1. OBJECTIVES Define Accounting, service business and proprietorship
Advantages and disadvantages of accounting
Understand Assets, liabilities and owner’s equity
State the accounting equation
LESSON 1-1

2. LESSON 1-1 What is Accounting ?
4/15/2017
LESSON 1-1
What is Accounting ?
Accounting: (Definition) planning, recording, analyzing, and interpreting financial information
Language of Business

3. LESSON 1-1 Advantages Helps managers make better business decisions
4/15/2017
LESSON 1-1
Advantages
Helps managers make better business decisions
Controls spending
Inaccurate accounting records can lead to business failure and bankruptcy
Failure to understand accounting can result in poor business decisions
Disadvantages

4. Accounting Terms
accounting: planning, recording, analyzing, and interpreting financial information
accounting system: a planned process for providing financial information that will be useful to management (for making decisions)
accounting records: organized summaries of a business’s financial activities
financial statements: financial reports that summarize the financial condition and operations of a business
LESSON 1-1

5. Chapters 1 – 8 In Chapter 1 – 8 sample in PowerPoints are:
Accounting records for a proprietorship
Accounting records for a service business
Company Name is: Techknow Consulting
Service provided: help setup and troubleshoot computer networks
LESSON 1-1

6. Types of Businesses Service business:
a business that performs an activity for a fee
installing a network
not a tangible product - (can’t necessarily touch or feel it or carry it away)
example: hair cut

7. Business Structures What is a proprietorship?
proprietorship: a business owned by one person
Note: owner’s must keep personal accounting records separate from business records
Illegal not to
LESSON 1-1

8. Notebook Assignment Lesson 1-1 Assignment #1
Let’s review the pros and cons of a proprietorship
On page 7 of your textbook, read Business Structures
On page 5 of your Working papers, respond to 4 items:
Number 1 & 2: answer 1 & 2 from page 7 after the reading
Number 3: List one advantage of a proprietorship that you feel is the most important and why?
Number 4: List two of the disadvantages of a proprietorship that you feel could prevent you from opening your own business and why?
Number 5: Of the disadvantages, which two would be the easiest to overcome and how would you do it?
LESSON 1-1

9. Business Structures What are three advantages?
Ease of formation, total control, non-shared profits
What are the disadvantages?
Limited resources
Unlimited liability
Limited expertise
Limited life
Must follow both federal and state laws
LESSON 1-1

10. The Accounting Equation
Two primary components in Accounting:
Asset: anything of value that is owned
What are some things a business may own?
Equities: financial rights to the assets of a business
What you owe
What you have left if you subtract what you owe from what you own
What are some types of owner’s equity?
LESSON 1-1

11. The Accounting Equation
Equities: financial rights to the assets of a business
Two Types:
liability: an amount owed by a business
Those whom money is owed to
You charged products to pay later, or you buy stocks, bonds etc, to fund your business
When you charge something you still have to pay it
owner’s equity:
The amount remaining after the you subtract the value of liabilities from the value of assets
LESSON 1-1

12. If you have a computer and an XBOX with a combined value of $850 and you owe $250 on the computer, how much is your owner’s equity?
Equities
Assets Liabilities Owner’s Equity
LESSON 1-1

13. Lesson 1-1
4/15/2017
Accounting Equation
Accounting Equation: the relationship among assets, liabilities, and owner’s equity is written as an equation:
Written as:
Assets = Liabilities + Owner’s Equity

14. Assets = Liabilities + Owner’s Equity
Lesson 1-1
4/15/2017
Accounting Equation
Characteristics of the equation:
Assets and Equities must be equal
Can be written in a T-Account form:
Assets on the left, equities on the right
Total on the left will always = the total on the right
Assets = Liabilities + Owner’s Equity

15. THE ACCOUNTING EQUATION
Lesson 1-1
4/15/2017
THE ACCOUNTING EQUATION
LESSON 1-1

16. The Accounting Equation
Assets and Equities must be equal
Total on the left will always = the total on the right
If Assets are $5000 and liability is $1000, what is Owner’s Equity?
LESSON 1-1

17. Example 1.1 Assets = 14,000 Liabilities = 2,000
Liabilities Owner’s Equity ?
4, ,000
,000
? ,000
,000
38, ?
Assets = 14,000
Liabilities = 2,000
Owner’s Equity = $22,000
LESSON 1-1

18. Ethical Decision Making
page 9
ethics: the principles of right and wrong that guide an individual in making decisions
business ethics: the use of ethics in making business decisions
LESSON 1-1

19. TERMS REVIEW accounting accounting system accounting records
financial statements
service business
proprietorship
asset
equities
liability
owner’s equity
accounting equation
ethics
business ethics
LESSON 1-1

20. Notebook Assignment Lesson 1-1 Assignment 2
4/15/2017
Notebook Assignment Lesson 1-1 Assignment 2
Number 1: What is the accounting equation
Number 2: Draw a “T Account”: Put accounting equation elements on the correct side.
Number 3: What are two examples of a service business?
Number 4: What is a proprietorship?
Assets = Liabilities + Owner’s Equity

21. Assignment: Work Together 1-1 On Your Own 1-1 Application 1-1
LESSON 1-1