unit 1 introduction to accounting
DESCRIPTION
Unit 1 Introduction to AccountingChapter 1 and Chapter 2TRANSCRIPT
Coming together is the beginning.Keeping together is progressWorking together is success
- Henry Ford
American AutomobileManufacturer
Learning ObjectivesLearning ObjectivesYou will be able to :
◦Describe how personal skills, values and lifestyle goals affect career decisions.
◦Find information about a variety of careers.
◦Identify career opportunities in the accounting fields.
◦Set career goals.
Learning Objectives Learning Objectives (cont.)(cont.)
◦Describe types of businesses and organizations that hire accountants.
◦Compare for profit businesses and non-profit organizations.
◦Define the accounting terms introduced in this chapter.
Exploring the Real World of Exploring the Real World of BusinessBusinessThe World Wildlife Fund
◦A non-profit organization, works to save endangered species.
◦Employs accountants, writers, fund raisers, and many other professionals who care about wildlife and their habitats.
Review the website:http://www.worldwildlife.org
What do you think?What do you think?
1.What job skills or interest do you think you would need to work for an organization like World Wildlife Fund?
2.What kind of interest do you think would attract someone to such an organization?
What You’ll LearnWhat You’ll LearnHow personal interest and skills,
values and lifestyle goals affect career decisions
Where to find information on possible careers.
How to set career goals.
Job vs. CareerJob vs. CareerA job is simply work for payA career is built on a foundation
of ◦Interest◦Knowledge◦Training and ◦Experience
Access Your Career VisionAccess Your Career VisionWhat are your personal interest
and skills?What are you values, and how
will they affect your career?What lifestyle interest you?How will your personality affect a
career choice?
Your Interest, Skills, and Your Interest, Skills, and TraitsTraitsSkills are activities that you do
well◦Are you good at math?◦Do you write well?◦Are you creative?◦Do you like to meet lots of people◦Do you enjoy building things
Skills & Traits Careers Example
Creative Thinking Fine arts and humanity, actor artist or musician
Knowing how to learn Training or Teaching
Responsibility Health –related careers
Friendliness Hospitality and recreation careers
Honesty Child care worker, family and consumer science worker
Decision making Financial planner, accountant
Analytical Construction careers
Adaptability Public service careers
Self control Entrepreneur or manager
Self-esteem Communication and media
ValuesValuesValues are the principle you live by
and the benefits that are important to you.◦Responsibility◦Achievement◦Relationships◦Compassion◦Courage◦Recognition
Many people share the same values, but how they apply them is unique to each person.
Lifestyle GoalsLifestyle GoalsLifestyle is how you use you
time, energy and resources.◦What’s really important to you?◦Do you want to go for the big bucks?◦Do you want to live in a big city with
endless activities or a small town where everybody knows your name
◦Do you want to work with a group of people, or do you prefer working solo?
Personality TraitsPersonality TraitsPersonality – a set of unique
qualities that makes us different from other people.
What is you personality. Are you ◦Confident◦Friendly◦Dependable◦Funny◦Sympathetic
Personal Career Profile FormName Date Career
Your Values Career Values
Your Interest Career Duties and Responsibilities
Your Personality Personality Type Needed
Skills and Aptitudes Skills and Aptitude Required
Education/Training Acceptable Education/Training Required
Research the PossibilitiesResearch the PossibilitiesGuidance counselor can help you
identify the things you like to do. One way is through personal interest test.
Networking is a way to find out about particular careers by asking people to share information and advice.
Print material about every career can be found in your public library.
The Internet is a great source of educational and career information
Professional organization are groups of people with common career interest.
Steps to Setting Career Steps to Setting Career GoalsGoals1. Decide on a long-term goal.2. Decide on actions that will lead
to the long-term goal.3. Take action!4. Diversify your skills5. Realize the long-term goal.
A Matter of EthicsA Matter of EthicsPadding a resumePart of landing a great job is
putting together a resume that effectively represents your skills and background. Imagine that BMW has opened a new regional headquarters in your area. You would like to work for BMW as a payroll clerk, but you are afraid you don’t have the right qualifications. A friend suggests that you “change” your resume to make yourself look better.
Ethical Decision Making:
What are the ethical issues?What are the alternatives?Who are the affected parties?How do the alternative effect the parties?What would you do?
