Unit 1 introduction to accounting

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Unit 1 Introduction to Accounting
Chapter 1 and Chapter 2

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  • Accounting plays a vital role in the day-to-day activities of every business. Accounting records and reports help businesses operate efficiently and profitably by keeping track of how much is earned and how much is spent.
    Accounting is so much a part of the business world that much of its terminology has become a part of our everyday language.
  • Please go to the World Wildlife Fund website. Browse and Review the site for 15 minutes, paying close attention to services and careers.
    ACTION: set timer
  • Why its important
    A successful career begins with identifying your interest and skills and putting them to work for you. As consumers, we buy goods from merchandising businesses daily. Understanding the nature of these transaction are key to accounting for a merchandising business.
  • Given this information, what might you want you career to be? Are do you just want a job?
  • Before choosing a career you need to do a little soul-searching. The more you know about yourself, the easier it will be to make career choices.
    ACTION: Students should go to this website: www.educationplanner.com and click on Career assessment and take the quiz.
    This should take approximately 10-15 minutes.
  • Your are more likely to enjoy a career that uses you individual interest skills and traits.
    Everyone has different skills and abilities – it’s the combination that gives you a unique selling point
  • How many of these traits do you have? Make a list. It will come in handy when you consider careers that interest you.
  • Being responsible means being dependable and taking positive actions, like showing up on time for work or honoring a commitment.
    You value achievement if you want to be a success in whatever you do, but it goes a little farther than wanting it also involves taking initiative.
    If you especially value interaction with friends and family, relationships are important to you.
    With compassion you care deeply about people animals or special causes.
    Courage is not just being brave in the face of physical danger, it is also the ability to overcome other fears. For example it takes courage to make a speech in front of the whole classroom
    If acknowledgement and appreciation of your work is important to you, then you value recognition.
  • Make a list of how you’d like to spend your time, energy and resources. These are your lifestyle goals. Try to focus on careers that closely match them.
  • As you collect information about yourself, you’ll want to complete a personal career profile. Use this profile to help you evaluate whether the careers that you’re considering match your skills, interest, values and personality.
    ACTION: hand out Personal Career Profile Form – Refer student to page 10 for help in completing the form.
  • ACTION: Hand out Personal Career Profile Form
    Use this profile to help you evaluate whether the career you’re considering match your skills, interest, values, and personality.
  • Accounting Flashbacks --- The Inca Empire, which spanned the west coast of South America throughout the 11th – 14th centuries, used knotted cords of different lengths and colors called quipi to keep accounting records.
  • Why its important --- Explore all the careers available in accounting. You wouldn’t want to miss a great opportunity just because you didn’t know it existed.
  • HOMEWORK: Problem 1-5 Researching Public Accounting Firms --- Page 17
    Surf the World Wide Web or conduct research in the library to find information about the “big Four” accounting firms. Create a table of information about each firm and the services they provide.
    Review the Key Concepts – Chapter 1 Summary on Page 19
  • Please go to the Huey’s Athletic Network website. Browse and Review the site for 15 minutes, paying close attention to services and careers.
    ACTION: set timer
  • Why is it important --- in order to participate in the world of business, you’ll want to understand how businesses are formed, organized and operated.
  • A business must operate at a profit and have some willing to take the risk for it.
    One measure of success in a business operation is the amount of profit it earns.
  • There are many benefits of starting and running your own business, but there are also drawbacks to consider.
  • A service business provides a needed service for a fee. Examples are travel agencies, beauty salons, movers, insurance company and realtors
    A merchandising business buys finished products and resales them to individual or businesses, such as Department Stores and supermarkets
    A Manufacturing business buys raw material and transform them into finished products. Ranging from shipbuilders to bakeries.
  • Why its important ---- understanding accounting systems is the key to understanding business.
  • Each business sets up an accounting systems according to its specific needs, but all businesses follow GAAP
  • Activity --- Computing in the business world – page 35
    Suppose you are opening a 1,000 square foot baseball card store in a shopping center. You have signed a lease that requires you to pay a monthly rent of $1,75 per square foot, plus 5% of your gross annual sales. What is the total amount of rent you will pay in one year if you have sales of $85,000?
    THE ANSWER = $25,250
    Review Chapter 2 Summary – Key concepts on page 37
    HOMEWORK: Problem 2-4 Indentify Types of Business Page 40, Problem 2-6 Understanding Business Operations, and Problem 2-7 Categorizing Forms of Business Organizations Page 41
  • Unit 1 introduction to accounting

    1. 1. Introduction to AccountingIntroduction to Accounting Unit 1
    2. 2. Coming together is the beginning. Keeping together is progress Working together is success - Henry Ford American Automobile Manufacturer
    3. 3. You and theWorld ofYou and theWorld of AccountingAccounting Chapter 1
    4. 4. Learning ObjectivesLearning Objectives You will be able to : ◦ Describe how personal skills, values and lifestyle goals affect career decisions. ◦ Find information about a variety of careers. ◦ Identify career opportunities in the accounting fields. ◦ Set career goals.
