Accounting - PowerPoint

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Accounting - PowerPoint Powered By Docstoc
                                 What do
                          accountants do?
                       Accounting is the process
                 used by an accountant to keep
                 track of all the money that comes
                 in and goes out.

   Accounting methods are based on the fact
    that at least 2 things happen each time an
    exchange of money occurs.
               When a company pays its
               employees, two things happen:

               The cash the company has goes
               The expenses the company has
               goes up.

When a company purchases a new computer, two
  things happen:
 $$ company has goes down.
 Value of equipment company has goes up
  (computer has been added)
                            An activity is also called
                            a transaction. A
                            company can have
                            hundreds or thousands
                            of transactions every

   An accountant is responsible for recording all
    of the transactions. They use invoices (i.e.
    bills), copies of cheques and bank
    statements to determine transactions.
                    Financial Statements
                        Financial statements are
                        reports that summarize
                        how well a company is
                        doing financially.

   There are 3 main financial statements: the
    balance sheet, the income statement, and the
    cash flow statement.

   Who reads financial statements?
    Investors     Auditors
    Management    Government
   An annual report is a glossy
    publication that summarizes
    the business’ activities for the past year.

   Most companies will give out ANNUAL
    REPORTS to anyone who is interested
    because it is a form of transparency.
The Balance Sheet

   A financial statement that
    shows the net worth of a
    business on a particular date.

   A indicator that a business is financially
     The balance sheet contains 3
ASSETS (Section 1)
Items of value that are owned by a business
Common assets owned by a business:
   Cash (bank included)
   Inventory
   Equipment
   Supplies
   Vehicles
   Building
   Accounts Receivable (the term used when someone
    else owes a business money)

Assets should be listed on a balance sheet in order of
    liquidity (how fast they can be converted into cash)
The debts of the business
($ business owes)
Common liabilities owed by a business:

   Accounts Payable (the term used when the
    business owes someone else money)
   Bank Loan
   Mortgage Payable

Liabilities should be listed in the order they will be
    paid back.
 The amount of assets that
  remain in a business after the
  liabilities are paid (this becomes
  the owner’s stake (worth) in the
 The equity in a corporation is called
  Shareholders equity because the
  shareholders are the true owners in a
        Accounting Equation
Assets - Liabilities= Owner’s Equity

What you own- What you owe= How much
                            you’re worth
                     Balance Sheet
                   September 30, 2002
Cash                                           $  8,050
Accounts receivable                               1,400
Supplies                                          1,600
Equipment                                         7,000
      Total assets                             $ 18,050

              Liabilities and Owner's Equity
  Accounts payable                             $   1,600
Owner's Equity
  M. Doucet, Capital                             16,450
    Total liabilities and owner's equity       $ 18,050
                                     Judy's Boutique

                                      Balance Sheet

                                      April 20, 2010

Assets                                        Liabilities

Cash                          $   3,200.00    Accounts Payable- Titan Whls.   $    8,420.00

Accounts Receivable-G.Lewis         475.00    Bank Loan                            9,460.00

Accounts Receivable-M.Erb            395.00   Mortgage Payable                    42,000.00

Inventory                         34,000.00   Total Liabilities               $ 59,880.00

Furnitue & Equipment              23,450.00   Owner's Equity

Building                          94,000.00   J. McCutcheon, Capital              95,640.00

TOTAL ASSETS                  $ 155,520.00    TOTAL LIABILITIES & O.E.        $ 155,520.00
                                        Snackbar Haven

                                         Balance Sheet


Assets                                             Liabilities

Cash                               $   16,941.19   Accounts Payable- Lloyd Rest.   $    7,492.37

Accounts Receivable-Karen's Cat.        6,248.23   Bank Loan                            8,695.25

Supplies                               19,742.74   Mortgage Payable                    38,462.91

Equipment                              26,497.36   Total Liabilities               $ 54,650.53

Furniture                              36,481.22   Owner's Equity

Building                               75,400.00   A. Persaud, Capital              126660.21

TOTAL ASSETS                       $181310.74      TOTAL LIABILITIES & O.E.
 A report that shows a business’s profitability
  over a period of time (like a movie; not a
 Businesses are required by law to create an
  income statement at the end of its fiscal year.
Service Business
 Income statements show revenue and expenses
Merchandising Business
 Income statement shows revenue, expenses and
  cost of goods sold.
    There are 4 sections on the Income
   A business earns revenue from the sale of goods or services.
   Other revenue can be generated from return on investments.

    Cost of Goods Sold
    Cost of goods sold is calculated from beginning inventory
     (located on the balance sheet), inventory purchased
     (determined by looking at invoices throughout the year) and
     ending inventory (determined by physically counting the

  Operating Expenses
  The cost of operating the business during the period the sales
    took place

    Net Profit = Gross profit – Operating Expenses
   Cost of Goods Sold Section

Beginning Inventory
= Goods Available for Sale
- Ending Inventory
- = Cost of Goods Sold
                    Law Offices of Dewey, Cheetham, and Howe
                                Income Statement
                      For the month ended December 31, 2009

Fees                                  $120,000.00
Investment Income                       32,000.00
Total Revenue                                                 $152,000.00

Salaries                              $12 750.00
Rent                                    7 600.00
Insurance                               5 000.00
Advertising                             3 299.00
Office Expense                          2 344.00
Transportation Expense                  5 460.00
Promotional Expense                     3 800.00
Total Expenses                                                  $ 40 253.00
Net Income                                                    $ 111, 747.00
                          Markville Laundromat
                            Income Statement
                     For the year ended June 30, 2008

Sales                                                   $88,932.29

Operating Expenses
Wages                             $49,908.50
Insurance                           7,171.00
Rent                               22,000.00
Telephone                             574.25
Truck Repairs                       8,146.90
Miscellaneous                         225.00
Utilities Expense                     907.64
Total Expenses                                          $88,933.29
Net Loss                                                $   (1.00)
                        UseLess Propane Equipment
                             Income Statement
                     For the month ending March 31, 2009

Sales                                                  $ 99,000.00

Cost of Goods Sold
Beginning Inventory              $ 250,000.00
Add: Inv. Purchased              $ 34,500.00
                                 $ 284,500.00
Less: Ending Inv.                $ 198,500.00
Cost of Goods Sold                                     $ 86,000.00

Expenses                                               $ 12,245.00
Net Profit                                             $   755.00

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