Introduction to Accounting

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Introduction to Accounting

• Unit 1

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

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You and the World of Accounting

• Chapter 1

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Learning 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.

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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.

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Exploring the Real World of Business

• 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

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What do you think?

• What job skills or interest do you think you
  would need to work for an organization like World
  Wildlife Fund?
• What kind of interest do you think would attract
  someone to such an organization?

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Exploring Careers

• Section 1

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What Youll 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.

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Key Terms

• Skills
• Values
• Lifestyle
• Personality
• Personal interest tests
• Networking

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Job vs. Career

• A job is simply work for pay
• A career is built on a foundation of
• Interest
• Knowledge
• Training and
• Experience

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Access 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?

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Your 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

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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
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Values

• 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.

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Lifestyle Goals

• Lifestyle is how you use you time, energy and
  resources.
• Whats 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?

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Personality 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

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Personal Career Profile Form Personal Career Profile Form Personal Career Profile Form Personal Career Profile Form
Name Date Date Career
Your Values Your Values Career Values Career Values
Your Interest Your Interest Career Duties and Responsibilities Career Duties and Responsibilities
Your Personality Your Personality Personality Type Needed Personality Type Needed
Skills and Aptitudes Skills and Aptitudes Skills and Aptitude Required Skills and Aptitude Required
Education/Training Acceptable Education/Training Acceptable Education/Training Required Education/Training Required
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Research 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.

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Set Career Goals

• Map out a plan
• Education
• On-the-Job Training
• Internships

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Steps 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.

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A 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 dont 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?

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Accounting CareersThe Possibilities Are Endless

• Section 2

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What Youll Learn

• The variety of career opportunities available to
  accountants.
• The type of businesses and organizations that
  hire accountants

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Key Terms

• Accountant
• For-profit business
• Not-for-profit business
• Accounting clerk
• Certified public accountant
• Public accounting

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The 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.

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Employment

• 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

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The World of Business Accounting

• Chapter 2

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Learning 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

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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.

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Exploring the Real World of Business

• Hueys 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

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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?

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Exploring the Worldof Business

• Section 1

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What Youll 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.

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Key Terms

• Free enterprise system
• Profit
• Loss
• Entrepreneur
• Capital
• Service business

• Merchandising business
• Manufacturing business
• Sole proprietorship
• Partnership
• Corporation
• Charter

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The 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.

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The 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.

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The 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

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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.

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Traits 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
• Accountants guidance
• Entrepreneurs seek the best solutions
• Only used appliances are within budget guidelines
• Entrepreneurs turn ideas into action
• Ben Jerrys is a worldwide producer of ice cream
  and frozen yogurt

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Types 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.

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Forms of Business Organization

• There are there forms of business organization
• Sole Proprietorship
• Partnership
• Corporation

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Sole 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
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Partnership

• 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
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Corporation

• 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

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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.

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AccountingThe Universal Language of Business

• Section 2

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What youll 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.

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Key Terms

• Accounting system
• Manual accounting system
• Computerized accounting system
• GAAP
• Financial reports

• Financial accounting
• Management accounting
• business entity
• Accounting period
• Going concern

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The 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.

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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

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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
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Using Accounting Reports for Making 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

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Using Accounting Reports for Making 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.

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Using Accounting Reports for Making 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.

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Accounting Assumptions

• These generally accepted accounting principles
  are based on these assumptions.
• Business entity
• A business is a separate entity and exist
  separate of its 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.

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A Matter of Ethics

• Becoming an Entrepreneur
• Imagine that youve 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 its
  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?