    5. 5. Learning Objectives (cont.)Learning Objectives (cont.) ◦ Describe types of businesses and organizations that hire accountants. ◦ Compare for profit businesses and non-profit organizations. ◦ Define the accounting terms introduced in this chapter.
    6. 6. Exploring the Real World ofExploring the Real World of BusinessBusiness The World Wildlife Fund ◦ A non-profit organization, works to save endangered species. ◦ Employs accountants, writers, fund raisers, and many other professionals who care about wildlife and their habitats. Review the website: http://www.worldwildlife.org
    7. 7. What do you think?What do you think? 1.What job skills or interest do you think you would need to work for an organization like World Wildlife Fund? 2.What kind of interest do you think would attract someone to such an organization?
    8. 8. Exploring CareersExploring Careers Section 1
    9. 9. What You’ll LearnWhat You’ll Learn How personal interest and skills, values and lifestyle goals affect career decisions Where to find information on possible careers. How to set career goals.
    10. 10. Key TermsKey Terms Skills Values Lifestyle Personality Personal interest tests Networking
    11. 11. Job vs. CareerJob vs. Career A job is simply work for pay A career is built on a foundation of ◦ Interest ◦ Knowledge ◦ Training and ◦ Experience
    12. 12. Access Your Career VisionAccess Your Career Vision What are your personal interest and skills? What are you values, and how will they affect your career? What lifestyle interest you? How will your personality affect a career choice?
    13. 13. Your Interest, Skills, and TraitsYour Interest, Skills, and Traits Skills are activities that you do well ◦ Are you good at math? ◦ Do you write well? ◦ Are you creative? ◦ Do you like to meet lots of people ◦ Do you enjoy building things
    14. 14. Skills & Traits Careers Example Creative Thinking Fine arts and humanity, actor artist or musician Knowing how to learn Training or Teaching Responsibility Health –related careers Friendliness Hospitality and recreation careers Honesty Child care worker, family and consumer science worker Decision making Financial planner, accountant Analytical Construction careers Adaptability Public service careers Self control Entrepreneur or manager Self-esteem Communication and media
    15. 15. ValuesValues Values are the principle you live by and the benefits that are important to you. ◦ Responsibility ◦ Achievement ◦ Relationships ◦ Compassion ◦ Courage ◦ Recognition Many people share the same values, but how they apply them is unique to each person.
    16. 16. Lifestyle GoalsLifestyle Goals Lifestyle is how you use you time, energy and resources. ◦ What’s really important to you? ◦ Do you want to go for the big bucks? ◦ Do you want to live in a big city with endless activities or a small town where everybody knows your name ◦ Do you want to work with a group of people, or do you prefer working solo?
    17. 17. Personality TraitsPersonality Traits Personality – a set of unique qualities that makes us different from other people. What is you personality. Are you ◦ Confident ◦ Friendly ◦ Dependable ◦ Funny ◦ Sympathetic
    18. 18. Personal Career Profile Form Name Date Career Your Values Career Values Your Interest Career Duties and Responsibilities Your Personality Personality Type Needed Skills and Aptitudes Skills and Aptitude Required Education/Training Acceptable Education/Training Required
    19. 19. Research the PossibilitiesResearch the Possibilities Guidance counselor can help you identify the things you like to do. One way is through personal interest test. Networking is a way to find out about particular careers by asking people to share information and advice. Print material about every career can be found in your public library. The Internet is a great source of educational and career information Professional organization are groups of people with common career interest.
    20. 20. Set Career GoalsSet Career Goals Map out a plan Education On-the-Job Training Internships
    21. 21. Steps to Setting Career GoalsSteps to Setting Career Goals 1. Decide on a long-term goal. 2. Decide on actions that will lead to the long-term goal. 3. Take action! 4. Diversify your skills 5. Realize the long-term goal.
    22. 22. A Matter of EthicsA Matter of Ethics Padding a resume Part of landing a great job is putting together a resume that effectively represents your skills and background. Imagine that BMW has opened a new regional headquarters in your area. You would like to work for BMW as a payroll clerk, but you are afraid you don’t have the right qualifications. A friend suggests that you “change” your resume to make yourself look better.  Ethical Decision Making: What are the ethical issues? What are the alternatives? Who are the affected parties? How do the alternative effect the parties? What would you do?
