 Accountants
 College degree in Accounting
 Bookkeepers
 Two years of high school Accounting
 Accounting Clerks
 One year of high school Accounting

 1. Accounting
 Planning, recording, analyzing, and interpreting financial information
 Accounting System
 A planned process for providing financial information useful to management
 Accounting Records
 Organized summaries of a business’ financial activities
 Financial Statements
 Financial reports that summarize the financial condition and operations of a business

 A place where products are manufactured and/or purchased and sold, or services are provided to earn a profit for owners and/or stockholders

 Sole Proprietorship
 A business owned by one person
 Partnership
 A business where two or more persons combine their assets and skills
 Corporation
 A business owned by many people with the legal rights of an individual person

 Business Entity – A business’s financial information is recorded and reported separately from the owner’s personal financial information
 Examples:
 Personal vehicle
 Checking account
 House
 Personal utilities

 Assets = Liabilities + Owners Equity
 Assets-anything of value that is owned
 Liabilities-an account owed by a business
 Equities-financial rights to the assets of a business
 Owner’s Equity- Amount remaining after the value of all liabilities is subtracted from the value of all assets.

 Transaction – A business activity that changes assets, liabilities, or owner’s equity.
 Account – A record summarizing all the information pertaining to a single item in the accounting equation.
 Account Title – The name given to an account.
 Account balance – The amount in an account.
 Capital – The account used to summarize the owner’s equity in a business.

 Unit of Measurement – when business transactions are stated in numbers that have common values
 Example
 U.S. uses dollars ($)

Transaction 1 August 1. Received cash from owner as an investment,
$5,000.00.
page 10
9 LESSON 1-2

Transaction 2 August 3. Paid cash for supplies, $275.00.
page 11
10
Transaction 3 August 4. Paid cash for insurance, $1,200.00.
LESSON 1-2

Transaction 4 August 7. Bought supplies on account from Supply
Depot, $500.00.
page 12
11
Transaction 5 August 11. Paid cash on account to Supply Depot,
$300.00.
LESSON 1-2

 Revenue – an increase in owner’s equity resulting from the operation of business
 Sale on account (Accounts receivable) – a sale in which cash will be received at a later date

 Realization of Revenue – revenue is recorded at the time goods or services are sold

 Expense – a decrease in owner’s equity resulting from the operation of business
 Examples:



Rent
Telephone bill
Water bill

 Withdrawal – assets taken out of a business for the owner’s personal use

 Ethics – the principles of right and wrong that guide decision making
 Business ethics – the use of ethics in making business decisions

Transaction 6 August 12. Received cash from sales, $295.00.
page 14
17
Transaction 7 August 12. Sold services on account to Oakdale
School, $350.00.
LESSON 1-3

Transaction 8 August 12. Paid cash for rent, $300.00.
page 15
18
Transaction 9 August 12. Paid cash for telephone bill, $40.00.
LESSON 1-3

Transaction 10 August 18. Received cash on account from Oakdale
School, $200.00.
page 16
19
Transaction 11 August 18. Paid cash to owner for personal use,
$125.00.
LESSON 1-3