Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Environment of Business

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Brainstorming Activity… –List as many businesses as possible within a 60 second timeframe Glencoe Accounting

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business The Environment of Business Free Enterprise System ProfitLoss free enterprise system A system in which private businesses are able to compete with each other with little control by the government. Business owners pursue opportunities that they find interesting and that they do well. profit The amount of money earned over and above the amount spent to keep the business operating. loss When a business spends more money than it earns. Section 2.1 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business The Environment of Business Section 2.1 What a business needs to survive Operate at a profit An individual willing to take the risk Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business The Environment of Business Section 2.1 Roles in a Business Inventors Investors EmployeesManagers Entrepreneurs entrepreneur A person who transforms ideas for products or services into real-world businesses. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business The Environment of Business Section 2.1 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business Types and Forms of Businesses Section 2.1 Three Types of Business Operations Service Business Merchandising Business Manufacturing Business service business A business that provides a needed service for a fee. merchandising business A business that buys finished products and resells them to individuals or other businesses. manufacturing business A business that buys raw materials, uses labor and machinery to transform them into finished products, and sells the finished products to individuals or other businesses. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Using the list you created with your partner at the beginning of the class period, do the following: –Identify each business as a (S)ervice, (M)anufacturing, or (R)etail/Merchandising business –Record two from each category on the marker board. Glencoe Accounting

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business Types and Forms of Businesses Section 2.1 $ All types of businesses need capital to begin. capital Money that investors, banks, or business owners supply for a business to begin. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting sole proprietorship A business owned by one person. partnership A business owned by two or more persons. corporation A business recognized by law to have a life of its own. Exploring the World of Business Types and Forms of Businesses Section 2.1 Three Types of Business Organization Sole Proprietorship PartnershipCorporation Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business Types and Forms of Businesses Section 2.1 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business Types and Forms of Businesses Section 2.1 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Exploring the World of Business Types and Forms of Businesses A corporation must obtain a charter. charter Legal permission to operate. Section 2.1 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Accounting: The Universal Language of Business Section 2.2 The Accounting System Two types of accounting systems Manual Accounting System Computerized Accounting System accounting system Designed to collect, document, and report on financial transactions affecting the business. manual accounting system When accounting information is processed by hand. computerized accounting system When accounting information is processed by recording it into a computer. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Discussion Question… –What would happen if everyone used a different set of rules when driving? Glencoe Accounting

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Accounting: The Universal Language of Business Section 2.2 The Accounting System GAAP (generally accepted accounting principles) The set of rules that all accountants use to prepare financial reports. What Is GAAP? Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Accounting System Accounting: The Universal Language of Business Section 2.2 What Are financial reports? financial reports Documents that present summarized information about the financial status of a business. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Using Accounting Reports for Making Business Decisions Accounting: The Universal Language of Business Section 2.2 Two groups that use accounting reports Individuals outside the business who have an interest in the business Individuals inside the business Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Using Accounting Reports for Making Business Decisions Accounting: The Universal Language of Business Section 2.2 Those interested in the financial accounting reports of a business include: Investors Local, state, and federal government Employees, consumers, and competitors financial accounting The type of accounting that focuses on reporting information to external users. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Using Accounting Reports for Making Business Decisions Accounting: The Universal Language of Business Section 2.2 Management accounting reports are prepared for managers involved in: management accounting The type of accounting that focuses on reporting information to management; often referred to as accounting for internal users of accounting information. Purchasing decisions Hiring decisions Production decisions Payments Sales Collections Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Accounting Assumptions Accounting: The Universal Language of Business Section 2.2 GAAP Assumptions Business entity Accounting period Going concern business entity The accounting assumption that a business exists independently of its owner’s personal holdings. The accounting records and reports are maintained separately and contain financial information related only to the business. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Accounting Assumptions Accounting: The Universal Language of Business Section 2.2 GAAP Assumptions Business entity Accounting period Going concern accounting period The period of time covered by an accounting report. going concern The accounting assumption that a business is expected to operate indefinitely. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. With a partner, complete Problem 2-3 on page 39 of textbook Individually, complete Problems 2-4 on page 43 and 2-6 on page 44 Glencoe Accounting