This document provides an overview of accounting concepts including the five basic account types (assets, liabilities, equity, income and expenses), the accounting equation, and who uses accounting information. Key points include:
- Assets are resources owned that provide future benefits, liabilities are debts owed, and equity is the owners' claim on assets. The accounting equation is Assets = Liabilities + Equity.
- Income increases assets and equity, expenses decrease assets. Common income examples are sales revenue and expenses include supplies and wages.
- Individuals, businesses, investors, creditors, governments and non-profits all use accounting information for purposes like managing finances, evaluating investments, and making decisions.
Basic accounting in 10 mints
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This powerpoint teaches the basics of bookkeeping and accounting. It includes details about debits and credits, assets, liabilities, sales, and expenses. Examples are provided and a quick description of the chart of accounts, profit and loss statements and the balance sheet is also included.
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Bookkeeping Basic & Quickbooks for ContractorsTerry Chong
Focus-Grow Bookkeeping presented Bookkeeping / Quickbooks for Contractors at SFPUC Contractor Assistance Center, SF on 3/2014. Sponsored by Merriwether & Williams Insurance Services. It talks about cash flow vs. profit, using credit to fund expansion, and Quickbooks set-up and reports: home page, items, estimate, invoices, job reports, financial reports (Balance Sheet, Profit & Loss), labor hours, payroll, labor burden for job costing.
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2. Any thing in RED write down in your books please
3. General understanding of accounting and the
language of business
Knowledge and understanding of the five types of
account classification.
Asset
Liability
Income
Expenses
Equity
4. What do you think accounting is?
Bank statements
Profit
Tax
Business
Financial statements
Management
Partnership
The process or work of keeping financial
accounts
5. The language of business.
A means to communicate financial
information.
A way to convey information about a business
to users.
6. The production of information about
an enterprise and the transmission of that
information from people who have it to those
who need It. – (Intermediate Accounting, 2nd edition)
The information system that measures
business activity, process the data into
reports and communicates the results to
decision makers. – (accounting 6th edition)
9. Individuals
manage bank accounts
Evaluate jobs
Decide whether they can afford something (e.g. a car
Businesses
Set goals
Budgeting
Investors
Whether to invest or not
How much they will get in return if they invest
Creditors (e.g. Banks)
If a company can make the loan repayments
Report on predicted income
10. Governments
For making decisions regarding welfare
Tax authorities
Tax is calculated using accounting information
How much business have purchased and sold
Non-profit organisations
The same way business do
Others. (employees, unions, etc.)
Estimate wages
Decipher business profit
Influence potential decisions
11. write down two examples of who uses
accounting
write an example of how you used
accounting within this month
People who use accounting to manage bank
accounts are ________?
Budgeting for products is used by ________ ?
Why?
12. Accounting is based on 5 basic account types
Asset
Liability
Owners Equity
Income/revenue
Expenses
13. An asset is a resource that a business/
person/ government owns and is expected to
benefit them in the future.
something that is of a benefit
Examples?
14. Cash at bank
Accounts receivable (paid by credit)
Bills receivable (paid by certain date)
Inventories (stock)
Prepaid expenses
Land
buildings
15. Current assets
Assets that can be converted into cash or sold within
the next 12 months
Land
Property
Non-current assets
Assets that are not current assets.
Equipment that is needed for the company to run
16. Economic obligations (debts) payable to an
individual or an organisation outside the
business
A responsibility or an obligation of arising
from past transactions or events.
Examples?
17. Accounts payable (opposite of accounts
receivable)
Bills payable (opposite of bills receivable)
Accrued liabilities (sometimes called accrued
expense)
Interest, salary
18. Demonstrate knowledge and understanding of
assets, liabilities, owners equity and the
accounting equation.
Reminder
Any thing in RED write down in your books please
19. Accounts payable
Something that the
company has paid for
by credit and not cash
Bills payable
Unpaid bills
Accounts receivable
A sale that was paid for by
credit and the company is
yet to receive the payment
e.g. cash
Bills receivable
An invoice has been sent
out and a company is
waiting for the payment
20. Accrued – to accumulate
- (benefit or sum of money) - received
by someone in regular or increasing
amounts
Accrued Liability is an expense that has been
acquired but not yet paid in cash. (has not been
paid therefore it is owed)
Wages – an employee has done the work but you haven't
paid them yet.
Interest – the interest is continually rising but the company
does not pay it until the end of the month
21. What the business is worth
Owners equity is the difference between the
assets and the liabilities of a business and
equals the amount of the owners investment
in the business
What an owner invests in the company
Owners equity = Assets – Liabilities
Examples?
