8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 1/61
Welcome to ACCT 1100
• Instructor: Wendy Schuster, CPA
• Course Syllabus
• Angel
• Cengage• Begin Chapter 1
1
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 2/61
Things to know about Mrs. Schuster
• I expect the following behaiors:o !ead the chapter before co"ing to classo Be in class and on ti"e# plan ahead
o $a%e responsibility for your own actionso Cell phones and co"puters put away
• In return, I will help you any way I can
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 3/61
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 4/61
Things to know about Homework Assignments
• ight Chapters *o assign"ent for Chapter 2+o Co"pleted through Cengage-W
$o register, follow the directions on the Cengage-WBoarding Pass, found in Angel under &essons.'etting
Started.Course Infor"ationo 3ue dates in Cengage-Wo Assign"ents
Adaptable learning actiity with a pre4test and post4test
o (o"ewor%
Algorith"ic proble" selections fro" your boo% 5ou get 6e 7chec% "y wor%8 opportunities and three sub"its
o Assign"ents.(o"ewor% do not re4open once closedo Solutions are not postedo &owest grade -$ dropped
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 5/61
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 6/61
Things to know about "#ams
• $wo xa"so 3ates in Syllabuso !eiew the class before the exa"
o Allowed: ote card, calculator, pencil, erasers *nocell phones+ >a%e your note card and use it to co"plete the reiew
assign"ents
o &owest grade -$ droppedo o "a%e4ups allowed unless pre4arranged with "e
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 7/61
How To $ass ACC 1100
• Co"plete all reading before classo We begin the next chapter i""ediately following
co"pletion of the preious *except when we hae atest+
• Co"plete all assign"ents# If you are absent, youare responsible for any "issed wor%?
• Attend all Classes and be on4ti"e
• As% /uestions• >a%e a @riend# >a%e seeral @riends
7
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 8/61
Warren
%eee
'uchac
Accounting
()e
Introduction to Accountingand Business1
C H A $ T " %
h u m a n / i S t o c k / 3 6 0 / G e t t y I m a g e s
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 9/61
T*+es o, -usinesses
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Serice -usinesses Serice
+e#ta Air !ines ,rans)ortation ser%ices
,he -a#t +isney om)any .ntertainment ser%ices
Merchanising -usinesses $rouct
-a#mart Genera# merchandise
Ama/on"com Internet 'ooks( music( %ideos
Manu,acturing -usinesses $rouct
ord &otor o" ars( trucks( %ans
+e## Inc" ersona# com)uters
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 10/61
%ole o, Accounting in -usiness
• Accounting can be de6ned as an
infor"ation syste" that proides reportsto users about the econo"ic actiities andcondition of a business?
• $he process by which accounting proidesinfor"ation to users is as follows:o Identify users?o Assess users9 infor"ation needs?o 3esign the accounting infor"ation syste" to
"eet users9 needs?o !ecord econo"ic data about business actiities
and eents?o Prepare accounting reports for users?©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 11/61
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Accounting as an /n,ormation S*stem
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 12/61
Managerial Accounting
• $he area of accounting that proidesinternal users with infor"ation is calledmanagerial accounting, or management accounting?
• >anagerial accountants e"ployed by abusiness are e"ployed in privateaccounting?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 13/61
inancial Accounting
• $he area of accounting that proidesexternal users with infor"ation is calledfnancial accounting?
• $he obectie of 6nancial accounting is to
proide releant and ti"ely infor"ation forthe decision4"a%ing needs of usersoutside of the business?
• General-purpose fnancial statementsare one type of 6nancial accounting reportthat is distributed to external users?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 14/61
%ole o, "thics in Accounting an -usinessslie 1 o, 23
• $he obectie of accounting is to proidereleant, ti"ely infor"ation for userdecision "a%ing?
• Accountants "ust behae in an ethical
"anner so that the infor"ation theyproide users will be trustworthy and,thus, useful for decision "a%ing?
• Ethics are "oral principles that guide the
conduct of indiiduals?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 15/61
Accounting an -usiness raus
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 16/61
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 17/61
%ole o, "thics in Accounting an -usinessslie 2 o, 23
•'uidelines for behaing ethically follow:
1? Identify an ethical decision by using yourpersonal ethical standards of honesty andfairness?
? Identify the conse<uences of the decision andits eect on others?
? Consider your obligations and responsibilitiesto those who will be aected by your decision?
D? >a%e a decision that is ethical and fair to thoseaected by it?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 18/61
O++ortunities ,or Accountants
•Accountants and their sta who proideserices on a fee basis are said to bee"ployed in public accounting?
• Accountants e"ployed by a business 6r",
goern"ent, or a not4for4pro6torgani0ation are said to be e"ployed inprivate accounting?
• Public accountants who hae "et a state9s
education, experience, and exa"inationre<uire"ents "ay beco"e CertifedPublic Accountants (CPAs)?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 19/61
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Accounting Career $aths an Salaries
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 20/61
4enerall* Acce+te Accounting $rinci+les
• @inancial accountants follow generally accepted
accounting principles (GAAP) in preparingreports?
