intro to accounting

economic activities and financial condition of a business or other organization.. business would have a cash account like a checking account and they might also own a building... stockho

Introduction to accounting

Debbie Gahr

economic activities and financial condition of a

business or other organization

are able to compare entities to each other

The language of business

communicated to the stakeholders in the business

that need information about a business

employees, news reporters and others

How accounting can help you

enough to pay bills

Financial accounting

reports for external users

Managerial accounting

decisions about the business

Objectives of financial accounting

point in time

business over a period of time

Objectives continued

business

a report called financial statements

Who’s who in accounting

errors and discrepancies (could be internal or

external)

Who’s who in accounting

accounting

of the company and do the related tax returns

Four financial statements

Elements of financial statements

organized into 10 categories called elements

contributed capital, revenue, expenses,

distributions, net income, gains and losses

accounts

business would have a cash account like a

checking account and they might also own a

building

Chart of accounts

like a table of contents in a book

stockholder’s equity 3, income 4, cost of goods sold 5, other expenses 6

financial statements

Balance sheet

point in time

liabilities, owner’s equity

investors.

buildings, land, computers, etc.

patents, rights to payments from customers, copyrights or trademarks.

buying supplies for your business on credit

finance their operations

earned assets kept in the business

Accounting equation

sides of the equal sign

the books

Example of accounting equation

liabilities of $5,000 How much is stockholder’s equity?

Income statement

(month, year)

Statement of changes in

Stockholder’s Equity

equity

stockholder’s equity during the accounting period

Statement of changes in

Stockholder’s Equity

additional shares of stock issued

adds on net income (subtracts net loss)

shareholders

Cash flow statement

cash during the accounting period

Cash flow statement

statement: operating, investing and financing

include receiving cash from revenue and paying cash for expenses

Cash flow statement

productive assets (like machinery or equipment) or receiving cash when you sell productive assets

owners or paying cash to owners (dividends) It

can also include borrowing cash from the bank or repaying the cash

Cash flow statement

decreased and why

How the financial statements are

interrelated

statement of changes in stockholder’s equity

totals flow to the balance sheet