Accounting Is an information system that provides reports to stakeholders about the economic activities and conditions of a business.

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Presentation transcript:

Accounting Is an information system that provides reports to stakeholders about the economic activities and conditions of a business.

Following the Rules Generally Accepted Accounting Principals (GAAP) The rules companies follow when they are reporting their data to others. Financial Accounting Standards Board (FASB) Responsible for developing Accounting Principals

AssetsLiabilities Owners Equity AssetsLiabilities Owners Equity

Assets Resources Owned by the business

Liabilities The debts of the business

Owners Equity The rights of the Owners

T Accounts DebtCredit Account Name

Assets DebitCredit (Cash, Supplies, and Land)

Liabilities and Owners Equity DebitCredit

AssetsLiabilities Owners Equity Assets LiabilitiesOwners Equity The owner deposits $5,000 cash into the company. They purchase $200 worth of supplies and pay for it in cash. They buy $1,700 worth of office equipment and charge it to pay later.

More Transactions a) Bob Bingo makes a deposit into his new company of $15,000. b) The Business purchases some land for the company for $10,000. c) The company purchases $1,350 worth of supplies, but we put in on our charge account to pay for it later when they bill us. d) We did some work for customers and they are paying us $7,500. e) We have to pay some of our expenses: wages $2,125, rent $800, and utilities $275. f) The bill for the supplies has arrived, and we need to make a payment. We are going to pay $950 of the $1,350 we owe. g) At the end of the month Bob Bingo withdrawals $2,000 for personal use.

What are our Account Balances?  Assets Cash $6,350 Supplies $1,350 Land $10,000  Liabilities $400  Owners Equity $17,300 Total Assets $17,700Total Liabilities and Owners Equity $17,700

Financial Statements

 Income Statement  Statement of Owners Equity  Balance Sheet  Statement of Cash Flows

Income Statement Summary of revenue and expenses

Statement of Owners Equity Summary of changes to Owners Equity

Balance Sheet Lists the Assets, Liabilities, and Owners Equity

Statement of Cash Flow Summary of the cash receipts and the cash payments