Ch 1 Lecture PPT-26E-2

8/16/2019 Ch 1 Lecture PPT-26E-2

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Welcome to ACCT 1100

• Instructor: Wendy Schuster, CPA

• Course Syllabus

• Angel

• Cengage• Begin Chapter 1

1



Things to know about Mrs. Schuster

• I expect the following behaiors:o !ead the chapter before co"ing to classo Be in class and on ti"e# plan ahead

o $a%e responsibility for your own actionso Cell phones and co"puters put away

• In return, I will help you any way I can





Things to know about Homework Assignments

• ight Chapters *o assign"ent for Chapter 2+o Co"pleted through Cengage-W

$o register, follow the directions on the Cengage-WBoarding Pass, found in Angel under &essons.'etting

Started.Course Infor"ationo 3ue dates in Cengage-Wo Assign"ents

Adaptable learning actiity with a pre4test and post4test

o (o"ewor%

Algorith"ic proble" selections fro" your boo% 5ou get 6e 7chec% "y wor%8 opportunities and three sub"its

o Assign"ents.(o"ewor% do not re4open once closedo Solutions are not postedo &owest grade -$ dropped





Things to know about "#ams

• $wo xa"so 3ates in Syllabuso !eiew the class before the exa"

o Allowed: ote card, calculator, pencil, erasers *nocell phones+ >a%e your note card and use it to co"plete the reiew

assign"ents

o &owest grade -$ droppedo o "a%e4ups allowed unless pre4arranged with "e



How To $ass ACC 1100

• Co"plete all reading before classo We begin the next chapter i""ediately following

co"pletion of the preious *except when we hae atest+

• Co"plete all assign"ents# If you are absent, youare responsible for any "issed wor%?

• Attend all Classes and be on4ti"e

• As% /uestions• >a%e a @riend# >a%e seeral @riends

7



Warren

%eee

'uchac

Accounting

()e

Introduction to Accountingand Business1

C H A $ T " %

h u m a n / i S t o c k / 3 6 0 / G e t t y I m a g e s



T*+es o, -usinesses

©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"

Serice -usinesses Serice

+e#ta Air !ines ,rans)ortation ser%ices

,he -a#t +isney om)any .ntertainment ser%ices

Merchanising -usinesses $rouct

-a#mart Genera# merchandise

Ama/on"com Internet 'ooks( music( %ideos

Manu,acturing -usinesses $rouct

ord &otor o" ars( trucks( %ans

+e## Inc" ersona# com)uters



%ole o, Accounting in -usiness

• Accounting can be de6ned as an

infor"ation syste" that proides reportsto users about the econo"ic actiities andcondition of a business?

• $he process by which accounting proidesinfor"ation to users is as follows:o Identify users?o Assess users9 infor"ation needs?o 3esign the accounting infor"ation syste" to

"eet users9 needs?o !ecord econo"ic data about business actiities

and eents?o Prepare accounting reports for users?©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"




Accounting as an /n,ormation S*stem



Managerial Accounting

• $he area of accounting that proidesinternal users with infor"ation is calledmanagerial accounting, or management accounting?

• >anagerial accountants e"ployed by abusiness are e"ployed in privateaccounting?




inancial Accounting

• $he area of accounting that proidesexternal users with infor"ation is calledfnancial accounting?

• $he obectie of 6nancial accounting is to

proide releant and ti"ely infor"ation forthe decision4"a%ing needs of usersoutside of the business?

• General-purpose fnancial statementsare one type of 6nancial accounting reportthat is distributed to external users?




%ole o, "thics in Accounting an -usinessslie 1 o, 23

• $he obectie of accounting is to proidereleant, ti"ely infor"ation for userdecision "a%ing?

• Accountants "ust behae in an ethical

"anner so that the infor"ation theyproide users will be trustworthy and,thus, useful for decision "a%ing?

• Ethics are "oral principles that guide the

conduct of indiiduals?




Accounting an -usiness raus






%ole o, "thics in Accounting an -usinessslie 2 o, 23

•'uidelines for behaing ethically follow:

1? Identify an ethical decision by using yourpersonal ethical standards of honesty andfairness?

? Identify the conse<uences of the decision andits eect on others?

? Consider your obligations and responsibilitiesto those who will be aected by your decision?

D? >a%e a decision that is ethical and fair to thoseaected by it?




O++ortunities ,or Accountants

•Accountants and their sta who proideserices on a fee basis are said to bee"ployed in public accounting?

• Accountants e"ployed by a business 6r",

goern"ent, or a not4for4pro6torgani0ation are said to be e"ployed inprivate accounting?

