Chapter 1 Power notes Approaching the Subject of Accounting (1) Learning Objectives 1.Definitions of six Basic Accounting Terms 2. Double Entry System 3. Balance Sheet 4. Trial Balance 5. Trading and Profit and Loss Account 6. Journal Entries C1 c1-1
C1 - 1 Learning Objectives 1. Definitions of Six Basic Accounting Terms 2. Double Entry System 3. Balance Sheet 4. Trial Balance 5. Trading and Profit and Loss Account 6. Journal Entries Power Notes Approaching the Subject of Accounting(1) Chapter 1 C1
Chapter F1 Power notes Approaching the Subject of Accounting(1) Slide f Power Note Topics 3. Accounting-An Information Process 9. Users of Accounting Information 11. Profession of Accounting 16. The Accounting Equation 19. Business Transactions 53. Financial statements 69. Ratio of Liabilities to Stockholders Equity [y Note: To select a topic, type the slide and press Enter c1-2
C1 - 2 Note: To select a topic, type the slide # and press Enter. • Accounting – An Information Process • Users of Accounting Information • Profession of Accounting • The Accounting Equation • Business Transactions • Financial Statements • Ratio of Liabilities to Stockholders Equity Slide # Power Note Topics Power Notes Approaching the Subject of Accounting(1) Chapter F1 3 9 11 16 19 53 69
Definitions of Basic Terms LAssets 2, Liabilities 3. Balance sheet 4 Debtors 5. Creditors 6. Proprietorship C1 c1-3
C1 - 3 1.Assets 2.Liabilities 3.Balance Sheet 4.Debtors 5.Creditors 6.Proprietorship Definitions of Basic Terms C1
Double-Entry System Double-entry system is based on a simple concept: each party in a business transaction will receive something and give something in return In bookkeeping terms, what is received is a debit and what is given is a credit. The T account is a representation of a sca| e or balance.” Scale or balance T account eft Side Right Side Receive Give Luca Pacioli DEBIT CREDIT Developer of Double-Entr Receive Give System DEBIT CREDIT c1-4
C1 - 4 Double-Entry System “ Double-entry system is based on a simple concept: each party in a business transaction will receive something and give something in return. In bookkeeping terms, what is received is a debit and what is given is a credit. The T account is a representation of a scale or balance.” Luca Pacioli Developer of Double-Entry System Scale or Balance Receive DEBIT Give CREDIT T account Left Side Receive DEBIT Right Side Give CREDIT
The Accounting Equation Resources What are an organization s resources called? c1-5
C1 - 5 Resources The Accounting Equation What are an organization’s resources called?
The Accounting Equation Resources Sources Assets Cost of What are the resources used sources of the in the business assets c1-6
C1 - 6 Assets Resources = Sources The Accounting Equation What are the sources of the assets? Cost of resources used in the business
The Accounting Equation Resources Sources Liabilities Assets Stoc kholders' Equity Cost of Resources resources used supplied by in the business creditors and owners c1-7
C1 - 7 Assets Liabilities Stockholders’ Equity Resources = Sources Cost of resources used in the business Resources supplied by creditors and owners The Accounting Equation
Expanded Accounting Equation The basic accounting equation can be expanded to include all five financial categories indicating what has been received and given. DEBITS CREDITS received gIven c1-8
C1 - 8 Expanded Accounting Equation “ The basic accounting equation can be expanded to include all five financial categories indicating what has been received and given.” DEBITS received CREDITS given =
Expanded Accounting Equation The basic accounting equation can be expanded to include all five financial categories indicating what has been received and given. DEBITS CREDITS received gIven Assets c1-9
C1 - 9 Expanded Accounting Equation “ The basic accounting equation can be expanded to include all five financial categories indicating what has been received and given.” DEBITS received CREDITS given = Assets
Expanded Accounting Equation The basic accounting equation can be expanded to include all five financial categories indicating what has been received and given. DEBITS CREDITS received gIven Assets Expenses c1-10
C1 - 10 Expanded Accounting Equation “ The basic accounting equation can be expanded to include all five financial categories indicating what has been received and given.” Assets DEBITS received CREDITS given = Expenses
