Job Opportunities in AccountingAccountants

College degree in AccountingBookkeepers

Two years of high school AccountingAccounting Clerks

One year of high school Accounting

Terms1. Accounting

Planning, recording, analyzing, and interpreting financial information

Accounting SystemA planned process for providing financial information

useful to management Accounting Records

Organized summaries of a business’ financial activitiesFinancial Statements

Financial reports that summarize the financial condition and operations of a business

A BusinessA place where products are manufactured

and/or purchased and sold, or services are provided to earn a profit for owners and/or stockholders

2. Types of BusinessSole Proprietorship

A business owned by one personPartnership

A business where two or more persons combine their assets and skills

CorporationA business owned by many people with the

legal rights of an individual person

Accounting ConceptBusiness Entity – A business’s financial

information is recorded and reported separately from the owner’s personal financial information

Examples:Personal vehicleChecking accountHousePersonal utilities

3. The Accounting EquationAssets = Liabilities + Owners Equity

Assets-anything of value that is ownedLiabilities-an account owed by a businessEquities-financial rights to the assets of a

businessOwner’s Equity- Amount remaining after

the value of all liabilities is subtracted from the value of all assets.

4. Business Activity TermsTransaction – A business activity that

changes assets, liabilities, or owner’s equity.Account – A record summarizing all the

information pertaining to a single item in the accounting equation.

Account Title – The name given to an account.

Account balance – The amount in an account.Capital – The account used to summarize the

owner’s equity in a business.

Accounting ConceptUnit of Measurement – when business

transactions are stated in numbers that have common values

ExampleU.S. uses dollars ($)

9 LESSON 1-2

Transaction 1 August 1. Received cash from owner as an investment, $5,000.00.

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10 LESSON 1-2

Transaction 2 August 3. Paid cash for supplies, $275.00.

Transaction 3 August 4. Paid cash for insurance, $1,200.00.

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11 LESSON 1-2

Transaction 4 August 7. Bought supplies on account from Supply Depot, $500.00.

Transaction 5 August 11. Paid cash on account to Supply Depot, $300.00.

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5. Revenue TransactionsRevenue – an increase in owner’s equity

resulting from the operation of businessSale on account (Accounts receivable) – a

sale in which cash will be received at a later date

Accounting ConceptRealization of Revenue – revenue is recorded

at the time goods or services are sold

Expense TransactionsExpense – a decrease in owner’s equity

resulting from the operation of businessExamples:

Rent Telephone bill Water bill

Other Cash TransactionsWithdrawal – assets taken out of a business

for the owner’s personal use

EthicsEthics – the principles of right and wrong

that guide decision making

Business ethics – the use of ethics in making business decisions

17 LESSON 1-3

Transaction 6 August 12. Received cash from sales, $295.00.

Transaction 7 August 12. Sold services on account to Oakdale School, $350.00.

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18 LESSON 1-3

Transaction 8 August 12. Paid cash for rent, $300.00.

Transaction 9 August 12. Paid cash for telephone bill, $40.00.

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19 LESSON 1-3

Transaction 10 August 18. Received cash on account from Oakdale School, $200.00.

Transaction 11 August 18. Paid cash to owner for personal use, $125.00.

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