1. Show Me the Money
Nature of Accounting
Financial Analysis
LAP 5

2. Objectives Describe the importance of accounting to an organization.
Explain basic accounting activities.

3. Describe the importance of accounting to an organization.
Objective
Describe the importance of accounting to an organization.

4. Tucker and Ian own a lawn- mowing and snow-shoveling business.
They need gasoline for their mowers.
Unfortunately, they don’t have enough money to buy gas.
They overlooked an important business function—accounting.

5. What Is Accounting? The process of keeping financial records
A basic business function
A career choice
Something we use in our daily lives

6. What Do Businesses Track with Accounting Information?
The value of the things they own
Accounts owed to them
Amounts that they owe to others

7. Why Is Accounting Important to Businesses?
Enables them to maintain control of their money
Is used to make good financial decisions

8. How Does Accounting Maintain Financial Control?
Tracking the business’s performance
Planning for the future

9. Who Uses Accounting Information?
Internal users
Are usually managers
Use managerial accounting information

10. Who Uses Accounting Information?
External users
Consist of:
Investors
Creditors
Government
Use financial accounting information

11. Explain basic accounting activities.
Objective
Explain basic accounting activities.

12. The Accounting System Described
Is a consistently applied process for handling a business’s financial information
Enables users to understand and accurately interpret the numbers
Must contain accurate, up-to-date information
Should meet a business’s specific needs and requirements

13. Accounting System Requirements
Be easy to use
Process data quickly
Be expandable
Be affordable to operate
Protect the business

14. Steps in the Accounting Cycle
Analyze financial transactions
Journalize transactions
Accounting methods used to enter transactions into journals:
Cash accounting
Accrual accounting

15. Steps in the Accounting Cycle
Post to ledgers
Balance the books
Prepare financial statements
Accounting standards:
Rules to follow when preparing financial statements

16. Steps in the Accounting Cycle
Post to ledgers
Balance the books
Prepare financial statements
Types of financial statements:
Balance sheet
Income statement
Cash flow statement
Close the books

17. Consider a school-based enterprise’s or career and technical student organization’s accounting system.
Who keeps the books?
Do those individuals follow a special process?
What is that process?

18. Consider a school-based enterprise’s or career and technical student organization’s accounting system.
Who uses the financial data?
How could the accounting system be improved?

19. Ride-go’s former CEO improperly spent investors’ money.
Ride-go’s current CEO held a board meeting in the Bahamas.
Spent $350,000 on the “meeting”
Hired a tattoo artist, mermaids, and fire dancers
What should Ride-go’s accountant do?
Approve payment for the trip?
Refuse to use company funds to pay for a party?

20. Acknowledgments Original Developers:
Christopher C. Burke, April J. Miller, MBAResearch
Version 2.0
Copyright © 2012
MBA Research and Curriculum Center

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ThinkStock
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