Accounting Careers:Accounting Careers:The Possibilities Are The Possibilities Are EndlessEndlessSection 2
What You’ll LearnWhat You’ll Learn
The variety of career opportunities available to accountants.
The type of businesses and organizations that hire accountants
Key TermsKey TermsAccountantFor-profit businessNot-for-profit businessAccounting clerkCertified public accountantPublic accounting
The Changing HorizonThe Changing HorizonAn accountant handles a broad range
of responsibilities, make business decisions, and prepares and interprets financial reports.
For-profit businesses operate to earn money for their owners.
Not-for-profit organizations operate for the greater good. Their goal is balancing their income with expenses. Their income comes from donations and tax dollars.
Employment Employment Accounting clerk – an entry level job
usually performing one or two accounting task.
Certified public accountant pass a national test and meet specific experience and education standards to become “certified” to practice accounting.
You might choose to work as a financial consultant in a large company or work for a public accounting firm and provide accounting services for their clients
Learning ObjectiveLearning ObjectiveYou will be able to:
◦Describe the role of profit, risk-taking, and the entrepreneur in the US economy.
◦Describe the difference among service, merchandising, and manufacturing businesses.
◦Compare the sole proprietorship, partnership, and corporate forms of business organization.
◦Describe the purpose of accounting
Learning Objectives Learning Objectives (cont.)(cont.)
◦Explain the difference between financial and management accounting.
◦Describe the three basic assumption that underlie accounting principles.
◦Define the accounting terms introduced in this chapter.
Exploring the Real World of Exploring the Real World of BusinessBusinessHuey’s Athletic Network (HAN)
◦Uses aquatic therapy to help injured athletes rebuild body strength
◦Provides personal training and consulting not only to sport star, but also to entertainers and weekend warriors who want to stay fit.
Review the website:www.lahuey.com
What do you think?What do you think?
1. What knowledge and special skills do you think Lynda Huey needed to start and manage her business?
2. What makes an entrepreneur successful?
What You’ll LearnWhat You’ll LearnProfit and risk-taking.The free enterprise system.Starting and running your own
business.Three types of business
operations.Three forms of business
organization.
Key TermsKey TermsFree enterprise
systemProfitLossEntrepreneurCapitalService business
Merchandising business
Manufacturing business
Sole proprietorship
PartnershipCorporationCharter
The Environment of The Environment of BusinessBusinessFree enterprise system
◦People are free to produce goods and services as they choose
◦Individuals are free to use their money as they wish: Spend it, Invest it, Save it, or Donate it.
◦Business owners must compete to attract customers to continue operating.
The Environment of The Environment of BusinessBusinessProfit – the amount of money
earned over and above the amount spent to operate the business
Loss – spending more money on business expenses than is earned.
A business has to do two things to survive:◦It must operate at a profit.◦It must attract and keep an individual
willing to take risk to run it.
The Environment of The Environment of BusinessBusinessThe need for Profit
◦You must pay Raw material Equipment Employees Utilities and rent
The need for a Risk-Taker◦People play different roles
Investors provide the money Employees provide the labor Managers handle supervision and planning Entrepreneurs transform ideas for products
and services into real-world businesses
Entrepreneurship: Who Entrepreneurship: Who Me?Me?
Pros Cons
You are your own boss. You create opportunities
for earning money. You create and control
your work schedule. You choose the people
you serve. You select the people
who work with you. You benefit from the
rewards of your own hard work.
You choose your own work hours.
You probably need to work long hours.
You lose the security of steady wages and medical benefits an employer provides.
You market your own services or products.
You pay your own operating expenses.
You must be motivated and energetic each day
You face the possibility of losing money.
Traits of the EntrepreneurTraits of the EntrepreneurEntrepreneur are aware of their
environment No ice cream shop Does the community want one?
Entrepreneur evaluate alternatives Customer preference Architect plans Accountant’s guidance
Entrepreneurs seek the best solutions Only used appliances are within budget
guidelinesEntrepreneurs turn ideas into action
Ben& Jerry’s is a worldwide producer of ice cream and frozen yogurt
Types of Business Types of Business OperationsOperationsThere are three types of business
that operate for profit:◦Service business◦Merchandising business◦Manufacturing business
Each type of business needs money to begin and maintain operations
Money supplied by investors, banks, or owners of a business is called capital.
