Introduction to Introduction to AccountingAccountingUnit 1

Coming together is the beginning.Keeping together is progressWorking together is success

- Henry Ford

American AutomobileManufacturer

You and the World of You and the World of AccountingAccountingChapter 1

Learning ObjectivesLearning ObjectivesYou will be able to :

◦Describe how personal skills, values and lifestyle goals affect career decisions.

◦Find information about a variety of careers.

◦Identify career opportunities in the accounting fields.

◦Set career goals.

Learning Objectives Learning Objectives (cont.)(cont.)

◦Describe types of businesses and organizations that hire accountants.

◦Compare for profit businesses and non-profit organizations.

◦Define the accounting terms introduced in this chapter.

Exploring the Real World of Exploring the Real World of BusinessBusinessThe World Wildlife Fund

◦A non-profit organization, works to save endangered species.

◦Employs accountants, writers, fund raisers, and many other professionals who care about wildlife and their habitats.

Review the website:http://www.worldwildlife.org

What do you think?What do you think?

1.What job skills or interest do you think you would need to work for an organization like World Wildlife Fund?

2.What kind of interest do you think would attract someone to such an organization?

Exploring CareersExploring CareersSection 1

What You’ll LearnWhat You’ll LearnHow personal interest and skills,

values and lifestyle goals affect career decisions

Where to find information on possible careers.

How to set career goals.

Key TermsKey TermsSkillsValuesLifestylePersonalityPersonal interest testsNetworking

Job vs. CareerJob vs. CareerA job is simply work for payA career is built on a foundation

of ◦Interest◦Knowledge◦Training and ◦Experience

Access Your Career VisionAccess Your Career VisionWhat are your personal interest

and skills?What are you values, and how

will they affect your career?What lifestyle interest you?How will your personality affect a

career choice?

Your Interest, Skills, and Your Interest, Skills, and TraitsTraitsSkills are activities that you do

well◦Are you good at math?◦Do you write well?◦Are you creative?◦Do you like to meet lots of people◦Do you enjoy building things

Skills & Traits Careers Example

Creative Thinking Fine arts and humanity, actor artist or musician

Knowing how to learn Training or Teaching

Responsibility Health –related careers

Friendliness Hospitality and recreation careers

Honesty Child care worker, family and consumer science worker

Decision making Financial planner, accountant

Analytical Construction careers

Adaptability Public service careers

Self control Entrepreneur or manager

Self-esteem Communication and media

ValuesValuesValues are the principle you live by

and the benefits that are important to you.◦Responsibility◦Achievement◦Relationships◦Compassion◦Courage◦Recognition

Many people share the same values, but how they apply them is unique to each person.

Lifestyle GoalsLifestyle GoalsLifestyle is how you use you

time, energy and resources.◦What’s really important to you?◦Do you want to go for the big bucks?◦Do you want to live in a big city with

endless activities or a small town where everybody knows your name

◦Do you want to work with a group of people, or do you prefer working solo?

Personality TraitsPersonality TraitsPersonality – a set of unique

qualities that makes us different from other people.

What is you personality. Are you ◦Confident◦Friendly◦Dependable◦Funny◦Sympathetic

Personal Career Profile FormName Date Career

Your Values Career Values

Your Interest Career Duties and Responsibilities

Your Personality Personality Type Needed

Skills and Aptitudes Skills and Aptitude Required

Education/Training Acceptable Education/Training Required

Research the PossibilitiesResearch the PossibilitiesGuidance counselor can help you

identify the things you like to do. One way is through personal interest test.

Networking is a way to find out about particular careers by asking people to share information and advice.

Print material about every career can be found in your public library.

The Internet is a great source of educational and career information

Professional organization are groups of people with common career interest.

Set Career GoalsSet Career GoalsMap out a planEducationOn-the-Job TrainingInternships

Steps to Setting Career Steps to Setting Career GoalsGoals1. Decide on a long-term goal.2. Decide on actions that will lead

to the long-term goal.3. Take action!4. Diversify your skills5. Realize the long-term goal.

A Matter of EthicsA Matter of EthicsPadding a resumePart of landing a great job is

putting together a resume that effectively represents your skills and background. Imagine that BMW has opened a new regional headquarters in your area. You would like to work for BMW as a payroll clerk, but you are afraid you don’t have the right qualifications. A friend suggests that you “change” your resume to make yourself look better.

Ethical Decision Making:

What are the ethical issues?What are the alternatives?Who are the affected parties?How do the alternative effect the parties?What would you do?