• Public accountants who hae "et a state9s

education, experience, and exa"inationre<uire"ents "ay beco"e CertifedPublic Accountants (CPAs)?





Accounting Career $aths an Salaries



4enerall* Acce+te Accounting $rinci+les

• @inancial accountants follow generally accepted

accounting principles (GAAP) in preparingreports?

• Within the E?S?, the Financial AccountingStandards oard (FAS) has the pri"ary

responsibility for deeloping accountingprinciples?

• $he Securities and E!change Commission(SEC), an agency of the E?S? goern"ent, has

authority oer the accounting and 6nancialdisclosures for co"panies whose shares ofownership *stoc%+ are traded and sold to thepublic?

• >any countries outside the E?S? use generallyaccepted accounting principles adopted by the©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"



-usiness "ntit* Conce+t

•Ender the business entity concept, theactiities of a business are recordedseparately fro" the actiities of itsowners, creditors, or other businesses?




orms o, -usiness "ntities




Cost Conce+tslie 1 o, 23

•Ender the cost concept, a"ounts areinitially recorded in the accounting recordsat their cost or purchase price?

• Aaron Publishers purchased a building on

@ebruary ;, ;1D, for F12;,;;;? -thera"ounts related to this purchase areshown on the next slide?




Cost Conce+tslie ( o, 23


Ender the cost concept, Aaron Publishers recordsthe purchase of the building on @ebruary ;,

;1D, at the purchase price of

$%&''''#

$he other a"ounts listed aboe hae no eect onthe accounting records?





xample

xercise

©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"

-n August 2, 'allatin !epair Serice

extended an oer of F12,;;; for land thathad been priced for sale at F12;,;;;? -nSepte"ber , 'allatin !epair Sericeaccepted the seller9s counteroer ofF1G,;;;? -n -ctober ;, the land wasassessed at a alue of F=H,;;; for propertytax purposes? -n 3ece"ber D, 'allatin

!epair Serice was oered F1;,;;; for theland by a national retail chain? At what alueshould the land be recorded in 'allatin!epair Serice9s recordsJ

Cost Concept

. 11B



Th A ti " ti



The Accounting "5uationslie ( o, 63


Assets .iabilities / 0*ner+s E,uity

1he resourceso*ned by a

business

Th A ti " ti



The Accounting "5uationslie 2 o, 63



1he rights o2creditors are the

debts o2 thebusiness

Th A ti " ti



The Accounting "5uationslie 6 o, 63



1he rights o2 theo*ners



xample

xercise


Kohn Koos is the owner and operator of 5ou9re

A Star, a "otiational consulting business?At the end of its accounting period,3ece"ber 1, ;12, 5ou9re A Star has assetsof FH;;,;;; and liabilities of F2;,;;;?

Esing the accounting e<uation, deter"inethe following a"ounts:

a? -wner9s e<uity as of 3ece"ber 1, ;12?

b? -wner9s e<uity as of 3ece"ber 1, ;1,assu"ing that assets increased byF1;,;;; and liabilities decreased byF2,;;; during ;1?

Accounting E,uation(slide % o2 3)



xample

xercise


Accounting E,uation(slide 3 o2 3)

.3ercise 6

-usiness Transactions an



-usiness Transactions an

the Accounting "5uation

• A business transaction is an econo"iceent or condition that directly changes anentity9s 6nancial condition or its results ofoperations?




Transaction A

• -n oe"ber 1, ;12, Chris Clar%deposited F2,;;; in a ban% account inthe na"e of etSolutions?




Transaction -

• -n oe"ber 2, ;12, etSolutions paidF;,;;; for the purchase of land as afuture building site?




Transaction C

• -n oe"ber 1;, ;12, etSolutions purchased

supplies for F1,2; and agreed to pay the supplierin the near future?

• $he liability created by a purchase on account is

called an account payable?

• Ite"s such as supplies that will be used in thebusiness in the future are called prepaide!penses, which are assets?


Transaction '



Transaction 'slie 1 o, 23

• A business earns "oney by selling goodsor serices to its custo"ers? $his a"ountis called revenue?


Transaction '



Transaction 'slie ( o, 23

• -n oe"ber 1H, ;12, etSolutionsreceied cash of FG,2;; for proidingserices to custo"ers?


Transaction '



Transaction 'slie 2 o, 23

• !eenue fro" proiding serices isrecorded as 2ees earned?

• !eenue fro" the sale of "erchandise isrecorded as sales?

• -ther exa"ples of reenue include rent,which is recorded as rent revenue, andinterest, which is recorded as interestrevenue?

• An account receivable is a clai" againsta custo"er, which is an asset?


