Chapter 1: Accounting Chapter 1: Accounting and Businessand Business

Investors (owners) Managers (employees) Lenders (bankers) Government:• Use financial information to find out

how much a company may pay in taxes• Also decide to provide funding to

companies for specific projects, and therefore also need to assess their financial state

Users of accounting informationUsers of accounting information

Sole Proprietorship

• 1 owner – responsible for all debts, gets all profits; may have several employees. (People can sue the owner)

• Ie: Barbershop, Dentist, Bakery, Convenient Store, Coffee shop

Forms of Business OwnershipForms of Business Ownership

Partnership

• Partners share the responsibility. (People can sue the partners)

• 2 or more owners – combine talents or money to run a business

• Ie: Lawyers, Public Accounting firms, Construction

Forms of Business OwnershipForms of Business Ownership

Corporation

• A Corporation is owned by many shareholders.(=owners)

• It is a separate legal entity. (Nobody can sue the owners)

• Their shares (ownership of the company) are issued to many owners

• Examples: Google, Apple, Wal-Mart and Tim Horton

Forms of Business OwnershipForms of Business Ownership

Bookkeeping:

• Involves only the recording of economic events

• Is just one part of accounting

• You can become a junior bookkeepers for small businesses at the end of this course!

• Typically you can become a bookkeeper after college diploma.

Bookkeeping Vs. AccountingBookkeeping Vs. Accounting

Accounting:

• Includes bookkeeping

• Also includes much more than just bookkeeping

• It involves analyzing and decision making after viewing financial statements.

• CA, CMA, CGA and CPA(US designation)

Bookkeeping Vs. AccountingBookkeeping Vs. Accounting

1. The Accounting Clerk or Bookkeeper1.Record transactions and organize

the source documents 2.Record accounting entries3.Make payroll calculations4.Carry out banking transactions

(e.g. depositing money into bank)

Bookkeeper’s Roles Bookkeeper’s Roles

1.Supervise and confirm that correct data are entered.

2.Ensure that accounting rules (Canadian GAAP) are met

3.Interpret the data4.Prepare financial reports5.Assist managers when making

decisions6.Supervise the work of all

accounting employees

Roles of Accountant Roles of Accountant

1. Routine Daily Activities1.These same activities occur

everyday. (usually simpler process)

2.Examples are processing bills, preparing cheques, recording transactions.

3.Typically done by bookkeeper or accounting clerk

Categories of Accounting WorkCategories of Accounting Work

2.Periodic Accounting Activities1.These activities occur at regular

intervals such as once a month or twice a month. (usually more complex)

2.Examples are preparing payroll cheque and preparing income statement every month. (bookkeeper and accountant)

Categories of Accounting WorkCategories of Accounting Work

3.Miscellaneous Activities1.Some accounting activities are

random. 2.Examples are meetings with

marketing manager or branch manager, meeting with banker about the company’s loan (by accountant)

Categories of Accounting WorkCategories of Accounting Work

1. Typically accountants and bookkeepers are good at using accounting software programs such as Simply Accounting and QuickBooks. Most small businesses would use Simply Accounting or QuickBooks.

2. Big Corporations have their own customized accounting software.

How Accountants use computer technology How Accountants use computer technology

3. Accountants also use Excel periodically if not everyday.

4. Computers are tools for accountants and bookkeepers.

5. Most accounting job ads will indicate, “Applicants must have superior analytical and problem solving skills. Communication skills are also essential. Accounting experience with the use of computers are key for candidates for this position.”

How Accountants use computer technology How Accountants use computer technology

What would you do or buy, if you had a million dollar?

If I had a million dollarIf I had a million dollar

Start and Finish “Getting to know you” sheet.

If you are done, then work on the textbook questions: Review Questions pg. 12• #1, 3, 4 and 5 (Thursday classwork)

• Review questions Page 12 #9, 10, 12, 18, 19 (Friday classwork)

•Review Exercise Page 13 Q#1f, 1h, 1i, 2, 3a, 3b, 3c, 3d and 3e (Friday classwork)

Textbook time! Textbook time!

What would you do or buy, if you had a million dollar?

Put your answers on a piece of paper. You can choose only two or three things

that you want to do or buy. You have 5 minutes to think (or talk)

about it with a partner. Then everyone will present in front of

the class.

If I had a million dollarIf I had a million dollar

I would buy a house with a decent sized backyard, deck and beautiful kitchen.

First 400,000 600,000 would be invested in mutual fundswhich would give me 6%yield. (36,000 a year)

If I had a million dollarIf I had a million dollar