1. Introduction

2.  The planning, recording, analyzing and interpreting of financial information. ◦ A planned process for providing financial information that will be useful in management is called an accounting system. ◦ Organized summaries of a businesses’ financial activities are called accounting records. ◦ Used by most individuals in everyday life. (Submit tax returns, plan personal spending, etc.)

3.  Inaccurate accounting records often contribute to business failure and bankruptcy.  Failure to understand accounting info. can result in poor business decisions for both businesses and nonprofit organizations.  Ex: Celebrities ◦ How celebrities spend their money How celebrities spend their money ◦ 9 Celebrities caught in DEBT 9 Celebrities caught in DEBT ◦ Celebrities with the Biggest Money Problems Celebrities with the Biggest Money Problems ◦ Top 10 Terrible Financial Choices in the Music Industry Top 10 Terrible Financial Choices in the Music Industry ◦ 10 Celebrities who Lost Big Financially 10 Celebrities who Lost Big Financially

4.  Accountants ◦ Plan, summarize, analyze and interpret information. ◦ Prepare various accounting reports and assist owners and managers in making financial decisions. ◦ Supervise the work of other accounting personnel. ◦ Check the accuracy of financial statements. ◦ Some work as members of accounting firms that sell accounting services to the general public.

5.  Controller ◦ Accountant needed to maintain accounting systems and supervise accounting personnel. ◦ 5 or more years of experience ◦ Professional certification ◦ Computer skills

6.  Accountants ◦ Needed by local businesses. ◦ Supervise all functions of accounting. ◦ Good interpersonal skills ◦ Good communications skills

7.  Bookkeeper ◦ Do general accounting work plus summarize and analyze accounting information. ◦ May help small business owners and managers make decisions. ◦ Work without supervision. ◦ Experience in general ledger and payroll. ◦ Experience in supervising accounting clerks. ◦ Electronic spreadsheet and word processing knowledge

8.  Accounting Clerk ◦ Records, sorts, and files accounting information. ◦ Titles: accounting clerks and payroll clerks ◦ Do specific accounting activities

9.  Need to effectively communicate to people responsible for making business decisions.  Important because accountants often communicate to people who don’t know accounting.  Phone conversations, one-on-one meetings, group meetings. (Oral Communication)  Memorandums, letters, reports (Written Communication)

10.  Ethics – principles of right and wrong that guide an individual in making decisions.  Business Ethics – using your personal ethics to make business decisions.

11.  Excessive emphasis on profits.  Misplaced business loyalty.  Personal advancement.  Expectation of not getting caught.  Unethical business environment.  Unwillingness to take a stand.

12.  Proprietorship: a business owned by one person. ◦ Don’t mix business records with personal records.  Service Business: performs an activity for a fee. ◦ Examples????  Painters  Plumbers  Accounting firms  Hospitals  Law firms

13. AASSETS: anything of value that is owned. EEQUITIES: the financial rights to a business. ◦L◦Liabilities: amounts owed to others. ◦O◦Owner’s Equity: the amount remaining after the value of all liabilities is subtracted from the value of all assets. AAccounting Equation: Assets = Liabilities + Owner’s Equity ◦M◦MUST ALWAYS BE IN BALANCE

14.  Transaction: a business activity that changes assets, liabilities, or owner’s equity.  When you start a business, the accounting equation looks like… Assets=Liabilities + Owner’s Equity 0 = 0 + 0

15. Assets=Liabilities + Owner’s Equity 0 = 0 + 0 Transaction #1: Received cash from owner as an investment, $10,000. Assets=Liabilities+ Owner’s Equity Cash=Ben Furman, Capital Beg. Balance 00 Trans.#1 +10,000+10,000 (investment) New Balance 10,000 10,000

16. Assets=Liabilities+ Owner’s Equity Transaction #2: Paid cash for supplies, $1,577. Cash + Supplies = Ben Furman, Capital Beg. Balance 0 00 Trans#1 +10,000+10,000 New Balance 10,00010,000 Trans#2 - 1,577 +1,577 New Balance 8,423 + 1,57710,000 Total left side: 8,423+1,577=10,000Total Right Side: 10,000

17. Assets=Liabilities+ Owner’s Equity Transaction #3: Paid cash for insurance, $1,200. Cash + Supplies + Prepaid Insurance = BF, Capital Beg. Balance 00 0 Trans#1 +10,000+10,000 (investment) New Balance 10,00010,000 Trans#2 - 1,577 +1,577 New Balance 8,423 + 1,577 =10,000 Trans#3 - 1,200 +1,200 New Balance 7,223 1,577 1,200 = 10,000 Total left side: 8,423+1,577+1,200=10,000Total Right Side: 10,000

18. Assets=Liabilities+ Owner’s Equity Transaction #4: Bought supplies on account from BCS Supplies, $2,720. Cash + Supplies + Prepaid Insurance = BF, Capital Trans#3 - 1,200 +1,200 New Bal. 7,223 1,577 1,200 = 10,000 C + S + PI = BCS + Capital Trans#4 2,720 +2,720 New Bal. 7,223 4,297 1,200 = 2,720 + 10,000 Total left side: 7,223 + 4,297 + 1,200 = 12,720 Total Right Side: 10,000 + 2,720 = 12,720

19. Assets=Liabilities+ Owner’s Equity Transaction #5: Paid cash on account to BCS Supplies, $1,360. Cash + Supp. + Pre. Ins. = BCS + BF, Capital Balances 7,223 4,297 1,200 = 2,720 + 10,000 Trans.#5 -1,360 - 1,360 New Balance 5,863 4,297 1,200 = 1,360 + 10,000 Total left side: 5,863 + 4,297 + 1,200 = 11,360 Total Right Side: 10,000 + 1,360 = 11,360

20.  Balance Sheet: a financial statement that reports assets, liabilities, and owner’s equity on a specific date.  ASSETS are on the left side of the balance sheet.  LIABILITIES and OWNER’S EQUITY are on the right side of the balance sheet.

21.  Write the heading. ◦ Name of the business ◦ Name of the report ◦ Date of the report  Prepare the asset section. ◦ Center the word Assets ◦ Under the heading, list each account to the left ◦ List the balances

22.  Prepare the liabilities section. ◦ Center the word Liabilities ◦ Under the heading, list each account to the left ◦ List the balances  Prepare the owner’s equity section. ◦ Center the words Owner’s Equity ◦ Under the heading, write the account title (Capital) ◦ Write the account balance

23.  Determine if the balance sheet is in balance. ◦ Add all the assets amounts ◦ Add liabilities and owner’s equity amounts ◦ (If it doesn’t equal, find your errors.)  Complete the balance sheet. ◦ Rule a single line across both amount columns. ◦ Write the totals. ◦ Rule double lines.