Dictionary on Financial Accounting by ajy78640

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									Chapter 1


Financial Accounting
   Fundamentals



                Created by D. Gilroy
            Heart Lake Secondary School   1
    What is Accounting?
   According to Merriam-Webster’s
   dictionary accounting is …
1 : the system of recording and
summarizing business and financial
transactions and analyzing, verifying,
and reporting the results; also : the
principles and procedures of accounting

                                     2
 What is Accounting?

Does accounting only apply in the
business world?
What day-to-day activities are
related to accounting?
Can you think of any games that
would lend themselves to the world
of accounting?

                                     3
     Five Main Activities?

1. Gathering financial information.
2. Preparing and collecting permanent
   records.
3. Rearranging, summarizing, and
   classifying financial information.




                                        4
       Five Main Activities?
4. Preparing information reports and
   summaries to:
  a.   Help management reach decisions;
  b.   Serve the needs of groups outside the
       business; and
  c.   Measure the profitability of the business.
5. To establish controls to promote
   accuracy and honesty among
   employees.
                                               5
Why Study Accounting?

Accounting on the job.
   Great background knowledge for many
    careers
Accounting in daily life.
   Balancing your bank book, filing your tax
    returns, preparing personal budgets, etc.
Owning your own business.
Accounting as a profession.
   CA, CMA, CGA
                                                6
  Types of Business

1. Service Business
2. Merchandising Business
3. Manufacturing or     The focus of
                        most of this
   Producing Business     course.
4. Non-Profit Organizations



                                7
  Forms of Business
     Ownership

1. Sole proprietorship.
     One owner.
2. Partnership.                The focus of
     More than one owner.     most of this
                                 course.
3. Corporations.
     Owned by shareholders.

                                       8
     The Accounting Cycle
1. Transactions occur   5. Work sheet
2. Transactions            prepared
   recorded in journals 6. Formal financial
3. Journal entries         statements
   posted to ledger        prepared
   accounts
                        7. Ledger account
4. Trial balance and
   interim financial       adjusted and closed
   statements           8. Post-closing trial
   prepared                balance prepared
                                          9
The Accounting Cycle




                       10
 Roles in Accounting


The Accounting Clerk
        vs.
  The Accountant

                       11
   Roles in Accounting
The Accounting Clerk
 Records   transactions with necessary
  supporting documents
 Records accounting entries and balances
  ledgers
 Perform payroll calculations, prepares
  payroll cheques and related records
 Carry out all banking transactions.



                                      12
   Roles in Accounting
The Accountant
 Develop   systems to ensure that correct
  data is entered into accounting systems
 Ensure GAAP are met
 Interpret data produced by accounting
  systems
 Prepare reports based on output from
  systems
 Participate in decision making
 Supervise the work of accounting staff
                                         13
Accounting Designations
 There are three recognized accounting
 designations in Canada
1.   CA – Chartered Accountant
        www.cica.ca
2.   CMA – Certified Management Accountant
        www.cma-canada.org
3.   CGA – Certified General Accountant
        www.cga-canada.org




                                          14
     Class / Homework

The following slides reflect Review
 Exercises …
 Page 11 Exercise 1
 Page 12 Exercise 2 & 3




                                      15
1.     Identify which accounting term best
       matches the following statements.
- Accounting
            cycle
                    a)   The professional accounting organization that
- Auditing               is well-known for distance education.
- CGA
    Association     b)   The professional accounting organization that
- Corporation            emphasizes management accounting.
- Financial
     statements     c)   The professional accounting organization that
- CICA
- Manufacturing
                         publishes a handbook of Canadian accounting
       business          rules and standards.
- Merchandising
       business     d)   Formal accounting data, prepared at least
- Non-profit             once a year.
       business
- Public            e)   An organization whose main aim is to provide
    accountants
- Service
                         a social benefit, usually at little or not cost to
       business          the user.
- Society of
   Management       f)   The recurring set of accounting procedures
   Accountants           carried out during each fiscal period.
- Sole proprietor                                                    16
1.     Identify which accounting term best
       matches the following statements.
- Accounting        g)   A business that buys goods and resells them
            cycle
- Auditing               at a higher price for profit.
- CGA               h)   The owner of a business who is in business
    Association
- Corporation            alone.
- Financial         i)   A special form of business that is owned by a
     statements
- CICA                   number of persons called shareholders.
- Manufacturing     j)   Professional persons who offer their services
       business
- Merchandising          as accountants to the general public.
       business     k)   The examining and testing of the books,
- Non-profit
       business          records, and procedures of a business.
- Public            l)   A business that sells a service to the public
    accountants
- Service
                         and does not make or sell a product.
       business     m)   A business that buys raw materials, converts
- Society of
   Management
                         them into a new product, and sells that product
   Accountants           to earn a profit.
- Sole proprietor                                                 17
2.   For each of following statements, fill in
     the blank with accountant, accounting or
     accounting clerk.
a) The work of an __________ is clerical in nature.
b) The work of an __________ is concerned with
   routine matters.
c) An __________ ensures that the supporting
   documents are present and correct for every
   transaction.
d) An __________ ensures that generally accepted
   accounting principles are followed.
e) An __________ records the accounting entries in
   the books of accounts.
f) An __________ makes the payroll calculations.
                                                18
2.   For each of following statements, fill in
     the blank with accountant, accounting or
     accounting clerk.
g) An __________ prepares reports based on the data
   produced by the accounting system.
h) An __________ carries out all the necessary
   banking transactions.
i) An __________ participates in management
   meetings.
j) A professional __________ has a high-level
   position.
k) For centuries, all __________ was handwritten.
l) Some small businesses still do their __________
   by hand.
                                              19
3.    Multiple choice:
1.    Which of the following statements does not fit the job
      title of an accounting clerk?
     a.   Verifies source documents.
     b.   Ensures that the ledger balances.
     c.   Works neatly to guard against errors.
     d.   Studies tax bulletins to keep up to date.
2.    Which of the following statements does not fit the job
      title of an accounting clerk?
     a. Works out accounting entries.
     b. Together with the owner, compares this year’s and last
        year’s income statements.
     c. Records accounting entries in the books.
     d. Inquires about a suspected error made by the bank.

                                                          20
3.    Multiple choice:
3.    Which of the following statements does not fit the job
      title of an accountant?
     a.   Is a professional person.
     b.   Has a broad knowledge of accounting.
     c.   Ensures the accuracy of the payroll deductions.
     d.   Discusses the business’s “cash flow” with the owners.
4.    Which of the following statements does not fit the job
      title of an accountant?
     a. Works out accounting entries.
     b. Together with the owner, compares this year’s and last
        year’s income statements.
     c. