1. Mr. Sherpinsky Council Rock School District

2. Assess Yourself in Terms of a Career Vision  What are your personal interests and skills?  What are your values, and how will they affect your career?  What lifestyle interests you?  How will your personality affect a career choice?

3. Enjoy Life  100 times more likely to enjoy a career that uses your interests, skills, and traits  92% say more satisfied*  Unique combination = Your unique selling point  Figuring out what you are good ▪ It will help you determine what careers are the best fit for you *- BLS/gov

4. Skills  Activities you do well

5. Values  Principles you live by and the beliefs that are important to you:  Responsibility  Achievement  Relationships  Compassion  Courage  Recognition Examples of Values responsibilityachievement relationships compassioncourage recognition values The principles a person lives by and the beliefs that are important to the person.

6. Lifestyle  The way you use your time, energy, and resources

7. Personality  A set of unique qualities that makes us different from all other people

8.  Accountant  Handles a broad range of responsibilities, makes business decisions, and prepares and interprets financial reports ▪ Can’t do without these basic skills!

9.  Accounting Clerk  Entry-level job that can vary from specializing in one part of the system to doing a wide range of tasks ▪ Can be a stepping stone to more!

10.  For-Profit Business  Operates to earn money for their owners!  Majority of businesses in US  Computers handle majority of basic accounting tasks ▪ Fortune 500 ▪ National Firms ▪ Local Firms

11.  Not-For-Profit Business  Operates for purposes other than making a profit!  Most have goal of balancing their income and expenses ▪ Donations ▪ Tax dollars ▪ Many are service providers

12.  Public Accounting Firms  Provide variety of services including audits  Audits:  Review of a company’s accounting systems and financial statements to confirm they comply with GAAP ▪ Generally Accepted Accounting Practices

13.  CPAs (certified Public Accountant)  An accountant that met certain education and experience requirements and passed a national test  Licenses by state

14. The Environment of Business In the U.S. we have a free enterprise system; people are free to produce goods and services and spend money as they wish.free enterprise system A business can operate at a profit or a loss. If the revenues are greater than the costs, the money left over is profit. When costs are greater than revenues, the business operates at a loss.profitloss In order to survive, a business must do two things…  operate at a profit, and  have an individual willing to take the risk to run it.

15. Roles in a Business Inventors Investors EmployeesManagers Entrepreneurs entrepreneur A person who transforms ideas for products or services into real-world businesses. The Need for a Risk-Taker An entrepreneur transforms ideas for products or services into actual (real-world) businesses.entrepreneur

16. Types of Business Operations There are three types of business operations:  Service businesses provide services for fees. Service businesses  Merchandising businesses buy and sell finished products. Merchandising businesses  Manufacturing businesses buy materials and make finished products. Manufacturing businesses service business A business that provides a needed service for a fee. merchandising business A business that buys finished products and resells them to individuals or other businesses. manufacturing business A business that buys raw materials, uses labor and machinery to transform them into finished products, and sells the finished products to individuals or other businesses.

17. Types and Forms of Business In a free enterprise system, an entrepreneur can choose the type and form of business to run. Each type needs capital (money) from investors, banks, or business owners to begin.capital

18. Sole Proprietorship Sole means “single” and proprietor means “owner.” – Most common in US! A sole proprietor is a single owner, but the operation may have many managers and employees. There are advantages and disadvantages to being a sole proprietor.

19. Partnership When two people or more people enter into an agreement to operate a business as co-owners, a partnership is formed. There are advantages and disadvantages to a partnership.

20. Corporation (legal permission to operate). A corporation often starts off as a sole proprietorship or partnership. In order to become a corporation an organization must obtain a charter (legal permission to operate).charter There are advantages and disadvantages to a corporation.

21. Main Idea Accounting: Universal Language of Business The accounting system produces information used to make decisions.

22. accounting system Designed to collect, document, and report on financial transactions affecting the business.

23. Accountants must follow GAAP rules issued by the Financial Accounting Standards Board (FASB).GAAP GAAP (generally accepted accounting principles) The set of rules that all accountants use to prepare financial reports. What is GAAP?

24. What Are financial reports? financial reports Documents that present summarized information about the financial status of a business. Financial reports Financial reports contain a summary of the financial status of a business. Most common time-period for reports is annual.. (Yearly)

25. Using Accounting Reports for Making Business Decisions Accounting provides financial information about a business or organization. Two groups that use accounting reports Individuals outside the business who have an interest in the business Individuals inside the business  investors,  the local, state, and federal government, and  employees, consumers, and competitors.  managers,  owners

26. Those interested in the financial accounting reports of a business include: Investors Local, state, and federal government Employees, consumers, and competitors financial accounting The type of accounting that focuses on reporting information to external users.

