1、1,Accounting and the Business Environment,Chapter 1,2,Objective 1,Use accounting vocabulary,3,Accounting,Measures Processes CommunicatesFinancial information to decision makers,4,Decision Makers,Individuals Businesses Investors Creditors Taxing Authorities,5,Financial vs. Managerial Accounting,Finan
2、cial Accounting Information for people outside of the company Managerial Accounting Information for internal decision makers,6,Governing Organizations,FASB Financial Accounting Standards Board SEC Securities and Exchange Commission AICPA American Institute of Certified Public Accountants IMA Institu
3、te of Management Accountants,7,Ethics,Audit Examination of companys financial situation Performed by independent accountants Sarbanes-Oxley Act Criminal offense to falsify financial statements Public Companies Accounting Oversight Board Monitors work of accountants,8,Standards of Professional Conduc
4、t,AICPA Code of Professional Conduct for Accountants IMA Standards of Ethical Conduct,9,Types of Business Organizations,Proprietorships Partnerships Corporations,10,Objective 2,Apply accounting concepts and principles,11,GAAP,Generally Accepted Accounting Principles Accounting guidelines that govern
5、 how accountants measure, process, and communicate financial information Formulated by Financial Accounting Standards Board (FASB),12,GAAP,Primary objective of financial accounting provide information that is useful for making investment and lending decisions,13,Entity Concept,Accounting Entity orga
6、nization that stands apart as a separate economic unit,14,Accounting information is based on the most reliable data available Verifiable Free from bias Individuals would arrive at similar conclusions using same data,Reliability (Objectivity) Principle,15,Cost Principle,Acquired assets and services s
7、hould be recorded at their actual cost (historical cost),16,Going Concern Concept,Assumes that the entity will remain in operation for the foreseeable future,17,Stable-Monetary-Unit Concept,Assumes that the dollars purchasing power is stable,18,Objective 3,Use the accounting equation,19,Assets,Econo
8、mic resources, expected to benefit the business in the future Cash Accounts receivable Merchandise inventory Furniture Land,20,Claims to the Assets,Liabilities economic obligations payable to an individual or organization outside the business Accounts payable Notes payable Salary payable,21,Claims t
9、o the Assets,Owners Equity (capital) claim of business owner to the assets of the business,22,Economic Resources,Claims to Economic Resources,The Accounting Equation,Assets,=,Liabilities + Owners Equity,23,Transactions that Affect Owners Equity,OWNERS EQUITY INCREASES,OWNERS EQUITY DECREASES,Owner I
10、nvestments,Revenues,Expenses,Owner Withdrawals,Owners Equity,24,Revenues,Amounts earned by delivering goods or services to customers Sales revenue Service revenue Interest revenue Dividend revenue,25,Expenses,Decrease in owners equity that occurs from using assets or increasing liabilities in the co
11、urse of delivering goods or services to customers Salary expense Rent expense Utilities expense Interest expense,26,Exercise 1-18,$81,000,32,000,21,000,$72,000,27,Objective 4,Analyze business transactions,28,Transaction,An event that affects the financial position of a particular entity and can be r
12、ecorded reliably,29,Exercise 1-17,Increased assets (cash) No effect on total assets Decreased assets (cash) Increased assets (equipment),30,Exercise 1-17,Increased assets (accounts receivable) Decreased assets (cash) No effect on total assets Increased assets (cash),31,Exercise 1-22,Assets = $45,000
13、,Liabilities & Owners Equity = $45,000,32,Exercise 1-22,35,000,Assets = $45,000,Liabilities & Owners Equity = $45,000,33,Exercise 1-22,2,000,Assets = $47,000,Liabilities & Owners Equity = $47,000,34,Exercise 1-22,Assets = $54,000,Liabilities & Owners Equity = $54,000,35,Exercise 1-22,Assets = $51,00
14、0,Liabilities & Owners Equity = $51,000,36,Exercise 1-22,Assets = $51,000,Liabilities & Owners Equity = $51,000,-500,37,Exercise 1-22,Assets = $49,500,Liabilities & Owners Equity = $49,500,-1,500,38,Objective 5,Prepare financial statements,Evaluate business performance,Objective 6,39,Financial State
15、ments,Income statement Statement of owners equity Balance sheet Statement of cash flows,40,Income Statement,Summary of an entitys revenues, expenses, and net income or net loss for a specific period Revenues - Expenses Net Income: Revenues Expenses Net Loss: Expenses Revenues,41,Statement of Owners
16、Equity,Summary of changes in an entitys owners equity during a specific periodBeginning owners equity+ Owners investments+ Net income- Net loss- Owners withdrawalsEnding owners equity,42,Balance Sheet,Reports the entitys assets, liabilities, and owners equity as of a specific dateAssets = Liabilitie
17、s + Owners Equity,43,Statement of Cash Flows,Reports cash receipts and cash payments during a period (covered in Chapter 17),44,Maria Lange, M.D. Income Statement For the Month Ended July 31, 2006,Revenue:Fees earned $7,000 Expenses:Salary expense $1,700Rent expense 1,000Utilities expense 300Total E
18、xpenses 3,000 Net income $4,000,45,Maria Lange, capital, July 1, 2006 $ 0 Add: Investment by owner 45,000 Net income for the month 4,000Subtotal $49,000Less: Withdrawals by owner 0 Maria Lange, capital, July 31, 2006 $49,000,Maria Lange, M.D. Statement of Owners Equity For the Month Ended July 31, 2
19、006,46,Maria Lange, M.D. Balance Sheet July 31, 2006,Assets Cash $13,000 Medical supplies 1,500 Land 35,000 Total assets $ 49,500,Liabilities Accounts payable $500 Owners equity, M. Lange, capital 49,000 Total liabilities and owners equity $ 49,500,47,Cash $2,000 Accounts receivable 6,000 Supplies 5
20、00 Equipment 15,500Total Assets $24,000,Allen Samuel Road Service Balance Sheet November 30, 2009,Liabilities,Accounts payable $3,500 Note payable 5,000Total liabilities $8,500 Owners Equity A. Samuel, capital 15,500Total liabilities and owners equity $24,000,Assets,Exercise 1-24,48,Exercise 1-26,Ci
21、liotta Design Studio Income Statement Year Ended December 31, 2006,Service revenue $158,100 Expenses:Salary expense $60,000Rent expense 24,000Utilities expense 6,800Supplies expense 4,000Property tax expense 1,200Total expenses 96,000 Net income $62,100,49,Exercise 1-26,Owners withdrawals:Ciliottas, capital, beginning of year $ 0Add: Net income 62,100Investment by owner 15,000Subtotal $77,100Less: Owner withdrawal ?Ciliotta, capital, end of year $27,100,50,000,50,End of Chapter 1,
