1. Introduction to Accounting Story Time!
Written by Ruby Ann Sawyer, Brantley County Middle School

2. BCS III – Accounting Unit Essential Questions
What are debits? credits?
What are the basic account types?
What is an Income Statement?
What is a Balance Sheet?
Let’s get started!

3. What is accounting?
System of recording & summarizing financial transactions & analyzing, verifying, & reporting the results (
IT TELLS A STORY ABOUT THE CONDITION OF A BUSINESS!
THE LANGUAGE OF BUSINESS!

4. Who uses accounting? Everyone!
Businesses – to run the business & make decisions.
Investors – decide whether to buy a part of a company’s stocks
Creditors – decide whether to loan money to a company
IRS - how much taxes the company must pay
Customers - determine which company to purchase products or services from

5. Key Terms Assets – things you own
Ex. Cash, equipment, inventory, vehicles
Liabilities – debt or obligation (money owed)
Ex. Bank loan for truck, money due to supplier
Owner’s Equity –amount of initial investment plus earnings; what owner is entitled to in company

6. Key Terms
Income – monetary gain usually from sale of products or services
money earned
Ex. – sales
Expenses – financial burdens; costs
money spent
Ex. – insurance, inventory, salary

7. What is credit & debit? Credit – entry on the right side of an account
decreases assets or increases liabilities
Debit – entry on the left side of an account
increases assets or decreases liabilities
Account Name
Debit
Credit

8. Example of Debit & Credit
Type of Account
Asset Account
Asset Account
Debit
Increases
Credit
Decreases
In this example, your parents gave you $150 cash and you spend
$100 on clothes.

9. Example of Debit & Credit
Type of Account
Asset Account
Asset Account
Debit
Increases
Credit
Decreases
In this example, your parents gave you $150 cash and you spend
$100 on clothes.
Cash
$150
$100
$50
What is the balance of your cash account?

10. Financial Statements
Balance Sheet - includes company’s assets & liabilities; determines value of the company; snapshot in time
ASSETS = LIABILITIES + OWNER’S EQUITY
Income Statement - shows company’s income, expenses & profit or loss over a period of time
REVENUE – EXPENSES = NET INCOME (or LOSS)