BAF3M
Accounting
Unit 1: Intro to Accounting
1.A: Accounting and Business
First
• Some Common
Abbreviations used
throughout this
course …..
•
•
•
•
•
•
•
•
B/S – Balance Sheet
A – Assets
L – Liabilities
OE – Owner’s Equity
A/R – Accounts Receivable
A/P – Accounts Payable
TB – Trial Balance
I/S – Income Statement
•
•
•
•
•
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Biz/Bus – Business
Org’n – Organization
Rec’d – Received
Eq’n – Equation
Stmt – Statement
Mgmt - Management
1.1 What is Accounting
• “Accounting” – is a system of dealing with
financial information that provides
information for decision making
• Accounting has 5 main activities
1.1 What is Accounting
• They are: (p. 1)
– 1. gathering financial information
– 2. preparing and collecting permanent records
– 3. rearranging, summarizing and classifying
financial information
– 4. preparing information reports and
summaries
– 5. establishing controls to promote accuracy
1.2 Why Study Accounting?
• Accounting can be useful to you:
– On the job
– In daily life (budgeting, taxes)
– Owning your own business (entrepreneurship)
– As a profession (CA, CGA, CMA)
– Complexity of business
1.3 Characteristics of Business
• A business involves the manufacture
and/or sale of goods or services in order to
earn a profit.
• They generally fit into one of four
categories:
• Service Business
• Merchandising Business
• Manufacturing or Producing Business
• Non-Profit Organization
Use p.4-5 to help you describe each
1.3 Characteristics of Business
Type of
Business
SERVICE
MERCHANDISING
MANUFACTURING
NON-PROFIT
Definition
Example
1.3 Characteristics of Business
• Forms of Business
Ownership
– 3 basic types
– Sole Proprietorship
– Partnership
– Corporation (or
“Limited” company)
We will be working mostly with sole proprietorships, until about Chapter 13.
1.3 Characteristics of Business
Form of Business
Ownership
Sole
Proprietorship
Partnership
Corporation
Definition
Example
1.4 The Nature of Accounting
• Categories of Accounting Work
– 3 Main Categories
• Routine Daily Activities
• Periodic Accounting Activities
• Miscellaneous Activities
1.4 The Nature of Accounting
1.5 Becoming a Professional
• 3 National Accounting Organizations
– CGA (Certified General Accountant)
– CMA (Certified Management Accountant)
– CA (Chartered Accountant)
1.6 Roles of Accounting
• The Accounting Clerk (aka “Bookkeeper”)
– Work is clerical in nature, deals mostly with
routine matters
• The Accountant
– Broader scope of duties, requires more
education and experience, usually
responsible for an entire accounting system
See p.8 for more job details for each
End of Chapter Section
NOTE: Each chapter section has two sets of
activities at its conclusion: “questions” and
“exercises” – also there is a section at the
chapter’s end with “chapter review” questions
and exercises
Chapter 1 is so short that it only has the “chapter
review” questions…
So to review Ch 1’s content, we’ll try
Ch1 Review Q’s: #2, 3, 4, 17
Ch1 Review Ex’s: #1, 3