27. Management accounting reports are prepared for managers involved in: management accounting The type of accounting that focuses on reporting information to management; often referred to as accounting for internal users of accounting information. Purchasing decisions Hiring decisions Production decisions Payments Sales Collections

28. Three GAAP Assumptions Business entity Accounting period Going concern business entity The accounting assumption that a business exists independently of its owner’s personal holdings. The accounting records and reports are maintained separately and contain financial information related only to the business.

29. Glencoe Accounting Unit 2 Chapter 3 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Financial Claims in Accounting A company can possess various property or items of value, known as assets:assets  cash  office equipment  manufacturing equipment  buildings  land EquitiesEquities are financial claims to these assets. When a business obtains a loan to help purchase an item, the owner’s financial claims to the assets are called the owner’s equity.owner’s equity Property and Financial Claims SECTION 3.1

30. Glencoe Accounting Unit 2 Chapter 3 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Financial Claims in Accounting The creditor’s financial claims to the assets are called liabilities. The relationship between assets, liabilities, and owner’s equity are shown in the accounting equation: liabilitiesaccounting equation Property and Financial Claims SECTION 3.1

31. Glencoe Accounting Property and Financial Claims Section 3.1 A creditor lends you money. You buy something on credit. The financial claim is shared. credit When you buy something and agree to pay for it later. creditor Any person or business to which you owe money. Home

32. Glencoe Accounting Property and Financial Claims Section 3.1 The purpose of accounting is to provide: Financial information about property Financial claim to property property Anything of value that a person or business owns. financial claim A legal right to property. Home

33. Glencoe Accounting Property and Financial Claims Section 3.1 Property = Financial Claims Home

34. Glencoe Accounting Property There is a relationship between property and financial claims that can be expressed as an equation: PROPERTY = FINANCIAL CLAIMS When you buy something and agree to pay for it later, you are buying it on credit, and you share the financial claim with the creditor (the business or person selling you the item on credit).creditcreditor

35. Glencoe Accounting Property and Financial Claims Section 3.1 Equity or Equities Owner’s Equity equity The accounting term for the financial claim to assets. owner’s equity The owner’s claim to the assets of a business. Home

36. Glencoe Accounting Property and Financial Claims Section 3.1 The Accounting Equation liabilities Amounts owed to creditors; the claims of creditors to the assets of a business. Home

37. Glencoe Accounting business transaction An economic event that causes a change—either an increase or decrease—in assets, liabilities, and/or owner’s equity. Section 3.2 Buying a sweater or putting cash in your savings account are examples of business transactions. Transaction That Affect Owner’s Investment, Cash, and Credit Home

38. Glencoe Accounting The number of accounts will vary from business to business. Two possible business accounts are  accounts receivable, an asset account, and accounts receivable  accounts payable, a liability account. accounts payable

39. Glencoe Accounting Section 3.2 A business records changes in subdivisions called accounts. Accounts receivable Accounts payable account A subdivision under assets, liabilities, or owner’s equity. Transaction That Affect Owner’s Investment, Cash, and Credit Home accounts receivableaccounts receivable, an asset account accounts payableaccounts payable, a liability account.

40. Glencoe Accounting A business records changes in subdivisions called accounts. Accounts receivable Accounts payable accounts receivable The total amount of money owed to a business—money to be received later because of the sale of goods or services on credit. accounts payable The amount owed, or payable, to the creditors of a business. Section 3.2 Transaction That Affect Owner’s Investment, Cash, and Credit Home accounts receivableaccounts receivable, an asset account accounts payableaccounts payable, a liability account.

41. Glencoe Accounting Section 3.3 Examples of Expenses Rent Utilities Advertising expense The cost of products or services used to operate a business. Transaction That Affect Revenue, Expense, and Withdrawals by the Owner Home

42. Glencoe Accounting Section 3.3 Withdrawals decrease assets and owner’s equity. Investments increase assets and owner’s equity. withdrawal When the owner takes cash or other assets from the business for personal use. Transaction That Affect Revenue, Expense, and Withdrawals by the Owner Home

43. Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. double- entry accounting system A business’s transactions can be analyzed by using the double- entry accounting system, which recognizes the different sides of business transactions as debits and credits. Home

44. Glencoe Accounting Unit 2 Chapter 4 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. The Chart of Accounts chart of accounts A chart of accounts is a list of accounts used by a business. ledger Accounts are grouped together in a ledger, also known as a general ledger. “Keeping the books” “Keeping the books” refers to maintaining accounts in the ledger. Accounts are easier to locate in the ledger if they are numbered. A chart of accounts is organized as a table SECTION 4.1 Section 4.1

45. Glencoe Accounting ledger general ledger A group of accounts; also referred to as a general ledger. Accounts and the Double- Entry Accounting System Section 4.1 ledger. A system for numbering accounts makes it easy to locate individual accounts in the ledger. Home

