Lamar Van Dusen is telling about the Accounting Equation for Businesses. Lamar is an Accounting & Financial services provider in Toronto, Canada.

1. Lamar Van Dusen

2.  The meaning & functions of Accounting
 The difference between Accounting &
Bookkeeping
 The purpose of keeping Accounting records
 The Accounting Cycle/Process
 Identify the different users of Accounting
information

3.  Accounting is the language of business
 It involves:
 Recording transactions
 Classifying transactions
 Summarising transactions
 Interpreting and analysing transactions

4. Recording Journal
Classifying
Trial Balance
Final
Accounts
Ledger
Interpretation
Summarising
Day to day recording of
transactions
“T “shape accounts
Verification of accuracy of
accounts
Preparation of reports
Ratio Analysis

5.  Bookkeeping involves the actual data
recording
 This is often computerized in organizations
 Accounting is concerned with the use,
analysis & interpretation of accounting
records

6. Income Statement or
Profit & Loss Account
Revenue – Expenses = Income
(or profit)
Balance Sheet
Asset – Liability = Owners Equity
Cash flow statement
$ Receipts - $ Payments =
Changes in cash balance

8.  Profitability
 Return on investment
 Operational efficiency (day-to-day operation)
 Ensure security of investment
 Basic functions like planning, budgeting,
decision-making and control purposes

9.  Earning capacity of the business
 Solvency or financial strength of the business
 Ability of the management
 Decision to invest in a business

10.  The borrower's capacity for repayment
 Whether to grant a credit or advance money
to a busines
 The limits of advance, or credit limits for a
customer

11.  To discuss and arrange labour contracts
 To be assured of steady employment
 To determine the ability of the business to
pay higher wages

12.  To evaluate tax returns to calculate tax
payable by the business
 To check that the business is following the
government rules and regulations

13.  To know the effect of pricing on customers
 To judge the ability of the firm to survive and
honour it's product warranties

14.  Profitability of the firm
 Security of capital
 Return on their investment (ROI)
 Resources owned
 Financial stability
 Whether to increase of decrease their existing
ownership in the firm

15.  Capital Resources supplied by the
owners to the business
 Assets Resources owned by the
business
 Liabilities What the business owes for the
assets supplied
 Purchase Goods bought by the business
 Sales Goods sold by the business

16.  Purchase return/ Goods returned by the business to it's
suppliers
 Return outwards
 Sales return/ Goods returned to the business
by it's customers
 Return inwards
 Creditor A person to whom the business has to
pay for goods and services rendered.
 Debtor A person from whom the business has
to receive money for goods and services
supplied.

17.  Stock Unsold goods
 Expense Cost of operating the business
 Revenue Money received for goods and
services supplied
 Profit Revenue minus expenses
 Loss Expense minus revenue

18.  The Accounting Equation
 Assets = Liabilities + Owner's Equity

19.  Sole Trader
 Features
 This is a one-man show
 Capital put in by the owner
 Business is run by the proprietor
 Profits and losses at the year end are taken
over by the proprietor
 Usually small retail establishments
 Unlimited liability

20.  Partnership
 Features
 Minimum 2 people, maximum 10 or 20, depending
upon the type of partnership
 Capital contributed by all partners
 Every partner has a right to participate in the business
 Each partner acts as the principal and agent of the firm
 Profits or losses at the end of the year are shared in the
agreed ratio
 Usually professionals like doctors, lawyers,
accountants, etc
 Unlimited liability

21.  Company
 Features
 Largest form of business organisation
 Capital contributed by the public, who are joint
owners of the company
 Can be public or private
 Separate legal entity
 Registered under the company's act
 Ownership and management is usually separate
 No limit to the maximum amount of members
 Accounts must be prepared and audited yearly
under the company's act