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
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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???