INTRODUCTION TO ACCOUNTING PANOS PAPADOPOULOS

WHAT IS ACCOUNTING? Accounting is the recording of financial transactions plus storing, sorting, retrieving, summarizing, and presenting the information in various reports and analyses. Accounting is also a profession consisting of individuals having the formal education to carry out these tasks. One part of accounting focuses on presenting the information in the form of general-purpose financial statements(balance sheet, income statement, etc.) to people outside of the company. These external reports must be prepared in accordance with generally accepted accounting principles often referred to as GAAP or US GAAP. This part of accounting is referred to as financial accounting.financial statementsbalance sheetaccounting principlesGAAP Accounting also entails providing a company's management with the information it needs to keep the business financially healthy. These analyses and reports are not distributed outside of the company. Some of the information will originate from the recorded transactions but some of the information will be estimates and projections based on various assumptions. This area of accounting is known as management accounting.

FOCUS ON ACCOUNTING Bookkeeping : Recording of Financial Transactions manually or electronicky Accounting Rules: Rules for reporting on a business performance and financial condition known as GAAP (Generally accepted accounting principles). Accounting & technology: Reduces the time, effort and cost of bookkeeping. Information are record, stored and processed. Business Income, expenses, revenue… Return & risk…

BUSINESS ORGANIZATIONS Sole proprietorship: Owned by one person Partnership: Own by 2 or more people.  Limited Liability  Unlimited liability Corporation: Legally separate from its owners, liable for its own acts and debts Non business organizations: Governments, non profit,

MAIN ACTIVITIES OF BUSINESS ORGANIZATIONS Planning : Defining organization’s ideas, goals and actions Financing: Means to pay for resources( lands, buildings, equipment etc) to carry out plans Investing: Acquiring of assets in order to be able to create and sell its products and services. Operating: MKT, research, Salaries, employees Owners claim: Equity Creditors claim: Liability Accounting Equation : Assets=Liabilities + Equity

FINANCIAL STATEMENTS INCOME Statement: Reports on Operating activities Statement of Financial Position: Reports on investing and financing activities Statement of Changes in Equity: Reports on changes on owners claim Statement of Cash flow: Reports on cash flows from Investing, Financing and operating activities

INCOME STATEMENT – OPERATING ACTIVITIES

FINANCIAL POSITION – INVESTING & FINANCING ACTIVITIES

OWNERS EQUITY

CASH FLOW STATEMENT

PRINCIPLES OF ACCOUNTING Business Entity Principle: Business is accounting for separately that its owners Objectivity principle: Financial statements information is independent & unbiased Cost principle: Financial statements are based on real/actual cost Going Concern Principle: Assumption that the business will continue operating instead of being closed Monetary Unit Principle: We express transactions and events in monetary unit (money)

TRANSACTIONS EXAMPLES Investment by Owner: 30k (Assets/Equity) Purchase Supplies for Cash:5k (Cash/Supplies) Purchase Equipment for Cash: 25k (Assets) Purchase Supplies on Credit: 5k Services Rendered (offered)for cash: 5k Product Sales on Credit Receipt of Cash from A/C Receivables Payment of Account Payables Withdrawal of Cash by Owners