• Within the E?S?, the Financial AccountingStandards oard (FAS) has the pri"ary
responsibility for deeloping accountingprinciples?
• $he Securities and E!change Commission(SEC), an agency of the E?S? goern"ent, has
authority oer the accounting and 6nancialdisclosures for co"panies whose shares ofownership *stoc%+ are traded and sold to thepublic?
• >any countries outside the E?S? use generallyaccepted accounting principles adopted by the©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 21/61
-usiness "ntit* Conce+t
•Ender the business entity concept, theactiities of a business are recordedseparately fro" the actiities of itsowners, creditors, or other businesses?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 22/61
orms o, -usiness "ntities
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 23/61
Cost Conce+tslie 1 o, 23
•Ender the cost concept, a"ounts areinitially recorded in the accounting recordsat their cost or purchase price?
• Aaron Publishers purchased a building on
@ebruary ;, ;1D, for F12;,;;;? -thera"ounts related to this purchase areshown on the next slide?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 24/61
Cost Conce+tslie ( o, 23
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Ender the cost concept, Aaron Publishers recordsthe purchase of the building on @ebruary ;,
;1D, at the purchase price of
$%&''''#
$he other a"ounts listed aboe hae no eect onthe accounting records?
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 25/61
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 26/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
-n August 2, 'allatin !epair Serice
extended an oer of F12,;;; for land thathad been priced for sale at F12;,;;;? -nSepte"ber , 'allatin !epair Sericeaccepted the seller9s counteroer ofF1G,;;;? -n -ctober ;, the land wasassessed at a alue of F=H,;;; for propertytax purposes? -n 3ece"ber D, 'allatin
!epair Serice was oered F1;,;;; for theland by a national retail chain? At what alueshould the land be recorded in 'allatin!epair Serice9s recordsJ
Cost Concept
. 11B
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 27/61
Th A ti " ti
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 28/61
The Accounting "5uationslie ( o, 63
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Assets .iabilities / 0*ner+s E,uity
1he resourceso*ned by a
business
Th A ti " ti
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 29/61
The Accounting "5uationslie 2 o, 63
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Assets .iabilities / 0*ner+s E,uity
1he rights o2creditors are the
debts o2 thebusiness
Th A ti " ti
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 30/61
The Accounting "5uationslie 6 o, 63
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Assets .iabilities / 0*ner+s E,uity
1he rights o2 theo*ners
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 31/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
Kohn Koos is the owner and operator of 5ou9re
A Star, a "otiational consulting business?At the end of its accounting period,3ece"ber 1, ;12, 5ou9re A Star has assetsof FH;;,;;; and liabilities of F2;,;;;?
Esing the accounting e<uation, deter"inethe following a"ounts:
a? -wner9s e<uity as of 3ece"ber 1, ;12?
b? -wner9s e<uity as of 3ece"ber 1, ;1,assu"ing that assets increased byF1;,;;; and liabilities decreased byF2,;;; during ;1?
Accounting E,uation(slide % o2 3)
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 32/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
Accounting E,uation(slide 3 o2 3)
.3ercise 6
-usiness Transactions an
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 33/61
-usiness Transactions an
the Accounting "5uation
• A business transaction is an econo"iceent or condition that directly changes anentity9s 6nancial condition or its results ofoperations?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 34/61
Transaction A
• -n oe"ber 1, ;12, Chris Clar%deposited F2,;;; in a ban% account inthe na"e of etSolutions?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 35/61
Transaction -
• -n oe"ber 2, ;12, etSolutions paidF;,;;; for the purchase of land as afuture building site?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 36/61
Transaction C
• -n oe"ber 1;, ;12, etSolutions purchased
supplies for F1,2; and agreed to pay the supplierin the near future?
• $he liability created by a purchase on account is
called an account payable?
• Ite"s such as supplies that will be used in thebusiness in the future are called prepaide!penses, which are assets?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Transaction '
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 37/61
Transaction 'slie 1 o, 23
• A business earns "oney by selling goodsor serices to its custo"ers? $his a"ountis called revenue?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Transaction '
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 38/61
Transaction 'slie ( o, 23
• -n oe"ber 1H, ;12, etSolutionsreceied cash of FG,2;; for proidingserices to custo"ers?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Transaction '
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 39/61
Transaction 'slie 2 o, 23
• !eenue fro" proiding serices isrecorded as 2ees earned?
• !eenue fro" the sale of "erchandise isrecorded as sales?
• -ther exa"ples of reenue include rent,which is recorded as rent revenue, andinterest, which is recorded as interestrevenue?