22. Capital – What an owner invest in a company
(money, land, buildings)
Drawings – what an owner removes from the
company
Revenues (income)
Expenses
Covered further down
23. Classify each of the following as assets,
liabilities or Owners equity
Accounts payable
Loan from bank
Owners interest in the business
Furniture
Money owed by Jack
Cash at bank
Stock / inventory
Rent – that you have to pay
Salaries
24. Assets = Liabilities + owners equity
A = L + OE
The accounting equation
Owners equity = Assets – Liabilities
OE = A – L
Liabilities = Assets - Owners equity
L = A - OE
25. OE = A - L
John Smith the owner of the tuckshop wants to
know his investment in the business. Use the above
equation to work out the total value.
Cash at bank $ 500
Loan from PNC comity $ 200
Accounts payable $ 50
Accounts Receivable $ 70
Value of stock $ 80
Value of fridge $ 200
26. Assets
Cash at bank $ 500
Accounts Receivable +$ 70
Value of stock +$ 80
Value of fridge +$ 200
=$ 850
Loan from PNC comity $ 200
Accounts payable +$ 50
=$ 250
Answer $ 600
27. A = L + OE
John Smith the owner of the tuckshop wants to
know the value of the assets. Use the accounting
equation to work out the total value.
Amount owed to jack $100
Cost of bread $ 20
Loan from PNC $300
Amount owing by Ms Schmidt $ 10
New fridge monthly repayment $ 50
John smiths Investment $ 500
28. Demonstrate knowledge and understanding of
income/revenue and expenses as well as how
assets, liabilities and owners equity, work in the
accounting equation.
Reminder
Any thing in RED write down in your books please
29. Total assets must always equal total
liabilities plus owners equity
1. If the owner puts $20,000 in a business
where does that money go (what account
does it go into)?
2. If the business buys furniture on credit
what type of account is being used?
(WRITE DOWN WHAT YOU THINK THE ANSWERS ARE)
30. 1. The money goes into cash at bank
Equal reaction on the other side
2. Created a liability but also gained an asset
Created liability through buying something on credit
Gained an asset through obtaining furniture
31. John Smith the owner of the tuckshop wants to
know the value of the assets. Use the accounting
equation to work out the missing asset value.
Amount owed to jack $100
Cost of bread $ 20
Loan from PNC $300
Amount owing by Ms Schmidt $ 10
New fridge monthly repayment $ 50
John smiths Investment $ 500
32. The total amount of all revenues and other
gains received in an accounting period.
Can enhance an asset can decrease a liability
(does not include money put in by the
owner)
Increase the economic benefit
Examples?
33. Demonstrate knowledge and understanding of
income/revenue and expenses as well as how
assets, liabilities and owners equity, work in the
accounting equation.
Reminder
Any thing in RED write down in your books please
34. The result of decreasing asset or increasing
liabilities is called an expense. An expense
occurs from the cost of delivering services to
clients.
Decreases economic benefit
Does not include distributions of equity
participants
35. Office rent
Salaries for
employees
Advertising
Water, electricity gas
insurance
Supplies (used)
Cash expenses
Depreciation
ONLY BECOME
EXPENSES WHEN
PAID
36. The devaluing of something
E.g. Apple Iphone 3 cheaper now because over time
more advance products have came out
E.g. Wear an tear, a brand new car as soon as it is use
is worth less than it was originally
The result of decreasing an asset or
increasing liabilities is called an expense. An
expense occurs from the cost of delivering
services to clients.
37. The Basic Accounting Elements:
Asset
Something a business owns or controls that is of
benefit.
Liability
Obligation to settle debts in the future
Owners’ Equity
Owners’ interest in the company
Revenue/Income
Operations of the company that increase assets and
economic resources
Expense
Decrease in economic resources and assets.
38. If John Smith has the following assets and
liabilities what is the owners equity
Cash at Bank $ 1,000
Loan from bank $ 4,000
Accounts payable $ 500
Accounts receivable $ 8,000
Inventories $ 2,000
Furniture $ 3,500
39. Assets - Liabilities = Owners
equity
Cash at bank Loan from bank
$1,000 $4,000
Accounts receivable Accounts payable
$8,000 $ 500
Inventories
$2,000
Furniture
$3,500
Total
$14,500 - $4,500 = $10,000
40. John Smith gives you the
following list of items. Use the
accounting equation to
determine the total value of
assets
Money owing to Tim $ 1,000
Value of stock $ 8,000
Loan from bank $ 1,000
Amount owing from Jack $ 1,000
New Equipment $ 3,000
Vehicle's value $15,000
John Smiths investment $25,000
Accounts payable ?
