C1 - 1 Learning Objectives 1. Nature of a Business 2. The Role of Accounting in Business 3. Business Ethics 4. Profession of Accounting 5. Generally Accepted Accounting Principles 6. Assets, Liabilities, and Owner’s Equity 7. Business Transactions 8. Financial Statements 9. Financial Analysis and Interpretation. Power Notes Introduction to Accounting and Business Introduction to Accounting and Business Chapter F1 C1
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C1 - 1 Learning Objectives 1.Nature of a Business 2.The Role of Accounting in Business 3.Business Ethics 4.Profession of Accounting 5.Generally Accepted.
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C1 - 1
Learning Objectives
1. Nature of a Business
2. The Role of Accounting in Business
3. Business Ethics
4. Profession of Accounting
5. Generally Accepted Accounting Principles
6. Assets, Liabilities, and Owner’s Equity
7. Business Transactions
8. Financial Statements
9. Financial Analysis and Interpretation.
Power Notes Introduction to Accounting and Business Introduction to Accounting and Business
Chapter F1
C1
C1 - 2 Note: To select a topic, type the slide # and press Enter.
• Accounting – An Information Process• Users of Accounting Information• Profession of Accounting• The Accounting Equation• Business Transactions• Financial Statements• Ratio of Liabilities to Stockholders Equity
Slide # Power Note Topics
Power Notes Introduction to Accounting and Business Introduction to Accounting and Business
Chapter F1
39
1116195369
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Accounting — An Information Process Accounting — An Information Process
Accounting — An Information Process Accounting — An Information Process
Identificationof Users
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UserInformation
Needs
Accounting — An Information Process Accounting — An Information Process
Accounting — An Information Process Accounting — An Information Process
Identificationof Users
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Identificationof Users
UserInformation
Needs
AccountingSystem
Accounting — An Information Process Accounting — An Information Process
Accounting — An Information Process Accounting — An Information Process
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Identificationof Users
UserInformation
Needs
AccountingSystem
Economic Dataand Activities
Accounting — An Information Process Accounting — An Information Process
Accounting — An Information Process Accounting — An Information Process
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Identificationof Users
UserInformation
Needs
AccountingSystem
Economic Dataand Activities
Reports
Accounting — An Information Process Accounting — An Information Process
Accounting — An Information Process Accounting — An Information Process
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a. Chris Clark deposits $25,000 in a bank account for NetSolutions in return for shares of stock in the
corporation.
ASSETS
=
Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
Cash Cash 25,00025,000
LIABILITIES
Capital Stock Capital Stock 25,00025,000
STOCKHOLDERS’ EQUITY
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Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
b. NetSolutions buys land for $20,000.
ASSETS
=
LIABILITIES
Cash Cash (20,000)(20,000)
Land Land 20,00020,000
STOCKHOLDERS’ EQUITY
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Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
ASSETS
=
LIABILITIES
c. NetSolutions buys supplies for $1,350, agreeing to pay the supplier in the near future.
Accounts PayableAccounts Payable1,3501,350
Supplies Supplies 1,3501,350 STOCKHOLDERS’ EQUITY
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Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
ASSETS
=
LIABILITIES
Cash Cash 7,5007,500
Fees Earned Fees Earned 7,5007,500
d. NetSolutions earns fees of $7,500, receiving cash.
STOCKHOLDERS’ EQUITY
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Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
ASSETS
=
LIABILITIES
Cash Cash (3,650)(3,650)
ExpensesExpenses(3,650)(3,650)
e. NetSolutions paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275.
STOCKHOLDERS’ EQUITY
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Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
ASSETS
=
LIABILITIES
Cash Cash (950)(950)
Accounts PayableAccounts Payable(950)(950)
f. NetSolutions pays $950 to creditors on account.
STOCKHOLDERS’ EQUITY
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Identificationof Users
UserInformation
Needs
AccountingSystem
Reports
Economic Dataand Activities
UserDecisions
Accounting — An Information Process Accounting — An Information Process
Accounting — An Information Process Accounting — An Information Process
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Business TransactionsBusiness TransactionsBusiness TransactionsBusiness Transactions
ASSETS
=
LIABILITIES
Cash Cash (2,000)(2,000)
DividendsDividends(2,000)(2,000)
h. NetSolutions pays $2,000 to stockholders (Chris Clark) as dividends.
Cash flows from operating activities: Cash received from customers $ 7,500 Deduct cash payments for expenses and payments to creditors 4,600 Net cash flow from operating activities $ 2,900Cash flows from investing activities: Cash payments for acquisition of land (20,000Cash flows from financing activities: Cash received from sale of stock $25,000 Deduct cash dividends 2,000 Net cash flow from financing activities 23,000Net cash flow and Nov. 30, 2002 cash balance $5,900
Ratio of Liabilities to Stockholders’ EquityRatio of Liabilities to Stockholders’ EquityRatio of Liabilities to Stockholders’ EquityRatio of Liabilities to Stockholders’ Equity
Ratio of liabilitiesto stockholders’ equity =
FormulaFormula
Objective: Use the ratio of liabilities to stockholders’ equity to analyze the ability of a business to withstand poor business conditions and to pay its creditors.
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
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decreased bydecreased by
STOCKHOLDERS’ EQUITY
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
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decreased bydecreased by
STOCKHOLDERS’ EQUITY
Dividends
Expenses
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
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STOCKHOLDERS’ EQUITY
increased byincreased by
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
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STOCKHOLDERS’ EQUITY
increased byincreased by
Stockholders’ investments
Revenues
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
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STOCKHOLDERS’ EQUITY
Dividends
Expenses
decreased bydecreased by increased byincreased by
Stockholders’ investments
Revenues
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
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STOCKHOLDERS’ EQUITY
decreased bydecreased by increased byincreased by
NET INCOME
Dividends
Expenses
Stockholders’ investments
Revenues
Effects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ EquityEffects of Transactions on Stockholders’ Equity
Cash flows from operating activities: Cash received from customers $ 7,500 Deduct cash payments for expenses and payments to creditors 4,600 Net cash flow from operating activities $ 2,900Cash flows from investing activities: Cash payments for acquisition of land (20,000Cash flows from financing activities: Cash received from sale of stock $25,000 Deduct cash dividends 2,000 Net cash flow from financing activities 23,000Net cash flow and Nov. 30, 2002 cash balance $5,900
Cash flows from operating activities: Cash received from customers $ 7,500 Deduct cash payments for expenses and payments to creditors 4,600 Net cash flow from operating activities $ 2,900Cash flows from investing activities: Cash payments for acquisition of land (20,000Cash flows from financing activities: Cash received from sale of stock $25,000 Deduct cash dividends 2,000 Net cash flow from financing activities 23,000Net cash flow and Nov. 30, 2002 cash balance $5,900
Cash flows from operating activities: Cash received from customers $ 7,500 Deduct cash payments for expenses and payments to creditors 4,600 Net cash flow from operating activities $ 2,900Cash flows from investing activities: Cash payments for acquisition of land (20,000Cash flows from financing activities: Cash received from sale of stock $25,000 Deduct cash dividends 2,000 Net cash flow from financing activities 23,000Net cash flow and Nov. 30, 2002 cash balance $5,900
)
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Note: To see the topic slide, type 2 and press Enter.
This is the last slide in Chapter F1. This is the last slide in Chapter F1.
Power NotesChapter F1
Introduction to Accounting and Business Introduction to Accounting and Business