1. Basic Accounting Course YESCO 2009 Office Managers Conference

2. What are Financial Statements?  Documents that show the results of business decisions made by management  They are used by creditors, investors and managers as a basis for making future decisions

3. Types of Financial Statements  Balance Sheet: A snapshot of a company’s financial position  Income Statement: Report of a company’s profitability for a specific period of time  Other Financials: Statement of Cash Flows, Statement of Retained Earnings or Stockholder’s Equity

4. Balance Sheet  Assets = Liabilities + Owner’s Equity Assets: Things of value owned by a business Assets: Things of value owned by a business Liabilities: Creditor claims against assets Liabilities: Creditor claims against assets Equity: Owner claims against assets Equity: Owner claims against assets

5. Income Statement  Revenue – Expenses = Net Income Revenue: Inflow of assets that result from the sale of products or rendering services to a customer Revenue: Inflow of assets that result from the sale of products or rendering services to a customer Expenses: Costs incurred to produce revenue (cost of goods sold) or maintain the business Expenses: Costs incurred to produce revenue (cost of goods sold) or maintain the business

6. Accounting for Transactions  Double Entry Accounting – A system of recording each business transaction by means of a two-way, self balancing entry There must always be at least 1 debit and 1 credit There must always be at least 1 debit and 1 credit Debits and Credits are simply terms that indicate whether to increase or decrease the balance in an account Debits and Credits are simply terms that indicate whether to increase or decrease the balance in an account T Accounts are used to provide a visual representation of account activity T Accounts are used to provide a visual representation of account activity

7. T Account DEBIT – Left Side CREDIT – Right Side

8. Debits  Increase assets  Decrease liabilities  Decrease stockholder’s equity  Decrease revenue  Increase expenses  Increase dividends

9. Credits  Decrease assets  Increase liabilities  Increase stockholder’s equity  Increase revenues  Decrease expenses  Decrease dividends

10. Business Transactions  Measurable events that affect the financial condition of a business  Examples of business transactions Paying a vendor for product/service Paying a vendor for product/service Creating an invoice to a customer Creating an invoice to a customer Paying salaries to an employee Paying salaries to an employee Issuing petty cash to an employee for purchase of permits Issuing petty cash to an employee for purchase of permits

11. YESCO Processes a Utility Bill for $100 UtilitiesAccounts PayableCash 100

12. YESCO Pays the Utility Bill for $100 UtilitiesAccounts PayableCash 100

13. YESCO Processes Time Card for $500 Bonus – charge to 8511 8511-XXXX - WageWages PayableCash 500

14. YESCO Issues check for $500 Bonus – charged to 8511 8511-XXXX - WageWages PayableCash 500

15. Yesco Invoices Customer for Cash Sale Job with the below detail  Amount of Invoice - $500  Customer has a resale certificate  Job Costs Labor costs - $150 Labor costs - $150 Materials costs - $100 Materials costs - $100 PCO costs - $50 PCO costs - $50

16. YESCO Creates Invoice to Customer Accounts Receivable Revenue – Cash Sale 500 500

17. YESCO Closes Job Work in Process Labor 300150 MaterialPCO 10050

18. Customer Pays YESCO Invoice Cash Accounts Receivable 500 500

19. Group Exercises and Fun!!!!