Accounting Chapter 1 notes 1-1 What is Accounting? Define in text Go over Techknow Consulting Service business Proprietorship (owned by one person) Business Entity (separate financial information from the owner) Ask students to name some companies they know that are sole proprietorships Advantages of forming sole proprietorship Easy to form, inexpensive, business license Total control by owner Profits not shared Disadvantages of SP Only owner can invest Unlimited liability (house can be taken in place of debt) Limited expertise (owner can only give up so much time) Must be dissolved when owner stops business or dies Why are there more sole proprietorships than any other type of business? Total control Easy to form Being in charge ===================================================== Accounting Equation Assets = Liabilities + Owner’s Equity Name some assets (car, cell phone, instruments, ATV, etc.) Name some school assets (supplies, desks, computers, books) What are some of your liabilities? (owe Mom, cell phone bill, rent, car insurance, etc.) Equity is either the company who you owe or your personal wealth in company (value of the assets minus the amount you owe or liabilities) COMPLETE WORK TOGETHER IN CLASS, GO OVER ANSWERS 1-2 Business Activities and impact on the A/C equation Business activities that impact the equation = transactions Go over transactions on p. 10-12 and read as a class Ask students how each account is impacted (increase or decrease???) COMPLETE WORK TOGETHER IN CLASS, GO OVER ANSWERS 1-3 Selling items increases Owner’s Equity and is called REVENUE Sale on Account is when you “count” revenue at the time of sale, but the buyer charges and is going to pay at a later date. Still increases OE EXPENSEs are when you pay for something that does not increase the value of the business and decreases OE (paying rent). Always decreases OE Go over transactions on p. 14-16 and read as a class Ask students how each account is impacted (increase or decrease???) COMPLETE WORK TOGETHER IN CLASS, GO OVER ANSWERS Assign Application Problems 1-2 and 1-3 as homework Complete Mastery 1-4 before test Pass out Study Guide Test Monday???