46. Glencoe Accounting Accounts and the Double-Entry Accounting System Section 4.1 A typical numbering system Asset accounts begin with 1. Liability accounts begin with 2. Owner’s equity accounts begin with 3. Revenue accounts begin with 4. Expense accounts begin with 5. See page 82 Home

47. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1 double-entry accounting debitcredit The double-entry accounting system recognizes both the debit and credit side of a business transaction. double-entry accounting A system used to analyze and record a transaction. debit An entry on the left side of an account. credit An entry on the right side of an account. Home

48. Double-Entry Accounting  Double-entry accounting is a system of recordkeeping in which each business transaction affects at least two accounts. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1

49. Glencoe Accounting Unit 2 Chapter 4 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. T Accounts T account The T account is a tool for using the double-entry accounting system.  It shows the dollar increase and decrease caused by a transaction.  Account name is on the top. left side debits  The left side is used for debits. right side credits  The right side is used for credits. SECTION 4.1

50. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1 The T account T. The T account gets its name from being shaped like a T. T-account A visual representation of a ledger account. The T account is a tool used to analyze transactions. Home Accountants sometimes use DR for debit and CR for credit.

51. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1 normal balance normalusual The increase side of an account. The word normal here means usual. Home

52. Glencoe Accounting Unit 2 Chapter 4 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. The Rules of Debit and Credit  In double-entry accounting, for each debit in one account, there must be an equal credit in another account.  The rules of debit and credit vary depending on the type of account. normal balance normalusual  Each account has a normal balance to record increases to the account. The word normal in this case means usual. Accounts and the Double- Entry Accounting System SECTION 4.1

53. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1 Rules for Asset Accounts increaseddebit It is increased (+) on the debit side ( left side ). decreasedcredit It is decreased (-) on the credit si d e ( right side ). normal balanceincreasedebit The normal balance is the increase or debit side. Home

54. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1 Rules for Liability and Owner’s Capital Accounts It is increased ( + )on the credit side (right side). It is decreased ( - )on the debit side (left side). The normal balance is the increase or credit side. Home

55. Glencoe Accounting Accounts and the Double- Entry Accounting System Section 4.1

56. Glencoe Accounting Section 5.1 Temporary Accounts Start the accounting period with a zero balance. Accumulate amounts for one accounting period. Transfer the balance to the owner’s capital account at the end of the period. temporary accounts Accounts used to collect information that will be transferred to permanent capital accounts at the end of the accounting period. Relationship of Revenue, Expenses, and Withdrawals to Owner’s Equity

57. Glencoe Accounting The Rules of Debit and Credit for Temporary Accounts Review the T account showing the rules of debit and credit for the owner’s capital account:

58. Glencoe Accounting Section 5.1 Permanent Accounts show: The balances on hand or amounts owed at any time The day-to-day account changes permanent accounts Accounts that are continuous from one accounting period to the next; balances are carried forward to the next period. Relationship of Revenue, Expenses, and Withdrawals to Owner’s Equity

59. Glencoe Accounting Section 5.1 These rules of debit and credit are used for revenue accounts: A revenue account is increased on the credit side. A revenue account is decreased on the debit side. The normal balance for an revenue account is the increase or the credit side. Revenue accounts normally have credit balances. Relationship of Revenue, Expenses, and Withdrawals to Owner’s Equity

60. Glencoe Accounting Section 5.1 Relationship of Revenue, Expenses, and Withdrawals to Owner’s Equity See page 110 Rules for Revenue Accounts These rules of debit and credit are used for revenue accounts:  A revenue account is increased on the credit side.  A revenue account is decreased on the debit side.  Revenue accounts normally have credit balances.

61. Glencoe Accounting Section 5.1 These rules of debit and credit are used for expense accounts: An expense account is increased on the debit side. An expense account is decreased on the credit side. The normal balance for an expense account is the increase or the debit side. Expense accounts normally have debit balances. Relationship of Revenue, Expenses, and Withdrawals to Owner’s Equity

62. Glencoe Accounting Section 5.1 These rules of debit and credit are used for withdrawals accounts: A withdrawals account is increased on the debit side. A withdrawals account is decreased on the credit side. The normal balance for a withdrawals account is the increase or the debit side. Withdrawals accounts normally have debit balances. Relationship of Revenue, Expenses, and Withdrawals to Owner’s Equity

63. Glencoe Accounting Key Term Review  revenue recognition The GAAP principle that revenue is recorded on the date it is earned even if cash has not been received.

64. Glencoe Accounting The Accounting CycleSection 6.1 Transactions are entered into a journal. This is journalizing. journal A chronological record of the transactions of a business. journalizing The process of recording business transactions.