Accounting and Finance What is Accounting? Method of reporting financial activity of a business...

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Accounting and Finance Accounting and Finance

Transcript of Accounting and Finance What is Accounting? Method of reporting financial activity of a business...

Page 1: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Accounting and Accounting and FinanceFinance

Page 2: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

What is Accounting?

• Method of reporting financial activity of a business

• Financial transactions recorded in an orderly fashion

Page 3: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Accounting EquationAccounting Equation

Assets =

Liabilities +

Owner’s Equity

Page 4: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Assets

Anything of Value

owned by the Business

Cash / Accounts Receivable Office

Equipment

Building / Real Estate

Company Cars

Office Furniture

Office Supplies

Page 5: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

LiabilitiesMoney owed by

the business

Accounts Payable

Mortgage Payable

Office Supply Store Utilities

Corporation

Taxes Due

Page 6: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Financial Statements

• Financial Statements• Written reports that describe the

financial health of a company; prepared regularly on quarterly and annual basis.

Balance SheetIncome StatementStatement of Change in Owner’s

Equity

Page 7: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Financial Statements, cont.

• Balance Sheet• Reports assets,

liabilities, and owner’s equity on a certain date

• Assets• Anything of value

that is owned by the business.

• Liabilities• Money owed by the

business (debts, accounts payable)

• Owner’s Equity• Net worth of the

business

Page 8: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Financial Statements, cont.• Income Statement

• Financial Statement of a business that reports the revenue, expenses and the net income (loss) of a business for the fiscal period.

• Revenue• Amount of money that a

company earns• Expenses

• Costs of maintaining and operating a business.

• Income/Profit• Results when a

business’s income is greater than its expenses.

• Loss• Results when a

business’s expenses are greater than its income.

• Fiscal Period• Specific period of time

covered by an accounting statement or report (1 month or year)

Page 9: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Financial Statements, cont.

• Statement of Change in Owner’s Equity • Financial Statement

of a business that reports the changes that have occurred in the owner’s equity account during the fiscal period.

Page 10: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Accounting Activitiesrelated to orderly record-keeping of financial information

• Recording daily transactions

• Preparing financial statements

• Paying bills

• Preparing payroll checks

• Preparing tax forms

• Auditing financial records• Examining financial

records for accuracy and compliance with regulations

• Reconciling the checkbook• Bringing the checkbook

into agreement with bank statement

•What are other accounting activities?

Page 11: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Banking Activitiesoccur in banks, credit unions and savings and loans

• Accepting deposits and processing withdrawals

• Preparing money orders and cashiers checks

• Opening new accounts for customers

• Processing loan applications

•What are other banking activities?

Page 12: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Finance Activitiesare related to investments and managing finances • Analyzing budgets

• Buying and selling stock and other securities

• Consulting with businesses on financial matters

• Counseling investors

• Selling

insurance

• Managing the finances for the entire company

•What are other finance activities?

Page 13: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Finance Careers• Financial Manager

• Top level professional who may have final responsibility for aspects of a business’ financial activity

• Accountant• Professional who

produces and examines financial records, prepares financial reports and tax returns; may give budget, tax or investment advice to company/customer

Page 14: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Finance Careers, cont.

• Certified Public Accountant (CPA)• Accountants who meet specific educational

requirements and pass a national examination

• Auditor• Professional whose work involves checking on

the accuracy of work completed by bookkeepers and accountants

• Bank Teller• Bank employee who handles deposits,

withdrawals, selling travelers check, accepting loan payments, preparing money orders

Page 15: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

1. ASSETS = LIABILITIES + OWNER’S EQUITY.

a. Payroll Recordb. Budgetc. Accounting Equation

Page 16: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

1. ASSETS = LIABILITIES + OWNER’S EQUITY.

a. Payroll Recordb. Budgetc. Accounting Equation

Page 17: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

2. Money owed by the business (debts, accounts payable)

a. Revenueb. Liabilitiesc. Assets

Page 18: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

2. Money owed by the business (debts, accounts payable)

a. Revenueb. Liabilitiesc. Assets

Page 19: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

3. Anything of value that is owned by the business

a. Revenue

b. Loss

c. Assets

Page 20: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

3. Anything of value that is owned by the business

a. Revenue

b. Loss

c. Assets

Page 21: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

4. Net worth of the business

a. Liabilities

b. Owner’s Equity

c. Revenue

Page 22: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Check your understanding!

4. Net worth of the business

a. Liabilities

b. Owner’s Equity

c. Revenue

Page 23: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Accounting Careers

Page 24: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

What do Accountants do?

• Track companies’ expenses• Prepare, analyze and verify financial

documents• Look for ways to run businesses

more efficiently• Keep public records• Make sure taxes are paid properly

Page 25: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Public Accountants

•Perform audits•Prepare taxes for

corporations, government agencies, nonprofits and individuals

Page 26: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Management Accountants

Management accountants are members of the executive team who •Record and analyze information

about budgets, costs and assets•Support strategic planning or

product development•Write financial reports for

stockholders, creditors or government agencies.

Page 27: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Government Accountants

• Maintain and examine government records

• Audit private businesses or individuals on the government's behalf

Page 28: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Internal Auditors

• Are fiscal “police officers”• Verify the accuracy of an

organization's financial records• Look for waste,

mismanagement and fraud.

Page 29: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Job Outlook in Accounting

• CPA accountants will continue to be in high demand, especially as states increase the education and experience requirements for the certification.

• Certified Management Accountants and those with MBAs will also fare well.

Page 30: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Job Outlook in Accounting

• Having a specialty, such as information systems, government regulation or international business, will help you land a job.

• Those without a degree or certification and those vying for the upper-most echelons of accounting will find keen competition for jobs.

Page 31: Accounting and Finance What is Accounting? Method of reporting financial activity of a business Financial transactions recorded in an orderly fashion.

Education Requirements• A bachelor's degree is

the minimum requirement, and to advance, you'll need additional certification or graduate-level education.

• Those in the accounting field can earn the Certified Public Accountant designation by meeting experience and educational requirements and passing an exam.