgeting,
accounting information systems, and taxation.
Opportunities in Government
Careers with the IRS, the FBI, the SEC, and in public
colleges and universities.
Forensic Accounting
Careers with insurance companies and law offices to conduct
investigations into theft and fraud.
Chapter
1-51
Copyright
Copyright
Copyright 2009 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted
in Section 117 of the 1976 United States Copyright Act
without the express written permission of the copyright owner
is unlawful. Request for further information should be
addressed to the Permissions Department, John Wiley & Sons,
Inc. The purchaser may make back-up copies for his/her own
use only and not for distribution or resale. The Publisher
assumes no responsibility for errors, omissions, or damages,
caused by the use of these programs or from the use of the
information contained herein.
Chapter
1-52