Show Me the Money Nature of Accounting Financial Analysis LAP 5
Objectives Describe the importance of accounting to an organization. Explain basic accounting activities.
Describe the importance of accounting to an organization. Objective Describe the importance of accounting to an organization.
Tucker and Ian own a lawn- mowing and snow-shoveling business. They need gasoline for their mowers. Unfortunately, they don’t have enough money to buy gas. They overlooked an important business function—accounting.
What Is Accounting? The process of keeping financial records A basic business function A career choice Something we use in our daily lives
What Do Businesses Track with Accounting Information? The value of the things they own Accounts owed to them Amounts that they owe to others
Why Is Accounting Important to Businesses? Enables them to maintain control of their money Is used to make good financial decisions
How Does Accounting Maintain Financial Control? Tracking the business’s performance Planning for the future
Who Uses Accounting Information? Internal users Are usually managers Use managerial accounting information
Who Uses Accounting Information? External users Consist of: Investors Creditors Government Use financial accounting information
Explain basic accounting activities. Objective Explain basic accounting activities.
The Accounting System Described Is a consistently applied process for handling a business’s financial information Enables users to understand and accurately interpret the numbers Must contain accurate, up-to-date information Should meet a business’s specific needs and requirements
Accounting System Requirements Be easy to use Process data quickly Be expandable Be affordable to operate Protect the business
Steps in the Accounting Cycle Analyze financial transactions Journalize transactions Accounting methods used to enter transactions into journals: Cash accounting Accrual accounting
Steps in the Accounting Cycle Post to ledgers Balance the books Prepare financial statements Accounting standards: Rules to follow when preparing financial statements
Steps in the Accounting Cycle Post to ledgers Balance the books Prepare financial statements Types of financial statements: Balance sheet Income statement Cash flow statement Close the books
Consider a school-based enterprise’s or career and technical student organization’s accounting system. Who keeps the books? Do those individuals follow a special process? What is that process?
Consider a school-based enterprise’s or career and technical student organization’s accounting system. Who uses the financial data? How could the accounting system be improved?
Ride-go’s former CEO improperly spent investors’ money. Ride-go’s current CEO held a board meeting in the Bahamas. Spent $350,000 on the “meeting” Hired a tattoo artist, mermaids, and fire dancers What should Ride-go’s accountant do? Approve payment for the trip? Refuse to use company funds to pay for a party?
Acknowledgments Original Developers: Christopher C. Burke, April J. Miller, MBAResearch Version 2.0 Copyright © 2012 MBA Research and Curriculum Center
Digital-based photography sources: ThinkStock Various images used in this presentation are ©2011 Thinkstock. All rights reserved www.thinkstockphotos.com
Copyright: All photographic digital images on this CD are owned by the aforementioned photographic resources or their licensors and are protected by the United States copyright laws, international treaty provisions, and applicable laws. No title to or intellectual property rights to the images on this CD are transferred to you. These sources retain all rights and are not to be used, digitally copied, transferred, or manipulated in any way. To do so is a violation of federal copyright laws.