acct076 chp 1 acctg
TRANSCRIPT
College
Accounting
College
Accounting
Heintz & ParryHeintz & Parry2020thth Edition Edition
Heintz & ParryHeintz & Parry2020thth Edition Edition
Introduction to AccountingIntroduction to Accounting
11ChapterChapter
1
Describe the purpose of
accounting
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The Purpose of AccountingThe Purpose of Accounting
To provide:
• Financial information about the current operations and financial condition of a business to individuals and organizations
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Who Are the Users of Accounting Information?Who Are the Users of Accounting Information?
• Owners
• Managers
• Creditors
• Government Agencies
2Describe the
accounting process.
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The Accounting ProcessThe Accounting Process
Accounting is a system of:
• Gathering financial information about a business and reporting this information to users
Step OneStep One
Looking at events that have taken place and thinking about how they affect the business.
ANALYZING
Step TwoStep Two
Entering financial information about events into the accounting system.
RECORDING
Step ThreeStep Three
Sorting and grouping similar items together rather than merely keeping a simple, diary-like record of numerous events.
CLASSIFYING
Step FourStep Four
The aggregation of many similar events to provide information that is easy to understand.
SUMMARIZING
Step FiveStep Five
Telling the results. Use of numbered tables in accounting is common.
REPORTING
Step SixStep Six
Deciding the meaning and importance of the information in various reports.
INTERPRETING
3
Define GAAP and describe the process used by FASB to develop these principles.
GAAPGAAP
• Generally Accepted Accounting Principles (GAAP)
• Developed by the Financial Accounting Standards Board (FASB)
• Procedures and guidelines to be followed in the accounting and reporting process
Process Used by FASB to Develop GAAPProcess Used by FASB to Develop GAAP
• Identify an accounting issue
• Place on the agenda
• Research an issue
• Issue a discussion memorandum
• Hold public hearings
• Issue an exposure draft
• Issue a Statement Of Financial Accounting Standards (SFAS)
4
Define three
types of
business
ownership
structures.
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Three Types of Ownership StructuresThree Types of Ownership Structures
• Sole proprietorship
• Partnership
• Corporation
Use a call out box like this or like below.
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Sole ProprietorshipSole Proprietorship
• One owner
• Owner assumes all risk
• Owner makes all decisions
Use a call out box like this or like below.
PartnershipPartnership
• Two or more partners
• Partners share risks
• Partners may disagree on how to run the business
CorporationCorporation
• Stockholders
• Stockholders have limited risk
• Stockholders may have little influence on business decisions
5
Classify different types of
businesses by activities.
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Types of BusinessesTypes of Businesses
• Service business
• Merchandising business
• Manufacturing business
Service BusinessService Business
A business that provides a service.
Travel Agency
Physician
Computer Consultant
Merchandising BusinessMerchandising Business
A business that buys a product from another business to sell to customers.
Department Store
Jewelry Store
Pharmacy
Manufacturing BusinessManufacturing Business
A business that makes a product to sell.
Automobile Manufacturer
Toy Factory
Furniture Maker
6
Identify
career
opportunities
in accounting.
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Career Opportunities in AccountingCareer Opportunities in Accounting
• Accounting clerk
• Bookkeeper
• Para-accountant
• Accountant
Accounting ClerkAccounting Clerk
• Record, sort, and file accounting information
• Often specialize in one area (such as cash, payroll, accounts receivable, accounts payable, inventory, or purchases)
• Usually have at least one year of accounting education
BookkeepersBookkeepers
• Supervise the work of accounting clerks
• Help with daily accounting work
• Summarize accounting information
• Help managers and owners interpret accounting information
• Usually have one to two years of accounting education and experience as an accounting clerk
Para-AccountantsPara-Accountants
• Provide many accounting, auditing, or tax services under the direct supervision of an accountant
• Have two years of accounting education or significant accounting and bookkeeping experience
AccountantsAccountants
• Design the accounting information system
• Focus on analyzing and interpreting information
• Look for important trends in the data
• Study the impact of alternative decisions
• Enter the field with a college degree in accounting
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Accounting CareersAccounting Careers
• Public accounting
• Private accounting
• Governmental and not-for-profit accounting
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Public AccountingPublic Accounting
• Offer services to the public
• CPA (Certified Public Accountant)
• Auditing, Taxation, Management Advisory Services
Private AccountingPrivate Accounting
• Employees of private businesses
• Controller
• Accounting Information Systems; Financial, Cost, and Tax Accounting; Budgeting; and Internal Auditing
• CMA (Certified Managerial Accountant)
• CIA (Certified Internal Auditor)
Governmental and Not-for-Profit AccountingGovernmental and Not-for-Profit Accounting
• Work in all levels of government
• Also employed by universities, hospitals, charities, etc.
• Gather and report financial information