1. Lesson 1-1 The Accounting Equation
5/1/2019
LESSON 1-1
The Accounting Equation
Original created by M.C. McLaughlin, Thomson/South-Western
Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School

2. In order to do this, you must have some type of
What is Accounting?
Planning, recording, analyzing, & interpreting financial information (also known as the language of business)
In order to do this, you must have some type of
LESSON 1-1

3. Accounting System
A planned process for providing financial information that will be useful to management
Consisting of
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4. To organize summaries of a business’s financial activities
Accounting Records
To organize summaries of a business’s financial activities
You will
use these
to create
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5. Financial Statements
Financial reports that summarize the financial condition and operations of a business
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6. The Business – Techknow Consulting
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Business Entity – A business’s financial information is recorded and reported separately from the owner’s personal financial information.
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7. The Business – Techknow Consulting
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A business that performs an activity for a fee
Service Business
Sole
Proprietor-ship
A business owned by one person
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8. THE ACCOUNTING EQUATION
Lesson 1-1
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THE ACCOUNTING EQUATION
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The Accounting Equation shows the relationship among assets, liabilities, & owner’s equity
It is most often stated as:
Assets = Liabilities + Owner’s Equity
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9. THE ACCOUNTING EQUATION
Lesson 1-1
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THE ACCOUNTING EQUATION
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Asset – anything of value that is owned by the business
Liability – an amount owed by a business
Equities – financial rights to the assets of a business
Equity of those to whom money is owed
Equity of the owner
Owner’s Equity – the amount remaining after the value of all liabilities is subtracted from the value of all assets
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10. THE ACCOUNTING EQUATION
Lesson 1-1
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THE ACCOUNTING EQUATION
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11. TERMS REVIEW accounting accounting system accounting records
Lesson 1-1
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TERMS REVIEW
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accounting
accounting system
accounting records
financial statements
service business
proprietorship
asset
equities
liability
owner’s equity
accounting equation
ethics
business ethics
LESSON 1-1