    23. 23. Accounting Careers:Accounting Careers: The Possibilities Are EndlessThe Possibilities Are Endless Section 2
    24. 24. What You’ll LearnWhat You’ll Learn The variety of career opportunities available to accountants. The type of businesses and organizations that hire accountants
    25. 25. Key TermsKey Terms Accountant For-profit business Not-for-profit business Accounting clerk Certified public accountant Public accounting
    26. 26. The Changing HorizonThe Changing Horizon An accountant handles a broad range of responsibilities, make business decisions, and prepares and interprets financial reports. For-profit businesses operate to earn money for their owners. Not-for-profit organizations operate for the greater good. Their goal is balancing their income with expenses. Their income comes from donations and tax dollars.
    27. 27. EmploymentEmployment Accounting clerk – an entry level job usually performing one or two accounting task. Certified public accountant pass a national test and meet specific experience and education standards to become “certified” to practice accounting. You might choose to work as a financial consultant in a large company or work for a public accounting firm and provide accounting services for their clients
    28. 28. TheWorld of BusinessTheWorld of Business AccountingAccounting Chapter 2
    29. 29. Learning ObjectiveLearning Objective You will be able to: ◦ Describe the role of profit, risk-taking, and the entrepreneur in the US economy. ◦ Describe the difference among service, merchandising, and manufacturing businesses. ◦ Compare the sole proprietorship, partnership, and corporate forms of business organization. ◦ Describe the purpose of accounting
    30. 30. Learning Objectives (cont.)Learning Objectives (cont.) ◦ Explain the difference between financial and management accounting. ◦ Describe the three basic assumption that underlie accounting principles. ◦ Define the accounting terms introduced in this chapter.
    31. 31. Exploring the Real World ofExploring the Real World of BusinessBusiness Huey’s Athletic Network (HAN) ◦ Uses aquatic therapy to help injured athletes rebuild body strength ◦ Provides personal training and consulting not only to sport star, but also to entertainers and weekend warriors who want to stay fit. Review the website: www.lahuey.com
    32. 32. What do you think?What do you think? 1. What knowledge and special skills do you think Lynda Huey needed to start and manage her business? 2. What makes an entrepreneur successful?
    33. 33. Exploring theWorldExploring theWorld of Businessof Business Section 1
    34. 34. What You’ll LearnWhat You’ll Learn Profit and risk-taking. The free enterprise system. Starting and running your own business. Three types of business operations. Three forms of business organization.
    35. 35. Key TermsKey Terms Free enterprise system Profit Loss Entrepreneur Capital Service business Merchandising business Manufacturing business Sole proprietorship Partnership Corporation Charter
    36. 36. The Environment of BusinessThe Environment of Business Free enterprise system ◦ People are free to produce goods and services as they choose ◦ Individuals are free to use their money as they wish:  Spend it,  Invest it,  Save it, or  Donate it. ◦ Business owners must compete to attract customers to continue operating.
    37. 37. The Environment of BusinessThe Environment of Business Profit – the amount of money earned over and above the amount spent to operate the business Loss – spending more money on business expenses than is earned. A business has to do two things to survive: ◦ It must operate at a profit. ◦ It must attract and keep an individual willing to take risk to run it.
    38. 38. The Environment of BusinessThe Environment of Business The need for Profit ◦ You must pay  Raw material  Equipment  Employees  Utilities and rent The need for a Risk-Taker ◦ People play different roles  Investors provide the money  Employees provide the labor  Managers handle supervision and planning  Entrepreneurs transform ideas for products and services into real-world businesses
    39. 39. Entrepreneurship:Who Me?Entrepreneurship:Who Me? Pros Cons  You are your own boss.  You create opportunities for earning money.  You create and control your work schedule.  You choose the people you serve.  You select the people who work with you.  You benefit from the rewards of your own hard work.  You choose your own work hours.  You probably need to work long hours.  You lose the security of steady wages and medical benefits an employer provides.  You market your own services or products.  You pay your own operating expenses.  You must be motivated and energetic each day  You face the possibility of losing money.
    40. 40. Traits of the EntrepreneurTraits of the Entrepreneur Entrepreneur are aware of their environment  No ice cream shop  Does the community want one? Entrepreneur evaluate alternatives  Customer preference  Architect plans  Accountant’s guidance Entrepreneurs seek the best solutions  Only used appliances are within budget guidelines Entrepreneurs turn ideas into action  Ben& Jerry’s is a worldwide producer of ice cream and frozen yogurt
    41. 41. Types of Business OperationsTypes of Business Operations There are three types of business that operate for profit: ◦ Service business ◦ Merchandising business ◦ Manufacturing business Each type of business needs money to begin and maintain operations Money supplied by investors, banks, or owners of a business is called capital.