Transaction "



Transaction "slie 1 o, (3

• 3uring the "onth, etSolutions spentcash or used up other assets in earningreenue? Assets used in this process ofearning reenue are called e!penses?


Transaction "



Transaction "slie ( o, (3

• -n oe"ber ;, ;12, etSolutions paidthe following expenses: wages, F,12#rent, FH;;# utilities, FD2;# and"iscellaneous, FG2?




Transaction

• -n oe"ber ;, ;12, etSolutions paidcreditors on account, F=2;?


T i 4



Transaction 4

• -n oe"ber ;, ;12, Chris Clar%deter"ined that the cost of supplies onhand at the end of the "onth was F22;?


T ti H



Transaction H

• -n oe"ber ;, ;12, Chris Clar%withdrew F,;;; fro" etSolutions forpersonal use?




Summar* o, Transactions ,or NetSolutions


T*+es o, Transactions



T*+es o, Transactions

A,,ecting Owner7s "5uit*




xample

xercise


Salo 3eliery Serice is owned and operated by Koel Salo? $he following selected transactions were co"pleted by Salo3eliery Serice during @ebruary:

1? !eceied cash fro" owner as additional inest"ent,F2,;;;?

? Paid creditors on account, F1,H;;?

? Billed custo"ers for deliery serices on account, F11,2;?D? !eceied cash fro" custo"ers on account, F,GD;?

2? Paid cash to owner for personal use, F1,;;;?

Indicate the eect of each transaction on the accountinge<uation ele"ents *Assets, &iabilities, -wner9s <uity,

3rawing, !eenue, and xpense+? Also indicate the speci6cite" within the accounting e<uation ele"ent that is aected? $o illustrate, the answer to *1+ follows:

1ransactions (slide % o2 3)



xample

xercise


1ransactions (slide 3 o2 3)

i i l St t t



inancial Statements

• After transactions hae been recorded andsu""ari0ed, reports are prepared forusers? $he accounting reports proidingthis infor"ation are called fnancial

statements?




inancial Statements


/ncome Statement



/ncome Statement

• $he income statement reports thereenues and expenses for a period ofti"e, based on the matching concept?

• $he "atching concept is applied by

7"atching8 the expenses incurred during aperiod with the reenue that thoseexpenses generated?

• $he excess of the reenue oer the

expenses is called net income, netproft, or earnings? If expenses exceedreenue, the excess is a net loss?


" St t t



xample

xercise


Prepare an inco"e state"ent for the year endedApril ;, ;1?

"ncome Statement

$he reenues and expenses of Chic%adee $rael

Serice for the year ended April ;, ;1, follow:

Statement o, Owner7s "5uit*



Statement o, Owner7s "5uit*

• $he statement o2 o*ner+s e,uity

reports the changes in the owner9s e<uityfor a period of ti"e?

• It is prepared after the inco"e state"ent

because the net inco"e or net loss for theperiod "ust be reported in this state"ent?


St t t 2 0 + E it



xample

xercise


Esing the inco"e state"ent for Chic%adee $rael

Serice, prepare a state"ent of owner9s e<uity forthe year ended April ;, ;1? Ada" Cellini, theowner, inested an additional F2;,;;; in thebusiness and withdrew cash of F;,;;; for personaluse during the year? $he capital of Ada" Cellini was

FH;,;;; on >ay 1, ;12?

Statement o2 0*ner+s E,uity

-alance Sheet



-alance Sheet

• A balance sheet is a list of the assets,

liabilities, and owner9s e<uity as of aspeci6c date?

• $he account 2orm of a balance sheet lists

the assets on the left and the liabilitiesand owner9s e<uity on the right? Itrese"bles the basic for"at of theaccounting e<uation?


alance Sheet



xample

xercise


Esing the following data for Chic%adee $rael

Serice as well as the state"ent of owner9se<uity, prepare a balance sheet as of April;, ;1?

alance Sheet

i i l St t t / St t t



inancial Statements8/ncome Statement


4et income is carriedto the statement o2

o*ner+s e,uity# (continued)

inancial Statements8Statement o, Owner7s



inancial Statements Statement o, Owner s

"5uit*


From the incomestatement

1o the balancesheet

(continued)

i i l St t t - l Sh t



inancial Statements8-alance Sheet


1his amount iscompared to thenet cash 5o* onthe statement o2

cash 5o*s#

From thestatement o2

o*ner+s e,uity(continued)

i i l St t t / t l ti hi



inancial Statement /nterrelationshi+s


/n9Class Assignment



/n9Class Assignment

• Practice xercises D, 2,

• Ki"9s &awn Care (andout

Ch 1 Lecture PPT-26E-2

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