Introduction to Financial Accounting Grade 11 University/College Preparation BAF3MI Room 214 Mr. D. Rourke

Classroom Requirements:  1.Come to class prepared!  2.Pencil!  3.Binder, workbook, textbook & lined paper.  4.Calculator  5.Date, title and organize all notes, tests and handouts in your binder.  5.Have a friend pick up assignments and handouts should you be absent from class.  6.Check website for assigned work.

Assessment  Audits 10%  Assignments 15%  Tests 45%  Final Exam 30%  The final examination consists of sixty multiple choice questions and five problems.  Learning skills.

Principles of Accounting 3rd Edition D'Amico, Palmer, D'Amico ©2002

Chapter One – The Balance Sheet Unit One – Financial Position What Learning You Will Demonstrate:  determine the financial position of a business  classify items as assets, liabilities, or owner's equity  calculate owner's equity  prepare a balance sheet and  use correct recording procedures

The Purpose of Accounting  to provide financial information for decision making.

What does a person require in order to begin a business?

Assets  items of value owned by a person or business  Something a person or business owns. Categories: 1. Cash - currency, cheques, money orders, bank deposits. 2. Accounts Receivable - total amount due from customers. 3. Government Bonds 4. Furniture 5. Office Equipment 6. Automobiles - cars, trucks 7. Land 8. Buildings

How does a business acquire these assets? 1. Borrowing 2. Investment by the owner(s) Creditor - a person/business to whom money or goods is owed. Debtor - a person/business who owes money or goods.

Borrowing = Debt = Liabilities  Liabilities - the debts of a business or person. - something a business or person owes. - something a business or person owes.  Categories: 1. Loans 2. Accounts Payable - amounts owing to creditors for purchases of goods and services. 3. Mortgage - a long-term debt where the building or land is used as collateral for the debt.

Investment by the owner(s) = Owner’s Equity Owner’s Equity - claim of the owner against the asset of the business. Personal Equity (Net Worth) - the difference between the cost of items owned and debts owed.

The Balance Sheet Equation Assets = Liabilities + Owner’s Equity $ = $ ? $ = $ $45 000

 Do exercises 1 – 3, page 13

Balance Sheet  a financial statement that lists the assets, liabilities and owner’s equity at a specific date.  Assets are listed in their order of liquidity (the order they would likely be converted into cash).  Liabilities are listed according to the order they are due to be paid (maturity order).

GAAPs  Generally Accepted Accounting Principles (GAAPs) - standard accounting rules and guidelines.

GAAPs  Business Entity Principle-requires that each business be considered a separate entity, and that the financial data for the business be kept separate from the owner’s personal financial data.

GAAPs  Cost Principle – assets are shown on the balance sheet at the cost of their acquisition.

 Do exercises 4 – 8, pages 13 & 14

Chapter One – The Balance Sheet Unit Two – Business Transactions When Learning You Will Demonstrate the skills necessary to:  Record trans actions that will affect assets, liabilities and owner’s equity on a transaction analysis sheet.  Prove the mathematical accuracy of a transaction analysis sheet, and  Prepare a balance sheet from a completed transaction sheet.

Business Transaction  An exchange of things of value.  a financial event that affects Assets, Liabilities or Owner’s Equity.  The term “accounting period” refers to the length of time between the preparation of financial reports.

 Do exercises 9 – 14, pages 21 – 24.