• An account receivable is a clai" againsta custo"er, which is an asset?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Transaction "
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 40/61
Transaction "slie 1 o, (3
• 3uring the "onth, etSolutions spentcash or used up other assets in earningreenue? Assets used in this process ofearning reenue are called e!penses?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
Transaction "
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 41/61
Transaction "slie ( o, (3
• -n oe"ber ;, ;12, etSolutions paidthe following expenses: wages, F,12#rent, FH;;# utilities, FD2;# and"iscellaneous, FG2?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 42/61
Transaction
• -n oe"ber ;, ;12, etSolutions paidcreditors on account, F=2;?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
T i 4
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 43/61
Transaction 4
• -n oe"ber ;, ;12, Chris Clar%deter"ined that the cost of supplies onhand at the end of the "onth was F22;?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
T ti H
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 44/61
Transaction H
• -n oe"ber ;, ;12, Chris Clar%withdrew F,;;; fro" etSolutions forpersonal use?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 45/61
Summar* o, Transactions ,or NetSolutions
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
T*+es o, Transactions
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 46/61
T*+es o, Transactions
A,,ecting Owner7s "5uit*
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 47/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
Salo 3eliery Serice is owned and operated by Koel Salo? $he following selected transactions were co"pleted by Salo3eliery Serice during @ebruary:
1? !eceied cash fro" owner as additional inest"ent,F2,;;;?
? Paid creditors on account, F1,H;;?
? Billed custo"ers for deliery serices on account, F11,2;?D? !eceied cash fro" custo"ers on account, F,GD;?
2? Paid cash to owner for personal use, F1,;;;?
Indicate the eect of each transaction on the accountinge<uation ele"ents *Assets, &iabilities, -wner9s <uity,
3rawing, !eenue, and xpense+? Also indicate the speci6cite" within the accounting e<uation ele"ent that is aected? $o illustrate, the answer to *1+ follows:
1ransactions (slide % o2 3)
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 48/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
1ransactions (slide 3 o2 3)
i i l St t t
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 49/61
inancial Statements
• After transactions hae been recorded andsu""ari0ed, reports are prepared forusers? $he accounting reports proidingthis infor"ation are called fnancial
statements?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 50/61
inancial Statements
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
/ncome Statement
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 51/61
/ncome Statement
• $he income statement reports thereenues and expenses for a period ofti"e, based on the matching concept?
• $he "atching concept is applied by
7"atching8 the expenses incurred during aperiod with the reenue that thoseexpenses generated?
• $he excess of the reenue oer the
expenses is called net income, netproft, or earnings? If expenses exceedreenue, the excess is a net loss?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
" St t t
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 52/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
Prepare an inco"e state"ent for the year endedApril ;, ;1?
"ncome Statement
$he reenues and expenses of Chic%adee $rael
Serice for the year ended April ;, ;1, follow:
Statement o, Owner7s "5uit*
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 53/61
Statement o, Owner7s "5uit*
• $he statement o2 o*ner+s e,uity
reports the changes in the owner9s e<uityfor a period of ti"e?
• It is prepared after the inco"e state"ent
because the net inco"e or net loss for theperiod "ust be reported in this state"ent?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
St t t 2 0 + E it
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 54/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
Esing the inco"e state"ent for Chic%adee $rael
Serice, prepare a state"ent of owner9s e<uity forthe year ended April ;, ;1? Ada" Cellini, theowner, inested an additional F2;,;;; in thebusiness and withdrew cash of F;,;;; for personaluse during the year? $he capital of Ada" Cellini was
FH;,;;; on >ay 1, ;12?
Statement o2 0*ner+s E,uity
-alance Sheet
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 55/61
-alance Sheet
• A balance sheet is a list of the assets,
liabilities, and owner9s e<uity as of aspeci6c date?
• $he account 2orm of a balance sheet lists
the assets on the left and the liabilitiesand owner9s e<uity on the right? Itrese"bles the basic for"at of theaccounting e<uation?
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
alance Sheet
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 56/61
xample
xercise
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in)art"
Esing the following data for Chic%adee $rael
Serice as well as the state"ent of owner9se<uity, prepare a balance sheet as of April;, ;1?
alance Sheet
i i l St t t / St t t
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 57/61
inancial Statements8/ncome Statement
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
4et income is carriedto the statement o2
o*ner+s e,uity# (continued)
inancial Statements8Statement o, Owner7s
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 58/61
inancial Statements Statement o, Owner s
"5uit*
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
From the incomestatement
1o the balancesheet
(continued)
i i l St t t - l Sh t
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 59/61
inancial Statements8-alance Sheet
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
1his amount iscompared to thenet cash 5o* onthe statement o2
cash 5o*s#
From thestatement o2
o*ner+s e,uity(continued)
i i l St t t / t l ti hi
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 60/61
inancial Statement /nterrelationshi+s
©2016 engage !earning" A## $ights $eser%ed" &ay not 'e scanned( co)ied or du)#icated( or )osted to a )u'#ic#y accessi'#e *e'site( in *ho#e or in )art"
/n9Class Assignment
8/16/2019 Ch 1 Lecture PPT-26E-2
http://slidepdf.com/reader/full/ch-1-lecture-ppt-26e-2 61/61
/n9Class Assignment
• Practice xercises D, 2,
• Ki"9s &awn Care (andout
Recommended