Chapter One Introduction to Accounting and Business Learning Objectives 1-1 Describe the nature of business and the role of accounting and ethics in business. 1-2 Summarize the development of accounting principles and relate them to practice. 1-3 State the accounting equation and define each element of the equation. 1-4 Describe and illustrate how business transactions can be recorded in terms of the resulting change in the elements of the accounting equation. 1-5 Describe the financial statements of a proprietorship and explain how they interrelate. 1-6 Describe and illustrate the use of the ratio of liabilities to owner's equity in evaluating a company's financial condition