Accountant

Accounting is the process of planning, recording, analyzing, interpreting and reporting

financial info.
Role: record and report financial

Accounting statement = sources of information

Financial Statement = Income Statement, Balance sheet,
Statement of Cash Flows
Receipts, invoices, pay roll
Accepting Reports = summarize and analyze information for a period of time.

Accounting Reports :
Sales- daily, monthly (income statement, balance sheets)
Payroll - monthly
Inventory - daily and monthly

Net worth statement

a statement of the financial position of a person on a special date
- differences between personal assets and personal liabilities
- assets - liabilities = net worth

Asset = Owners Equity + Liabilities

anything that is owned

Liabilities
An amount owned

Equity(Net worth)
- differences between assets and liability
Equities
- a right to own the assets of a business.
Owners Equity = what owners own
Accounting Information
Users = Business owner, store manager, staff, accountants, supplier, consumers.

Accounting system
- is a planned process
- records financial data
- summarize the results in accounting reports a
- we can analyze and interpret it

Financial Statement
Financial reports that summarize the financial condition and operation of a
business

Condition = Health (value, assets, liabilities, equity)

Operations = fitness (performance, profit, efficiency)
Proprietorship
Business owned by one person.

Service Business
Business that perform as activity for a fee

Business Plan
formal written document that describes the nature of a business plan, describes
the operation, how it operate.

Accounting equation
Equation showing the relationship among assets, liabilities and owner equity.

On account = pay by credit.

Creditor = person or business to whom a liability is owned

Transaction on
any business activity that changes assets, liabilities or owners equity.

Account
record that summarizes all the transaction pertains to a single item in the
accounting equation.

Account Title
The name given to an account

Account Balance
The difference between the increases and decreases in an account.

Revenue
increases in equity resulting from the sale of goods or services.

Expense
cost of goods or services used to operate a business
- there is no assets

Withdrawals/ drawing
assets taken from the business for the owners personal use.
GAAP (Generally accepted accounting principles)
standard and rules that accountant follow.

Ethics
the principle of right and wrong that guide an individual

Business Ethics compound Interest

The use of ethics in making business decision

Compound Interest
earning interest

Saving
money you set aside to reach a goal
Using T-Account
Double entry accounting
- every business transaction affects at least two account
- You must debit at least one account and credit at least one account

Debit = left
An amount recorded on the left side
Increases an asset account
Decrease a liability or equity
Credit = right
An amount recorded on the right side
Increase a liability or equity
Decrease an asset expense or drawing account.

CLIC
types of accounts are increased with a Credit
- Liabilities
- Income
- Capital

DEAD
Debits
- Expenses
- Assets
- Drawing

T- account
An accounting device used to analyze transactions.

Normal Balance
the side of the account that is increased

Why we need to separate business financial information separate from owner.

- To know business doing well ?
- Is it making a profit?
- To protect your personal assets
- Claim tax deduction and grants for small business
- To look professional