Download - Ch2 Notes.ppt
-
7/31/2019 Ch2 Notes.ppt
1/26
System used to keep track of financesRecord of money that comes and goes outFollows strict rulesFinancial Accountingrecording and analyzing
Managerial Accountingdecision making
What is Accounting?
2.1
-
7/31/2019 Ch2 Notes.ppt
2/26
Assets = Liabilities + Equity
AssetsThings of value you own
LiabilitiesThings that you owe to othersEquityWhat you have left/are worth after you use all
of your assets to pay off your liabilitiesAssets Liabilities = Equity/Net Worth
Fundamental Accounting Equation
2.1
-
7/31/2019 Ch2 Notes.ppt
3/26
2.1
-
7/31/2019 Ch2 Notes.ppt
4/26
List of things of values that you ownLeft side of balance sheetListed in order of liquidity.
Two categoriesCurrent Assets: turn to cash in 1 yearFixed Assets: needed to run the businessTotal is double underlined
Assets
2.1
-
7/31/2019 Ch2 Notes.ppt
5/26
Money that is owed TO you by customersBilled but not yet receivedUsually give 30 days to paytherefore current assetDetailed records are keptUsually only the total appears
Accounts Receivable
2.1
-
7/31/2019 Ch2 Notes.ppt
6/26
Lists of things that you owe to othersRight side of balance sheetTwo categoriesCurrent liabilities: pay within a yearLong term liabilities: more than a yearTotalled but not underlinedNeeds to be added to Equity
Liabilities
2.1
-
7/31/2019 Ch2 Notes.ppt
7/26
Money that you have to pay to suppliers/creditorsUsually have 30 days to paytherefore Current Liability
Detailed records are keptUsually only total appears on the balance sheet
Accounts Payable
2.1
-
7/31/2019 Ch2 Notes.ppt
8/26
Also called Net Worth or Owners EquityMoney owner invested in companyPlus any profits or Minus any losses
Minus money owner takes out for personal usecalled DrawingsWhatever is left over after all the liabilities aresubtracted from the assets
Assets - Liabilities = EquityShows what the company is worth
Equity
2.1
-
7/31/2019 Ch2 Notes.ppt
9/26
Text pages 17-18Questions 1-6Exercises 1-6
Workbook pages 4 & 5
Homework
2.1
-
7/31/2019 Ch2 Notes.ppt
10/26
Formal DocumentsStandard formatRegular basis
At least yearly (fiscal year)Required by law for tax purposesKey information about financial positionBalance Sheet
Income Statement
Financial Statements
2.2
-
7/31/2019 Ch2 Notes.ppt
11/26
Provides accurate picture of how company is doingUsed byBusiness owners/managersInvestors
LendersGovernment
Using Financial Statements
2.2
-
7/31/2019 Ch2 Notes.ppt
12/26
Statement of financial positionSnap shot in timeContains fundamental accounting equation
Assets = Liabilities + EquityAlways has three lines at the topWhoWhatWhen
Balance Sheet
2.2
-
7/31/2019 Ch2 Notes.ppt
13/26
Who
What
When
2.2
-
7/31/2019 Ch2 Notes.ppt
14/26
Balance Sheet
Both TOTALS should be on the same line.
List all assets on theleft
Single underline
Add up total AssetsDouble underlineTOTAL
List all liabilities on rightSingle underlineAdd up total LiabilitiesCalculate EquityAssets-Liabilities
Single underlineAdd up Liabilities andEquityDouble UnderlineTOTAL
2.2
-
7/31/2019 Ch2 Notes.ppt
15/26
Each column starts with a dollar signA line restarts the column
Dollar Signs?
2.2
-
7/31/2019 Ch2 Notes.ppt
16/26
Single lineSingle line
Double line Double line
$
2.2
-
7/31/2019 Ch2 Notes.ppt
17/26
Using Column Paper
2.2
-
7/31/2019 Ch2 Notes.ppt
18/26
Text Page 24-25 Exercise #1 (wb6)Have me check when doneFOLLOW TEXTBOOK EXAMPLES
HomeworkReview Questions 1-17Text page 25 Exercise #2 (wb7)
Assignment
2.2
-
7/31/2019 Ch2 Notes.ppt
19/26
Liquidate
Claims against Assets
2.3
-
7/31/2019 Ch2 Notes.ppt
20/26
2.3
-
7/31/2019 Ch2 Notes.ppt
21/26
Page 27-28 (wb8-9)Exercises 1 & 2
Homework
2.3
-
7/31/2019 Ch2 Notes.ppt
22/26
Generally Accepted Accounting Principles1. Business Entity
Keep business and personal separate
2. Going Concern (Continuing Concern)
Assume business continues as usual3. Conservatism
Fair and reasonable evaluations and estimates
GAAPs
2.4
-
7/31/2019 Ch2 Notes.ppt
23/26
Text pg 30-31 (wb10)Review Questions 1-6
Exercise #1Separate business from personalCases for further thought 1-6
Homework
2.4
-
7/31/2019 Ch2 Notes.ppt
24/26
Makes accounting quicker and easierEliminates arithmetic errorsDedicated accounting programsCant put the accounting equation out of balance
Provide immediate financial statementsSpecialize to meet your business needs
Computers and Accounting
2.5
-
7/31/2019 Ch2 Notes.ppt
25/26
Does not eliminate all errorsCould put information in wrong accountNeed to understand the basics of accountingFundamental accounting equation
A/R owes you moneyA/P you owe money to
Computers and Accounting
2.5
-
7/31/2019 Ch2 Notes.ppt
26/26
With a partner use a spreadsheet to complete page25 Exercise #3
Homework Chapter 2 ReviewPage 38-39 Exercises 1-5
Assignment
2.5