Professional Documents
Culture Documents
1-1
Chapter 11
Chapter
Accounting In
Action
Chapter
1-4
What
What is
is Accounting?
Accounting?
Chapter
1-5 SO 1 Explain what accounting is.
What
What is
is Accounting?
Accounting?
Illustration 1-1
Three Activities Accounting process
Chapter
1-6 SO 1 Explain what accounting is.
Who
Who Uses
Uses Accounting
Accounting Data?
Data?
Internal Users
Management IRS
Human Investors
Resources
Labor
Unions
Finance Common Questions
Creditors
Marketing
SEC
Customers External
Users
Chapter
1-7 SO 2 Identify the users and uses of accounting.
Who
Who Uses
Uses Accounting
Accounting Data?
Data?
Common Questions Asked User
1. Can we afford to give our
employees a pay raise? Human Resources
Discussion Question
Q1. “Accounting is ingrained in our society and it is
vital to our economic system.” Do you agree? Explain.
Chapter
1-11 SO 3 Understand why ethics is a fundamental business concept.
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Financial Statements
Various users Balance Sheet
need financial Income Statement
Retained Earnings Statement
information Statement of Cash Flows
Note Disclosure
Chapter
1-12 SO 4 Explain generally accepted accounting principles and the cost principle.
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Chapter
1-13 SO 4 Explain generally accepted accounting principles and the cost principle.
The
The Building
Building Blocks
Blocks of
of Accounting
Accounting
Chapter
1-14 SO 4 Explain generally accepted accounting principles and the cost principle.
Assumptions
Assumptions
Stockholders’
Assets = Liabilities +
Equity
Stockholders’
Assets = Liabilities +
Equity
Assets
Stockholders’
Assets = Liabilities +
Equity
Liabilities
Stockholders’
Assets = Liabilities +
Equity
Stockholders’ Equity
Record/
Don’t Record
Discussion Question
Q18. In February 2008, Paula King invested an
additional $10,000 in Hardy Company. Hardy’s
accountant, Lance Jones, recorded this receipt
as an increase in cash and revenues. Is this
treatment appropriate? Why or why not?
Companies
Companies prepare
prepare four
four financial
financial statements
statements from
from
the
the summarized
summarized accounting
accounting data:
data:
Retained Statement
Income Balance
Earnings of Cash
Statement Sheet
Statement Flows
Chapter
1-38 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Review Question
Net income will result during a time period when:
a. assets exceed liabilities.
b. assets exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses.
Chapter
1-39 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Income Statement
Chapter
1-40 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Retained Earnings
Income Statement Statement
Barone’s Repair Shop Barone’s Repair Shop
For the Month Ended May 31, 2007 For the Month Ended May 31, 2007
Chapter
1-41 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Retained Earnings
Statement
Statement indicates the Barone’s Repair Shop
Retained Earnings Statement
reasons why retained For the Month Ended May 31, 2007
earnings has increased Retained earnings, May 1 $ -
or decreased during the Add: Net income 3,200
Chapter
1-42 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Balance Sheet Retained Earnings
Barone’s Repair Shop Statement
Balance Sheet
May 31, 2007 Barone’s Repair Shop
Chapter
1-45 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Statement of Cash Flows
Information for a
specific period of time. Barone’s Repair Shop
Statement of Cash Flows
For the Month Ended May 31, 2007
Answers the following: Cash flow from Operations
Cash receipts from customers $ 5,220
1. Where did cash come Cash paid for expenses (2,400)
from? Cash provided by operations 2,820
Cash flow from Investing
Chapter
1-46 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Review Question
Which of the following financial statements is
prepared as of a specific date?
a. Balance sheet.
b. Income statement.
c. Statement of stockholders’ equity.
d. Statement of cash flows.
Chapter
1-47 SO 8 Understand the four financial statements and how they are prepared.
Financial
Financial Statements
Statements
Discussion Question
Q19. “A company’s net income appears directly
on the income statement and the retained
earnings statement, and it is included indirectly
in the company’s balance sheet.” Do you agree?
Explain.
Chapter
1-48 SO 8 Understand the four financial statements and how they are prepared.
All
All About
About You
You
Chapter
1-49
All
All About
About You
You
Some Facts:
After adjusting for inflation, private-college
tuition and fees have increased 37% over the
past decade; public-college tuition has risen 54%.
Chapter
1-50
All
All About
About You
You
Source: College
Board, Princeton
Review, as reported in
“College Admissions:
Is Gate Open or
Closed?,” Wall Street
Journal, March 25,
2006, p. A7.
Chapter
1-51
All
All About
About You
You
What Do You Think?
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Chapter
1-53