Accounting Careers:Accounting Careers:The Possibilities Are The Possibilities Are EndlessEndlessSection 2

What You’ll LearnWhat You’ll Learn

The variety of career opportunities available to accountants.

The type of businesses and organizations that hire accountants

Key TermsKey TermsAccountantFor-profit businessNot-for-profit businessAccounting clerkCertified public accountantPublic accounting

The Changing HorizonThe Changing HorizonAn accountant handles a broad range

of responsibilities, make business decisions, and prepares and interprets financial reports.

For-profit businesses operate to earn money for their owners.

Not-for-profit organizations operate for the greater good. Their goal is balancing their income with expenses. Their income comes from donations and tax dollars.

Employment Employment Accounting clerk – an entry level job

usually performing one or two accounting task.

Certified public accountant pass a national test and meet specific experience and education standards to become “certified” to practice accounting.

You might choose to work as a financial consultant in a large company or work for a public accounting firm and provide accounting services for their clients

The World of Business The World of Business AccountingAccountingChapter 2

Learning ObjectiveLearning ObjectiveYou will be able to:

◦Describe the role of profit, risk-taking, and the entrepreneur in the US economy.

◦Describe the difference among service, merchandising, and manufacturing businesses.

◦Compare the sole proprietorship, partnership, and corporate forms of business organization.

◦Describe the purpose of accounting

Learning Objectives Learning Objectives (cont.)(cont.)

◦Explain the difference between financial and management accounting.

◦Describe the three basic assumption that underlie accounting principles.

◦Define the accounting terms introduced in this chapter.

Exploring the Real World of Exploring the Real World of BusinessBusinessHuey’s Athletic Network (HAN)

◦Uses aquatic therapy to help injured athletes rebuild body strength

◦Provides personal training and consulting not only to sport star, but also to entertainers and weekend warriors who want to stay fit.

Review the website:www.lahuey.com

What do you think?What do you think?

1. What knowledge and special skills do you think Lynda Huey needed to start and manage her business?

2. What makes an entrepreneur successful?

Exploring the WorldExploring the Worldof Businessof BusinessSection 1

What You’ll LearnWhat You’ll LearnProfit and risk-taking.The free enterprise system.Starting and running your own

business.Three types of business

operations.Three forms of business

organization.

Key TermsKey TermsFree enterprise

systemProfitLossEntrepreneurCapitalService business

Merchandising business

Manufacturing business

Sole proprietorship

PartnershipCorporationCharter

The Environment of The Environment of BusinessBusinessFree enterprise system

◦People are free to produce goods and services as they choose

◦Individuals are free to use their money as they wish: Spend it, Invest it, Save it, or Donate it.

◦Business owners must compete to attract customers to continue operating.

The Environment of The Environment of BusinessBusinessProfit – the amount of money

earned over and above the amount spent to operate the business

Loss – spending more money on business expenses than is earned.

A business has to do two things to survive:◦It must operate at a profit.◦It must attract and keep an individual

willing to take risk to run it.

The Environment of The Environment of BusinessBusinessThe need for Profit

◦You must pay Raw material Equipment Employees Utilities and rent

The need for a Risk-Taker◦People play different roles

Investors provide the money Employees provide the labor Managers handle supervision and planning Entrepreneurs transform ideas for products

and services into real-world businesses

Entrepreneurship: Who Entrepreneurship: Who Me?Me?

Pros Cons

You are your own boss. You create opportunities

for earning money. You create and control

your work schedule. You choose the people

you serve. You select the people

who work with you. You benefit from the

rewards of your own hard work.

You choose your own work hours.

You probably need to work long hours.

You lose the security of steady wages and medical benefits an employer provides.

You market your own services or products.

You pay your own operating expenses.

You must be motivated and energetic each day

You face the possibility of losing money.

Traits of the EntrepreneurTraits of the EntrepreneurEntrepreneur are aware of their

environment No ice cream shop Does the community want one?

Entrepreneur evaluate alternatives Customer preference Architect plans Accountant’s guidance

Entrepreneurs seek the best solutions Only used appliances are within budget

guidelinesEntrepreneurs turn ideas into action

Ben& Jerry’s is a worldwide producer of ice cream and frozen yogurt

Types of Business Types of Business OperationsOperationsThere are three types of business

that operate for profit:◦Service business◦Merchandising business◦Manufacturing business

Each type of business needs money to begin and maintain operations

Money supplied by investors, banks, or owners of a business is called capital.