Accounts receivable ?
Prepaid rent ?
Company Car ?
Paid for food ?
Received money for services ?
Owner took money out ?
Paid employees Income ?
Tax owing ?
Drawings ?
Cash at bank ?
Paid for new stock ?
Capital ?
Interest earned ?
E
L
R/I
A
OEConsider using excel
41. John Smith gives you the
following list of items. Use the
accounting equation to
determine the total value of
assets
Money owing to Tim $ 1,000
Value of stock $ 8,000
Loan from bank $ 1,000
Amount owing from Jack $ 1,000
New Equipment $ 3,000
Vehicle's value $15,000
John Smiths investment $25,000
Accounts payable ?
Accounts receivable ?
Prepaid rent ?
Company Car ?
Paid for food ?
Received money for services ?
Owner took money out ?
Paid employees Income ?
Tax owing ?
Drawings ?
Cash at bank ?
Paid for new stock ?
Capital ?
Interest earned ?
E
L
R/I
A
OE
L
43. Assets = $27,000 .
L
A
A
A
E
R/I
OE
E
L
OE
A
E
OE
R/I
44. Fill in the blank
Capital is what an owner
. . in a company.
Drawings is what an owner
. . from the company
L
Accounting is . . (please circle)
Income/revenue Increases the T F
economic benefit
Expenses Increases the economic benefit T F
Owners equity is the difference between the
. . and the . . of a business and
equals the amount of the . . Investment
in the business
45. Two examples of an Asset. 1 .
2 .
Two examples of a Liability. 1 .
2 .
Two examples of Owners equity. 1 .
2 .
Two examples of an Expense 1 .
2 .
Two examples of Income/revenue 1 .
2 .
What is the Accounting equation? . .
Fill in the Blank. An asset is something a business . . or controls
that is of . . (please circle)
Is budgeting in accounting? T F
Accounts are the only people who use accounting T F
Non Current assets are sold within 12 months. T F
I owe John Smith money, that is an asset T F
Accounts payable is the opposite of accounts receivable T F
Owners equity = Assets + Liabilities T F
Liabilities = Assets - Owners equity T F
Total assets must always equal total liabilities plus T F
owners equity
46. Demonstrate knowledge and understanding of
revenue and expenses as well as how assets,
liabilities and owners equity, work in the
accounting equation.
Demonstrate knowledge and understanding of
who uses accounting
Reminder
Any thing in RED write down in your books please
47.
48. Individuals
Businesses
Investors
Creditors
Governments
Tax authorities
Non-profit organisations
Others. (employees,
unions, etc.)
manage bank accounts
Evaluate jobs
Decide whether they can afford
something (e.g. a car)
Set goals
Budgeting
Whether to invest or not
How much they will get in return if
they invest
If a company can make the loan
repayments
Report on predicted income
For making decisions regarding
welfare
Tax is calculated using accounting
information
How much business have purchased
and sold
The same way business do
Estimate wages
Decipher business profit
Influences for potential decisions
50. Show three ways the accounting equation
can be expressed (write them down)
A = L + OE
OE = A – L
L = A - OE
51. 1. Write out the appropriate equation
2. Decipher which classification it is asking for
3. List values under the equation
4. Work out totals
5. Work out missing value
52. If John Smith has the following assets and
liabilities what is the owners equity
Cash at Bank $ 2,000
Bank Loan $ 3,500
Accounts payable $ 600
Accounts receivable $ 7,100
Inventories $ 3,000
Furniture $ 1,700
Land $ 8,000
Interest Payable $ 200
54. John Smith gives you the
following list of items. Use the
accounting equation to
determine the total value of
assets
Money owing to Tim $ 2,000
Value of stock $ 8,000
Loan from bank $ 1,500
Amount owing from Jack $ 3,500
New Equipment value $ 4,500
Vehicle's value $14,500
John Smiths investment $29,000
Company Car ?
Accounts receivable ?
Accounts payable ?
Owner took money out ?
Cash at bank ?
Received money for services ?
Interest earned ?
Paid employees Income ?
Tax owing ?
Drawings ?
Prepaid rent ?
Paid for new stock ?
Paid for food ?
Capital ?
E
L
R/I
A
OE
L
55. Assets = $ .
Company Car ?
Accounts receivable ?
Accounts payable ?
Owner took money out ?
Cash at bank ?
Received money for services ?
Interest earned ?
Paid employees Income ?
Tax owing ?
Drawings ?
Prepaid rent ?
Paid for new stock ?
Paid for food ?
Capital ?
