Unit 1 Accounting Basics

Accounting Process of planning, recording, analyzing and interpreting financial information

Why Learn Accounting? Use data collected to make business decisions MAKE MORE $$$ m/watch?v=sCH7u1xHsX 0

1.Read textbook page 6- The Role of Accounting 2.Compile a list of data that might be collected in a fast food business. 3.What types of business decisions could be made using that data?

Accounting System Planned process designed to compile financial data and summarize the results in accounting records and reports

Financial Statements Financial reports that summarize the financial condition and operations of a business

Net Worth Statement Report that shows what an individual owns, owes and the difference between the two

Asset Something you own

Liability Something you owe

Equity = Net Worth The difference between assets and liabilities

Assets – Liabilities = Net Worth (Equity)

Net Worth Statement See the Net Worth Statement on page 7 of your online textbook. Cengage.com User Name: Password: Accounting 1234

Write A friend has asked you to borrow $200. What are some questions you would ask the borrower before lending money? Why would you ask these questions?

Net Worth Statement Textbook Page 9- Work Together 1-1 Workbook Page 7- Complete Net Worth Statement

Assignment Textbook Page 9- On Your Own 1-1 Workbook Page 8- Complete Net Worth Statement Call me over to check once complete

GAAP Generally Accepted Accounting Principles

Equity Financial rights to the assets of a business

Owner’s Equity Amount of $$$ remaining after the value of all liabilities is subtracted from the value of all assets

Accounting Equation Assets = Liabilities + Owners Equity (Must always be in balance)

Accounting Equation Write Student Assets and Liabilities on the board- Calculate Equity

Careers in Accounting Read Textbook page 12- Careers In Accounting- So You Want To Be An Accountant Write- 1 paragraph- Which career path in accounting are you most interested in and why?

Transaction Any business activity that changes assets, liabilities or owner’s equity

Transaction Write Accounting Equation on Board Received Cash from Owner as Investment, $2000. Add $2000 to Assets as Cash Add $2000 to OE as Owner Capital

Transaction Paid cash for supplies, $165.

Transaction Paid cash for Insurance, $900.

Transaction Bought supplies on account from Canyon Office Supplies, $225.

Transaction Paid cash on account to Canyon Office Supplies, 100.

Creditor Person or business to whom a liability is owed

Work Together Textbook Page 17 Workbook Page 9 Complete Work Together 1-2

Assignment Textbook Page 17 Workbook Page 10 Complete On Your Own1-2

Revenue Increase in equity resulting from the sale of goods or services

Sale on Account Sale for which payment will be received at a later date

Expense Cost of goods or services used to operate a business

Withdrawals Assets taken from the business for the owner’s personal use