Unit 1 Introduction to Accounting Chapter 1 and Chapter 2

1. Introduction to AccountingIntroduction to Accounting
Unit 1

2. Coming together is the beginning.
Keeping together is progress
Working together is success
- Henry Ford
American Automobile
Manufacturer

3. You and theWorld ofYou and theWorld of
AccountingAccounting
Chapter 1

4. Learning ObjectivesLearning Objectives
You 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.

5. Learning Objectives (cont.)Learning Objectives (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.

6. Exploring the Real World ofExploring the Real World of
BusinessBusiness
The 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

7. 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?

8. Exploring CareersExploring Careers
Section 1

9. What You’ll LearnWhat You’ll Learn
How personal interest and skills, values
and lifestyle goals affect career decisions
Where to find information on possible
careers.
How to set career goals.

10. Key TermsKey Terms
Skills
Values
Lifestyle
Personality
Personal interest tests
Networking

11. Job vs. CareerJob vs. Career
A job is simply work for pay
A career is built on a foundation of
◦ Interest
◦ Knowledge
◦ Training and
◦ Experience

12. Access Your Career VisionAccess Your Career Vision
What 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?

13. Your Interest, Skills, and TraitsYour Interest, Skills, and Traits
Skills 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

14. 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

15. ValuesValues
Values 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.

16. Lifestyle GoalsLifestyle Goals
Lifestyle 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?

17. Personality TraitsPersonality Traits
Personality – a set of unique qualities
that makes us different from other
people.
What is you personality. Are you
◦ Confident
◦ Friendly
◦ Dependable
◦ Funny
◦ Sympathetic

18. Personal Career Profile Form
Name 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

19. Research the PossibilitiesResearch the Possibilities
Guidance 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.

20. Set Career GoalsSet Career Goals
Map out a plan
Education
On-the-Job Training
Internships

21. Steps to Setting Career GoalsSteps to Setting Career Goals
1. Decide on a long-term goal.
2. Decide on actions that will lead to the
long-term goal.
3. Take action!
4. Diversify your skills
5. Realize the long-term goal.

22. A Matter of EthicsA Matter of Ethics
Padding a resume
Part 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?

23. Accounting Careers:Accounting Careers:
The Possibilities Are EndlessThe Possibilities Are Endless
Section 2

24. What You’ll LearnWhat You’ll Learn
The variety of career opportunities
available to accountants.
The type of businesses and organizations
that hire accountants

25. Key TermsKey Terms
Accountant
For-profit business
Not-for-profit business
Accounting clerk
Certified public accountant
Public accounting

26. The Changing HorizonThe Changing Horizon
An 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.

27. EmploymentEmployment
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

28. TheWorld of BusinessTheWorld of Business
AccountingAccounting
Chapter 2

29. Learning ObjectiveLearning Objective
You 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

30. Learning Objectives (cont.)Learning Objectives (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.

31. Exploring the Real World ofExploring the Real World of
BusinessBusiness
Huey’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

32. 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?

33. Exploring theWorldExploring theWorld
of Businessof Business
Section 1

34. What You’ll LearnWhat You’ll Learn
Profit and risk-taking.
The free enterprise system.
Starting and running your own business.
Three types of business operations.
Three forms of business organization.

35. Key TermsKey Terms
Free enterprise
system
Profit
Loss
Entrepreneur
Capital
Service business
Merchandising
business
Manufacturing
business
Sole proprietorship
Partnership
Corporation
Charter

36. The Environment of BusinessThe Environment of Business
Free 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.

37. The Environment of BusinessThe Environment of Business
Profit – 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.

38. The Environment of BusinessThe Environment of Business
The 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

39. Entrepreneurship:Who Me?Entrepreneurship:Who 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.

40. Traits of the EntrepreneurTraits of the Entrepreneur
Entrepreneur 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 guidelines
Entrepreneurs turn ideas into action
 Ben& Jerry’s is a worldwide producer of ice cream and
frozen yogurt

41. Types of Business OperationsTypes of Business Operations
There 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.

42. Forms of Business OrganizationForms of Business Organization
There are there forms of business
organization
◦ Sole Proprietorship
◦ Partnership
◦ Corporation

43. Sole ProprietorshipSole Proprietorship
Business 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

44. PartnershipPartnership
Business 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

45. CorporationCorporation
Business 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

46. 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.

47. Accounting:Accounting:
The Universal Language of BusinessThe Universal Language of Business
Section 2

48. What you’ll learnWhat you’ll learn
How 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.

49. Key TermsKey Terms
Accounting system
Manual accounting
system
Computerized
accounting system
GAAP
Financial reports
Financial accounting
Management
accounting
business entity
Accounting period
Going concern

50. The Accounting SystemThe Accounting System
The 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.

51. The Accounting System (cont.)The Accounting System (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

52. 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

53. Using Accounting Reports forUsing Accounting Reports for
Making Business DecisionsMaking 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

54. Using Accounting Reports forUsing Accounting Reports for
Making Business DecisionsMaking 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.

55. Using Accounting Reports forUsing Accounting Reports for
Making Business DecisionsMaking 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.

56. Accounting AssumptionsAccounting Assumptions
These 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.

57. 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?