1. Accounting Is Fun! Introduction To Accounting

2. Introduction Performance Objectives: Define accounting
Explain the importance of accounting information
Describe the various career opportunities in accounting

3. Why do we want to learn Accounting?
Accounting Is Fun!
Why do we want to learn Accounting?
Language of Business

4. Definition of Accounting
Accounting Is Fun!
Definition of Accounting
Keep track of receipts
Revenue or dollars in
Expenses or dollars out
Keep track of debt
Keep track of investments
Keep track of assets (stuff you own)
Calculate profit (earnings)
Cash Flow

5. Define Accounting Accounting
The process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms; sometimes mistakenly called bookkeeping

6. Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms
Define: Business Transactions (page 1)
A business transaction is an event that has a direct effect on the operation of an economic unit, is expressed in terms of money, and is recorded
Examples of Economic Unit:
Business Entity
Sole Proprietorship
Corporation
College
Government Agencies
Churches
Clubs
Common terms:
Firm
Company

7. Analyzing? Look at receipts Look at loan documents Etc….
Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms
Analyzing?
Look at receipts
Look at loan documents
Etc….

8. Classifying? Classifying?
Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms
Classifying?
Is it cash in?
Is it cash out?
Is it an expense?
Is it debt?
Etc….
Classifying?
Asset
Things you own
Liability
Debt
Owners’ Equity
Assets - Liabilities
Loose Definitions

9. Recording? Write it down Etc….
Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms
Recording?
Write it down
Etc….

10. Summarizing? Add it up Create a report Etc….
Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms
Summarizing?
Add it up
Create a report
Etc….

11. Look at reports and make decisions Etc….
Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms
Interpreting?
Look at reports and make decisions
Etc….

12. Accounting Is Fun!
Process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms

13. Definitions Generally accepted accounting principles (GAAP)
The rules or guidelines used for carrying out the accounting process
Who creates the rules?
Voters  Congress  SEC  PCAOB  FASB  GAAP
Congress (107th) PCAOB

14. Definitions
There is not an exact distinction between bookkeeping & accounting
In General:
Bookkeeping
Systematic recording of business transactions in financial terms
Accounting
Create accounting system, audit accounting system, or create official reports

15. Accounting Is Fun!
Purpose of Accounting
To provide useful information to people who make business decisions
Who makes business decisions?
Users of Accounting Information:
Owners/Investors
Managers
Creditors
Government Agencies

16. Owners
Owners have invested their money or goods in a business organization
Owners desire information regarding:
Company’s earnings
Prospects for future earnings
Company’s ability to pay debts

17. Managers
Managers must know the language of business so that they can manage the economic unit
Managers use or create accounting information in order to:
Prepare financial reports
Understand reports and budgets
Express future plans in financial terms

18. Creditors Creditors lend money or extend credit to the company
Creditors look at accounting information to assess the company’s ability to pay its debts
Examples of creditors:
Banks
Suppliers
Lending Institutions

19. Government Agencies
Taxing authorities must verify information submitted by companies
Examples of taxes:
Income taxes
Sales taxes
Employment taxes
Public companies must submit the correct reports to regulatory agencies

20. Career Opportunities In Accounting
Accounting Clerk/Technician
Bookkeeper
Paraprofessional Accountant
Accountant
CPA
Managerial/Private
Not-for-profit

21. Accounting Clerk/Technician
Routine recording of financial information
Generally, accounting clerks work with one part of the accounting system such as:
Accounts Receivable
Accounts Payable
Payroll
Minimum requirements:
One semester of an accounting course (book)
Reality 2004: (1 – 2 year accounting certificate)

22. Bookkeeper
Supervises accounting clerks or accounting system in small- to medium-sized company
Minimum requirements:
One to two years of accounting as well as experience as an accounting clerk

23. Paraprofessional Accountant
In-between a bookkeeper & an accountant
A person who is qualified in accounting to assume the duties of a general bookkeeper as well as some of those of a professional accountant under that accountant’s supervision

24. Accountant CPA (Certified Public Accountant) Minimum Requirements:
Design and audit accounting systems
Provide financial advice about business operations
Prepare tax returns
Minimum Requirements:
College degree (150 units – 5 years of college)
Pass CPA exam
Accounting experience

25. Accountant Managerial/Private Not-for-profit
Manage and create accounting system
Prepare budgets
Determine costs
Prepare financial reports
Not-for-profit
Accountants that work for business entities such as:
Government agencies
Hospitals
Churches
Schools