century 21 accounting © thomson/south-western objectives define accounting, service business and...
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CENTURY 21 ACCOUNTING © Thomson/South-Western
OBJECTIVESOBJECTIVES
Define Accounting, service business and proprietorship
Advantages and disadvantages of accounting Understand Assets, liabilities and owner’s equity State the accounting equation
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LESSON 1-1
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-1LESSON 1-1
Accounting: (Definition) planning, recording, analyzing, and interpreting financial information
Language of Business
What is Accounting ?
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 1-1LESSON 1-1
Helps managers make better business decisions Controls spending
Inaccurate accounting records can lead to business failure and bankruptcy
Failure to understand accounting can result in poor business decisions
Advantages
Disadvantages
CENTURY 21 ACCOUNTING © Thomson/South-Western
Accounting TermsAccounting Terms
accounting: planning, recording, analyzing, and interpreting financial information
accounting system: a planned process for providing financial information that will be useful to management (for making decisions)
accounting records: organized summaries of a business’s financial activities
financial statements: financial reports that summarize the financial condition and operations of a business
LESSON 1-1
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CENTURY 21 ACCOUNTING © Thomson/South-Western
Chapters 1 – 8 Chapters 1 – 8
In Chapter 1 – 8 sample in PowerPoints are:Accounting records for a proprietorshipAccounting records for a service businessCompany Name is: Techknow ConsultingService provided: help setup and troubleshoot computer networks
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LESSON 1-1
CENTURY 21 ACCOUNTING © Thomson/South-Western
Types of BusinessesTypes of Businesses
Service business: a business that performs an activity for a fee
installing a network
not a tangible product - (can’t necessarily touch or feel it or carry it away) example: hair cut
CENTURY 21 ACCOUNTING © Thomson/South-Western
Business StructuresBusiness Structures
What is a proprietorship? proprietorship: a business owned by one person
Note: owner’s must keep personal accounting records separate from business records
Illegal not to
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LESSON 1-1
CENTURY 21 ACCOUNTING © Thomson/South-Western
Business StructuresBusiness Structures
What are three advantages?Ease of formation, total control, non-shared
profits What are the disadvantages?
Limited resourcesUnlimited liabilityLimited expertiseLimited lifeMust follow both federal and state laws
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LESSON 1-1
CENTURY 21 ACCOUNTING © Thomson/South-Western
The Accounting EquationThe Accounting Equation
Two primary components in Accounting: Asset: anything of value that is owned
What are some things a business may own?
Equities: financial rights to the assets of a business What you owe What you have left if you subtract what you owe
from what you own What are some types of owner’s equity?
LESSON 1-1
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CENTURY 21 ACCOUNTING © Thomson/South-Western
The Accounting EquationThe Accounting Equation• Equities: financial rights to the assets of a business• Two Types:
liability: an amount owed by a business Those whom money is owed to You charged products to pay later, or you buy stocks,
bonds etc, to fund your business When you charge something you still have to pay it
owner’s equity: The amount remaining after the you subtract the
value of liabilities from the value of assets
LESSON 1-1
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CENTURY 21 ACCOUNTING © Thomson/South-Western
If you have a computer and an XBOX with a combined value of $850 and you owe $250 on the computer, how much is your owner’s equity?
Equities
Assets Liabilities Owner’s Equity
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LESSON 1-1
CENTURY 21 ACCOUNTING © Thomson/South-Western
Accounting EquationAccounting Equation
Accounting Equation: the relationship among assets, liabilities, and owner’s equity is written as an equation: Written as:
Assets = Liabilities + Owner’s Equity
CENTURY 21 ACCOUNTING © Thomson/South-Western
Accounting EquationAccounting Equation
Characteristics of the equation:Assets and Equities must be equalCan be written in a T-Account form:
Assets on the left, equities on the right
Total on the left will always = the total on the right
Assets = Liabilities + Owner’s Equity
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 1-1
THE ACCOUNTING EQUATIONTHE ACCOUNTING EQUATION
CENTURY 21 ACCOUNTING © Thomson/South-Western
The Accounting EquationThe Accounting Equation
Assets and Equities must be equal Total on the left will always = the total on the right
If Assets are $5000 and liability is $1000, what is Owner’s Equity?
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LESSON 1-1
CENTURY 21 ACCOUNTING © Thomson/South-Western
Example 1.1Example 1.1
Assets = Liabilities + Owner’s Equity
1. ? 4,000 10,000
2. 10,000 ? 8,000
3. 60,000 38,000 ?
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LESSON 1-1
1. Assets = 14,000 2. Liabilities = 2,0003. Owner’s Equity = $22,000
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 1-1
Ethical Decision MakingEthical Decision Making page 9
ethics: the principles of right and wrong that guide an individual in making decisions
business ethics: the use of ethics in making business decisions
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 1-1
TERMS REVIEWTERMS REVIEW
accounting accounting system accounting records financial statements service business proprietorship asset
equities liability owner’s equity accounting equation ethics business ethics
CENTURY 21 ACCOUNTING © Thomson/South-Western
Notebook AssignmentNotebook AssignmentLesson 1-1 Assignment 2Lesson 1-1 Assignment 2
Number 1: What is the accounting equationNumber 2: Draw a “T Account”: Put accounting equation elements on the correct side. Number 3: What are two examples of a service business?Number 4: What is a proprietorship?
Assets = Liabilities + Owner’s Equity
CENTURY 21 ACCOUNTING © Thomson/South-Western
Assignment:Assignment:
Work Together 1-1 On Your Own 1-1 Application 1-1
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LESSON 1-1