Forms of Business Forms of Business OrganizationOrganization
There are there forms of business organization◦Sole Proprietorship◦Partnership◦Corporation
Sole ProprietorshipSole ProprietorshipBusiness owned by one person.The oldest and most common form
of ownership
The success or failure of the business depends heavily on the efforts and talents of the owner.
Advantages 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
PartnershipPartnershipBusiness owner by two or more
persons; called partners
Partnerships are formed when the need for capital is greater than the amount of money one person can invest.
Advantages Disadvantages
Easy to start Conflicts between partners
Skills and talents are pooled
Profits must be shared
More money available Owners share all risks
CorporationCorporationBusiness organization that is
recognized by law to have a life of its own.
Must get permission from the state to operate.Advantages Disadvantages
Easier to raise money Costs more to start up
Easy to expand Complex to organize
Easy to transfer ownership
More regulations
Losses limited to investments
Higher taxes
Corporation (cont.)Corporation (cont.)To raise money, shares of stock are
sold to hundreds or even thousands of people.
These shares represent invest in and ownership of the corporation.
Shareholders/Stockholder are the legal owners of a corporation
*************Regardless of the form, all businesses share
common financial characteristics and methods for recording and reporting financial charges.
What you’ll learnWhat you’ll learnHow the accounting system works.Who uses financial accounting
reports.Who uses managerial accounting
reports.How accounting is used to help
make business decisions.What assumptions provide the
foundation for accounting systems.
Key TermsKey TermsAccounting
systemManual
accounting system
Computerized accounting system
GAAPFinancial reports
Financial accounting
Management accounting
business entityAccounting
periodGoing concern
The Accounting SystemThe Accounting SystemThe accounting system is
designed to collect, document and report on financial transactions affecting the business.
In a manual accounting system the accounting is processed by hand.
In a computerized accounting system the financial information is
recorded by entering it in the computer.
The Accounting System The Accounting System (cont.)(cont.)All accountants used the same set
of rules to prepare their reports.GAAP is also known as generally
accepted accounting principles.Accounting principles provide a way
to communicate financial information in a form understood by those interested in business operations
Financial reports are summarized information about the financial status of a business
Input Processing Outputs
Source Document
Tasks Financial and
•Checks •Analyzing Management
•Invoices •Classifying Accounting Reports
•Sales Slips •Recording •Financial condition
•Receipts •Results of operation
•Investment by and distributions to owners
How the Accounting System Works
Using Accounting Reports for Using Accounting Reports for Making Business Decisions Making Business Decisions Purpose of accounting
◦Provide financial information about a business or not-for-profit organization
◦Provide information to individual in order to make decisions.
These two groups use accounting reports◦Individuals outside the business who
have an interest in the business◦Individuals inside the business
Using Accounting Reports for Using Accounting Reports for Making Business Decisions Making Business Decisions Financial Accounting focuses on
reporting information to external users.◦The reports are prepared using GAAP for
Individuals or institutions that loan money to a business, to determine if the business is able to repay the loan
Local, state and federal government agencies for taxing purposes.
Workers, consumers, union leaders and competition are interested in the businesses performance.
Using Accounting Reports for Using Accounting Reports for Making Business Decisions Making Business Decisions Management accounting focuses on
reporting information to management.
Referred to as accounting for internal users
Reports are prepared for managers to make decision regarding:◦Purchasing,◦Hiring,◦Production,◦Payments,◦Sales, and◦Collections.
Accounting AssumptionsAccounting AssumptionsThese generally accepted accounting
principles are based on these assumptions.◦Business entity
A business is a separate entity and exist separate of it’s owners personal holdings
◦Accounting period For reporting purposes, the life of a business is
divided into specific periods of time. It can be a month, a quarter, or most
commonly a year.◦Going concern
Accountants assume the business has the ability to survive and operate indefinitely.
It is expected to continue.
A Matter of EthicsA Matter of Ethics
Becoming an Entrepreneur
Imagine that you’ve been working for a local day-care center for several years. You attend a company meeting to discuss new ideas on improving day care. Several new services are discussed that would help your center stand out from it’s competition. You think that this is a great opportunity for you to become and entrepreneur – by opening your own day-care center offering the new services discussed at the meetings
Ethical Decision Making
What are the ethical issues?What are the alternatives?Who are the affected parties?How do the alternatives affect the parties?What would you do?