Forms of Business Forms of Business OrganizationOrganization

There are there forms of business organization◦Sole Proprietorship◦Partnership◦Corporation

Sole ProprietorshipSole ProprietorshipBusiness owned by one person.The oldest and most common form

of ownership

The success or failure of the business depends heavily on the efforts and talents of the owner.

Advantages Disadvantages

Easy to set up Limited expertise

All profits go to owner Hard to raise money

Owner has total control Owner has all the risks

Few regulations to follow

Hard to attract talented employees

PartnershipPartnershipBusiness owner by two or more

persons; called partners

Partnerships are formed when the need for capital is greater than the amount of money one person can invest.

Advantages Disadvantages

Easy to start Conflicts between partners

Skills and talents are pooled

Profits must be shared

More money available Owners share all risks

CorporationCorporationBusiness organization that is

recognized by law to have a life of its own.

Must get permission from the state to operate.Advantages Disadvantages

Easier to raise money Costs more to start up

Easy to expand Complex to organize

Easy to transfer ownership

More regulations

Losses limited to investments

Higher taxes

Corporation (cont.)Corporation (cont.)To raise money, shares of stock are

sold to hundreds or even thousands of people.

These shares represent invest in and ownership of the corporation.

Shareholders/Stockholder are the legal owners of a corporation

*************Regardless of the form, all businesses share

common financial characteristics and methods for recording and reporting financial charges.

Accounting:Accounting:The Universal Language of The Universal Language of BusinessBusinessSection 2

What you’ll learnWhat you’ll learnHow the accounting system works.Who uses financial accounting

reports.Who uses managerial accounting

reports.How accounting is used to help

make business decisions.What assumptions provide the

foundation for accounting systems.

Key TermsKey TermsAccounting

systemManual

accounting system

Computerized accounting system

GAAPFinancial reports

Financial accounting

Management accounting

business entityAccounting

periodGoing concern

The Accounting SystemThe Accounting SystemThe accounting system is

designed to collect, document and report on financial transactions affecting the business.

In a manual accounting system the accounting is processed by hand.

In a computerized accounting system the financial information is

recorded by entering it in the computer.

The Accounting System The Accounting System (cont.)(cont.)All accountants used the same set

of rules to prepare their reports.GAAP is also known as generally

accepted accounting principles.Accounting principles provide a way

to communicate financial information in a form understood by those interested in business operations

Financial reports are summarized information about the financial status of a business

Input Processing Outputs

Source Document

Tasks Financial and

•Checks •Analyzing Management

•Invoices •Classifying Accounting Reports

•Sales Slips •Recording •Financial condition

•Receipts •Results of operation

•Investment by and distributions to owners

How the Accounting System Works

Using Accounting Reports for Using Accounting Reports for Making Business Decisions Making Business Decisions Purpose of accounting

◦Provide financial information about a business or not-for-profit organization

◦Provide information to individual in order to make decisions.

These two groups use accounting reports◦Individuals outside the business who

have an interest in the business◦Individuals inside the business

Using Accounting Reports for Using Accounting Reports for Making Business Decisions Making Business Decisions Financial Accounting focuses on

reporting information to external users.◦The reports are prepared using GAAP for

Individuals or institutions that loan money to a business, to determine if the business is able to repay the loan

Local, state and federal government agencies for taxing purposes.

Workers, consumers, union leaders and competition are interested in the businesses performance.

Using Accounting Reports for Using Accounting Reports for Making Business Decisions Making Business Decisions Management accounting focuses on

reporting information to management.

Referred to as accounting for internal users

Reports are prepared for managers to make decision regarding:◦Purchasing,◦Hiring,◦Production,◦Payments,◦Sales, and◦Collections.

Accounting AssumptionsAccounting AssumptionsThese generally accepted accounting

principles are based on these assumptions.◦Business entity

A business is a separate entity and exist separate of it’s owners personal holdings

◦Accounting period For reporting purposes, the life of a business is

divided into specific periods of time. It can be a month, a quarter, or most

commonly a year.◦Going concern

Accountants assume the business has the ability to survive and operate indefinitely.

It is expected to continue.

A Matter of EthicsA Matter of Ethics

Becoming an Entrepreneur

Imagine that you’ve been working for a local day-care center for several years. You attend a company meeting to discuss new ideas on improving day care. Several new services are discussed that would help your center stand out from it’s competition. You think that this is a great opportunity for you to become and entrepreneur – by opening your own day-care center offering the new services discussed at the meetings

Ethical Decision Making

What are the ethical issues?What are the alternatives?Who are the affected parties?How do the alternatives affect the parties?What would you do?