Chapter 1: Accounting and 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 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 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 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 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. 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. Accounting

1. The Accounting Clerk or Bookkeeper 1. Record transactions and organize the source documents 2. Record accounting entries 3. Make payroll calculations 4. Carry out banking transactions (e.g. depositing money into bank) Bookkeeper’s Roles

1. Supervise and confirm that correct data are entered. 2. Ensure that accounting rules (Canadian GAAP) are met 3. Interpret the data 4. Prepare financial reports 5. Assist managers when making decisions 6. Supervise the work of all accounting employees Roles of Accountant

1. Routine Daily Activities 1. 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 Work

2.Periodic Accounting Activities 1. 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 Work

3.Miscellaneous Activities 1. 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 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

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

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

 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 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 funds which would give me 6% yield. (36,000 a year) If I had a million dollar