1. Accounting 1
Chapter 1

2. Section 1 Learning Goal
Students will begin to develop an appreciation of the significance of accounting to both businesses and people
Students will also be able to complete a “Net Worth” Statement

3. Accounting
Planning, recording, analyzing, financial information.

4. Why is accounting information important?

5. Is accounting relevant only to businesses?

6. Net Worth Statement
A formal report that shows what an individual owns, what an individual owes, and the difference between the two.

7. Assets
Anything of value owned
Examples:

8. Liabilities
An amount owed .

9. Equity The remaining claim to the assets after liabilities are settled
Total Assets – Total Liabilities

10. Review
In a short paragraph, define accounting and describe a scenario in which you, as a non-accountant, might use accounting.
On the same document, create a Net Worth Statement for yourself estimating or using the internet to research the value of things you own (include only individual assets worth at least $100). Assume you owe me $500.
Save this as Assignment 2 in your turn in folder
Complete “on your own” 1-1

11. Section 2 Learning Goal
Students will become familiar with the accounting equation and will be able to show how transactions effect the equation

12. Service Business A business that performs an activity for a fee.
They provide something that is not tangible.
Examples include: Legal services, medical services, accounting services, landscaping services, etc.

13. Proprietorship A business owned by one person.
Also called “sole proprietorships”.

14. Business Entity Concept
A business is treated as its own entity. Financial records of the business should be kept separate from the owners personal financial information.

15. Accounting Equation Assets = Equities
Assets = Liabilities + Owner’s Equity

16. Owner’s Equity
The owner’s claim to the assets of a business
What is left after the value of liabilities is subtracted from the assets of a business.
Assets – Liabilities = Owner’s Equity

17. Transaction
An activity that changes assets, liabilities or owner’s equity.
The business entity concept requires that personal transactions of the owner be kept separate from transactions of the business.

18. Unit of Measurement Concept
A principle that all business transactions should be expressed in a common unit of measure.

19. Account
A record pertaining to a single item in the accounting equation.
A record for a particular asset, liability or owner’s equity.

20. Transactions Received cash from owner as an investment, $10, 000
Paid cash for supplies, $2000
Paid cash for insurance, $1200
Bought supplies on account from Ling Music Supplies, $2700
Paid cash on account to Ling Music Supplies, $1300.

21. Goal for Today
Student will learn how to account for transactions that change owner’s equity

22. New Terms
Revenue
Expense
Withdrawal

23. Transactions Received cash from sales, $1100
Sold services on account to Joe Smith, $500
Paid cash for communication bill, $80
Paid cash for equipment rental, $400
Received cash on account from Joe Smith, $200

24. Balance Sheet
A financial statement reporting the assets, liabilities and owner’s equity on a specific date.

25. Join APLIA You will need to create an account
The link to do so is on the Accounting page of my web site
Please use your school to create the account
Use the access code I provide you for payment
Enter class : Accounting 1 – Fall 2016