    42. 42. Forms of Business OrganizationForms of Business Organization There are there forms of business organization ◦ Sole Proprietorship ◦ Partnership ◦ Corporation
    43. 43. Sole ProprietorshipSole Proprietorship Business owned by one person. The oldest and most common form of ownership The success or failure of the business depends heavily on the efforts and talents of the owner. Advantages Disadvantages Easy to set up Limited expertise All profits go to owner Hard to raise money Owner has total control Owner has all the risks Few regulations to follow Hard to attract talented employees
    44. 44. PartnershipPartnership Business owner by two or more persons; called partners Partnerships are formed when the need for capital is greater than the amount of money one person can invest. Advantages Disadvantages Easy to start Conflicts between partners Skills and talents are pooled Profits must be shared More money available Owners share all risks
    45. 45. CorporationCorporation Business organization that is recognized by law to have a life of its own. Must get permission from the state to operate. Advantages Disadvantages Easier to raise money Costs more to start up Easy to expand Complex to organize Easy to transfer ownership More regulations Losses limited to investments Higher taxes
    46. 46. Corporation (cont.)Corporation (cont.) To raise money, shares of stock are sold to hundreds or even thousands of people. These shares represent invest in and ownership of the corporation. Shareholders/Stockholder are the legal owners of a corporation ************* Regardless of the form, all businesses share common financial characteristics and methods for recording and reporting financial charges.
    47. 47. Accounting:Accounting: The Universal Language of BusinessThe Universal Language of Business Section 2
    48. 48. What you’ll learnWhat you’ll learn How the accounting system works. Who uses financial accounting reports. Who uses managerial accounting reports. How accounting is used to help make business decisions. What assumptions provide the foundation for accounting systems.
    49. 49. Key TermsKey Terms Accounting system Manual accounting system Computerized accounting system GAAP Financial reports Financial accounting Management accounting business entity Accounting period Going concern
    50. 50. The Accounting SystemThe Accounting System The accounting system is designed to collect, document and report on financial transactions affecting the business. In a manual accounting system the accounting is processed by hand. In a computerized accounting system the financial information is recorded by entering it in the computer.
    51. 51. The Accounting System (cont.)The Accounting System (cont.) All accountants used the same set of rules to prepare their reports. GAAP is also known as generally accepted accounting principles. Accounting principles provide a way to communicate financial information in a form understood by those interested in business operations Financial reports are summarized information about the financial status of a business
    52. 52. Input Processing Outputs Source Document Tasks Financial and •Checks •Analyzing Management •Invoices •Classifying Accounting Reports •Sales Slips •Recording •Financial condition •Receipts •Results of operation •Investment by and distributions to owners How the Accounting System Works
    53. 53. Using Accounting Reports forUsing Accounting Reports for Making Business DecisionsMaking Business Decisions Purpose of accounting ◦ Provide financial information about a business or not-for-profit organization ◦ Provide information to individual in order to make decisions. These two groups use accounting reports ◦ Individuals outside the business who have an interest in the business ◦ Individuals inside the business
    54. 54. Using Accounting Reports forUsing Accounting Reports for Making Business DecisionsMaking Business Decisions Financial Accounting focuses on reporting information to external users. ◦ The reports are prepared using GAAP for  Individuals or institutions that loan money to a business, to determine if the business is able to repay the loan  Local, state and federal government agencies for taxing purposes.  Workers, consumers, union leaders and competition are interested in the businesses performance.
    55. 55. Using Accounting Reports forUsing Accounting Reports for Making Business DecisionsMaking Business Decisions Management accounting focuses on reporting information to management. Referred to as accounting for internal users Reports are prepared for managers to make decision regarding: ◦ Purchasing, ◦ Hiring, ◦ Production, ◦ Payments, ◦ Sales, and ◦ Collections.
    56. 56. Accounting AssumptionsAccounting Assumptions These generally accepted accounting principles are based on these assumptions. ◦ Business entity  A business is a separate entity and exist separate of it’s owners personal holdings ◦ Accounting period  For reporting purposes, the life of a business is divided into specific periods of time.  It can be a month, a quarter, or most commonly a year. ◦ Going concern  Accountants assume the business has the ability to survive and operate indefinitely.  It is expected to continue.
    57. 57. A Matter of EthicsA Matter of Ethics Becoming an Entrepreneur Imagine that you’ve been working for a local day-care center for several years. You attend a company meeting to discuss new ideas on improving day care. Several new services are discussed that would help your center stand out from it’s competition. You think that this is a great opportunity for you to become and entrepreneur – by opening your own day-care center offering the new services discussed at the meetings Ethical Decision Making What are the ethical issues? What are the alternatives? Who are the affected parties? How do the alternatives affect the parties? What would you do?

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