his Video online accounting course is
designed for those with little or no
experience in bookkeeping or accounting
and may be of interest to those looking to
review their basic knowledge of accounting.
Lesson 1. Learning objectives1 Business Operations2 Business Organizations3 Accounting Assumptions
Lesson 2: What You’ll LearnWHY IT IS IMPORTANT UNDERSTAND ACCOUNTINGDescribe profit, risk-taking,and entrepreneurs. Describe the purpose of accounting.Describe service,merchandising, andmanufacturing businesses. Explain financial and management accounting.Compare the soleproprietorship, partnership, Describe three basicand corporate forms ofbusiness accounting assumptions.List the advantages anddisadvantages of each formof business organization.
Lesson 2: The Business and AccountingKey Terms Accounting period GAAP Business entity Going concern Financial accounting Manufacturing business Profit Merchandising Loss business Sole proprietorship Partnership
Summary - Profit Profit is the differencebetween the amountsreceived from customers forgoods or services and theamounts paid for the inputsused to provide the goods orservices.
Summary – Business operations The three types of business operations. Merchandising businesses buys finished products and resells them to individuals or other businesses Manufacturing businessesService businesses A manufacturingprovide needed business buys rawservices, such as materials, uses labormedical, legal, hair and machinery tostyling, and lawn transform them intomowing, for a fee. finished products.
Summary - The three forms of business organization
Summary – Sole Proprietorship The advantages and disadvantages of organizing as a sole proprietorshipAdvantages 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
Summary – PartnershipThe advantages and disadvantages of organizing as a PartnershipAdvantages Disadvantages• Easy to start • Conflicts between partners• Skills and talents are pooled • Profits must be shared• More money available • Owners share all risks
Summary – CorporationThe advantages and disadvantages of organizing as a CorporationAdvantages Disadvantages• Easy to raise money • Costs more to start• Easy to expand • Complex to organize• Easy to transfer ownership • More regulations• Losses limited to investment • Higher taxes
Summary - GAAPAll accountants follow the same set of rules toprepare financial reportsAccounting principles and concepts develop fromresearch, practice, and pronouncements ofauthoritative bodiesThe rules are referred to as generally acceptedaccounting principles - GAAP
Summary – Users of accounting informationFinancial accounting Management accountingFinancial accounting Management accounting,focuses on reportinginformation to external users. which focuses on reporting information to managementCustomers, creditors, for internal users.investors, government Managers, employees
Summary – Accounting Assumptions Three basic accounting assumptions.Business entity Accounting period Going concernThe owner’s personal The life of a business is Accountants assumefinancial activities are divided into specific that a business hasnot included in the periods of time that are the ability to survivereports of the business covered by accounting and operate reports. indefinitely.
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