Chapter 1 Accounting Concepts & Procedures Learning Objective 1.1 Explain Accounting, Business, and the Accounting Equation Accounting Provides information to: Others inside and outside the organization Provides financial information for ___________________________: Individuals Small businesses Large corporations Governmental agencies In a ________________ fashion Accounting System The accounting process: ____________________Looking at what happened ____________________Putting information into system ____________________Grouping similar activities ___________________Totaling the results ___________________Issuing the statements ___________________Examining the statements ___________________Provides reports Business Organizations __________________________________ _______ owner The owner makes all the decisions for the business _______________________ at least ________ owners Partners share the decision making and risks of the business _______________________owned by ______________________ Liability Corporation (LLC) owned by a few stockholders Liable only to the extent of their investment Business Classifications _________________actual services are provided for clients (e.g., limo service) __________________________make their own products or sell products made by another supplier (e.g., Old Navy and Crate and Barrel) __________________________companies that make their own products (e.g., Nike and Tesla) Accounting Rules Procedures and guidelines that must be followed during the accounting process Used to ensure everyone prepares and interprets financial reports the same way Developed by the _______________________________________ __________________________________________________ (IFRS) Guidelines developed by the International Accounting Standards Board The United States is considering a change from GAAP to IFRS Difference Between Bookkeeping and Accounting Bookkeeping Is the ____________________________________ of the accounting process ___________ accounting ________________________ in the companys ______________ Accounting Prepares the __________________________________ Involves many complex activities The Accounting Equation A business is considered a __________________________________ _____________________ are kept _________________ and __________________ from _______________________________ All transactions use the accounting equation _______________ ___________________, of _______________ _______________ by a business

Recorded at their ____________________________ _____________________ _____________________ that come _________ in the _____________________. Result in _______________________ the financial rights or ___________ of __________________ to assets. Examples include Companies that are owed money are called __________________ They have a _______________________________. _______________________ ______________ or ___________________ to the ___________________ of the business by the _______________ _________________ the _______________________________ in a company Does not always mean cash Includes _____________________________ the _______________ has ___________________________________ Accounting Transactions Transaction A Aug. 28: Jess invests $6,000 in cash and $200 of computer equipment into the business.

Transaction B Aug. 29: Consulting practice buys computer equipment for cash, $500

Transaction C Aug 30: Consulting firm buys additional computer equipment on account, $300.

Accounts payable unwritten __________________________ the _______________ Learning Objective 1.2 Prepare a Balance Sheet Balance Sheet Shows the ___________________ of a company. Reports ______________________________as of a ___________________________. Presents _______________________________ in _______________, ___________________, and ______________________________. __________________ appear on the ______ side. ___________________ and ____________________ appear on the ________________ side. The heading of the balance sheet provides the following information: The ________________________________ The _________________________________________ The __________________ for which the report is prepared Use of the dollar sign Placed to the left of each columns _____________________ and to the left of the ___________________________ Learning Objective 1.3 Record Transactions into the Expanded Accounting Equation The Accounting Equation Expanded: Revenue, Expenses, and Withdrawals

Revenue Amount ____________________ by ___________________________ or ________________________ to ______________________ Requires an _____________________ in _________________ ___________________ if the client pays right away ____________________________ ___________________ to _________ in the ___________________ Expenses _____________________________ in its efforts to _________________________ Requires a ________________________________________ or an _____________________________ Net Income/Net Loss If revenues expenses = If expenses revenues = Withdrawals _________________ or other ______________ _________________ from the business to ___________________________ _______ related to the business _______ an _____________________ If the business is a _________________________, withdrawals are called ______________________ Transactions Transaction D Sept. 130: Provided consulting services for cash, $2,000.

Transaction E Sept. 130: Provided consulting services on account, $3,000.

Transaction F Sept. 130: Received $900 cash as partial payment from previous consulting services performed on account.

Transaction G Sept. 130: Paid salaries expense, $700

Transaction H Sept. 130: Paid rent expense, $400.

Transaction I Sept. 130: Incurred advertising expenses of $200, to be paid next month.

Transaction J Sept. 130: Jess withdrew $100 for personal use

Learning Objective 1.4 Prepare the Three Financial Statements Income Statement Shows __________________________ Covers a certain ____________________________ A month, a quarter, a year Statement Heading The ______________________________ The ______________________________ The _________________________ the statement covers Statement of Owners Equity Increased by: Decreased by: Balance Sheet Main Elements of the Income Statement, the Statement of Owners Equity, and the Balance Sheet The ___________________________ is prepared _____________. _________________________________ is needed for the _____________________________________________. The ______________________________________ is prepared ___________________. The __________________________ is prepared _____________. The balance in ______________________ comes from the ____________________________________________.