EBT 4.01

Method of reporting and recording financial activity of a business

Assets = Liabilities + Owner’s Equity

Anything of value owned by the business Cash / Accounts Receivable Office Equipment Building / Real Estate Company Cars Office Furniture Office Supplies

Money owed by the business Accounts Payable Mortgage Payable Office Supply Store Utilities Corporation Taxes Due

Net worth of the business

Written reports that describe the financial health of a company; prepared on quarterly and annual basis 1. Balance Sheet 2. Income Statement 3. Statement of Change in Owner’s Equity

Reports assets, liabilities, and owner’s equity

Reports the revenue, expenses and the net income (or loss) of a business for the fiscal period. Profit When a business’s income is greater than its expenses. E < I Loss When a business’s expenses are greater than its income. E > I Fiscal Period Specific period of time covered by an accounting statement or report (1 month or year) Revenue Amount of money that a company earns Expenses Costs of maintaining and operating a business.

Reports the changes that have occurred in the owner’s equity account during the fiscal period. Example: Net worth in 2010=$30,000 Net worth in 2011=$28,500 Statement of Change in OE= ___________

Recording daily transactions Preparing financial statements Paying bills Preparing payroll checks Preparing tax forms Auditing financial records Examining financial records for accuracy and compliance with regulations Reconciling the checkbook Bringing the checkbook into agreement with bank statement

Accepting deposits and processing withdrawals Preparing money orders and cashiers checks Opening new accounts for customers Processing loan applications

Analyzing budgets Buying and selling stock Consulting with businesses on financial matters Counseling investors Selling insurance Managing the finances for the entire company

Financial Manager Accountant Handles all records, taxes, and prepares all financial documents CPA Must pass national exam Auditor Checks the accuracy of financial records Bank Teller Handles deposits, withdrawals, loans, etc. Book keeper Inputs financial data into computer Reconciles accounts Investment Counselor Advises people how to invest their money Stock Broker Buys/sells/trades stock on behalf of their clients Insurance Representative Double checks fraud claims on behalf of the bank/company

Anything of value that is owned by the business a. Revenue b. Loss c. Assets Net worth of the business a. Liabilities b. Owner’s Equity c. Revenue