56. Assets = $ 32,500 .
Company Car A
Accounts receivable A
Accounts payable L
Owner took money out OE
Cash at bank A
Received money for services R/I
Interest earned R/I
Paid employees Income E
Tax owing L
Drawings OE
Prepaid rent A
Paid for new stock E
Paid for food E
Capital OE
57. John Smith invest $20,000 into the business, Cupcake World as
capital. Cupcake World also takes out a loan from the bank for
$20,000. With the $40,000 the business buys $10,000 worth of
inventories, $5,000 of furniture, a $15,000 motor vehicle and
leaves the remaining money in the bank.
Make to following table in excel
Fill out the values
Work out totals
We are using excel to
solve this problem!
58.
59. Fill in the blank
Capital is what an owner
. . in a company.
Drawings is what an owner
. . from the company
L
(please circle)
Income/revenue Increases the economic benefit T F
Expenses Increases the economic benefit T F
Accounts are the only people who use accounting T F
Owners equity is the difference between the . .
and the . . of a business and equals the amount of
the . . Investment in the business
60. Three examples of an Asset. 1 .
2 .
3 .
Three examples of a Liability. 1 .
2 .
3 .
Two examples of Owners equity. 1 .
2 .
Three examples of an Expense 1 .
2 .
3 .
Three examples of Income/revenue 1 .
2 .
3 .
What is the Accounting equation? . .
Fill in the Blank. An asset is something a business . . or controls
that is of . . (please circle)
Is budgeting in accounting? T F
Non Current assets are sold within 12 months. T F
I owe John Smith money, that is an asset T F
Accounts payable is the opposite of accounts receivable T F
Owners equity = Assets + Liabilities T F
Liabilities = Assets - Owners equity T F
Total assets must always equal total liabilities plus T F
owners equity
61. Knowledge and understanding of debit and
credit and how they affect different
accounts.
62. Debit” and “Credit” are just accounting-
terms for “increase” and “decrease”.
Both debit and credit can cause an increase
or a decrease
Debit is always on the left credit is always on
the right whether its in a bank statement,
ledger or balance sheet.
A ledger is A book or other collection of
financial accounts of a particular type
63. Debit card – spending your own money
Credit card – spending someone else's money
e.g. Spending the banks money
64. Debits either increase a debit account or
decrease a credit account.
Assets and Expenses are increased by debit
Liabilities, owners equity and revenue are
decreased by a debit
For example, a debit entry in a ledger may
record an increase in an asset, an expense,
or a decrease in a liability.
65. Credits either increase a credit account or
decrease a debit account.
Liabilities, owners equity and revenue are
increased by a credit
Assets and Expenses are decreased by credit
For example, a credit entry may record an
decrease in an asset, an increase in a
liability, or a revenue or profit.
66. DEAD – Debits increase Expenses, Assets and
Dividend
Dividends are a sum of money paid regularly by a
company to its shareholders out of its profits
Dividends are considered an expense as a company has
to pay money to its shareholders
CORAL – Credits increase Owners equity,
Revenue And Liabilities
Equity isn't an expense dividends how to explain?
67. Debit
Assets expenses
Credit
liabilities revenue Owners
equity
To increase an Asset or Expense: Debit
To increase a Liability, Revenue, or Owners’ Equity:
Credit
To decrease an Asset or Expense: Credit
To decrease a Liability, Revenue, or Owners’ Equity:
Debit
Editor's Notes
Use the white board to write answers in the template which is shown through the projector
Cross reference the answers which the class has just written on the board. Put ticks and crosses and discuss the answers that were incorrect
Use the white board to write answers in the template which is shown through the projector. Chooses students to write on the board
Use the white board to write answers in the template which is shown through the projector. Chooses students to write on the board
Using a white board marker draw lines to match up the answers
Each student is given two sheets of paper with a category of an account type. Students are then asked to place them under the appropriate account type
Use space above text on PowerPoint to teach students ways of working out an accounting equation
Work together to work out the problem. Use above template on the white board as your example
Use the white board to write answers in the template which is shown through the projector. Ask students to raise their hand for the answers on each question
Use the white board to write answers in the template which is shown through the projector. Cross reference answers and discuss the incorrect ones
Use the white board to write answers in the template which is shown through the projector. Cross reference answers and discuss the incorrect ones
Ask students to open Microsoft excel and copy the template into their own laptops.
Show students the answer and discuss how we the answer was formed.
Use the white board to write answers in the template which is shown through the projector. Ask students to answer a question on the board with a white board marker
Use the white board to write answers in the template which is shown through the projector. Ask students to answer a question on the board with a white board marker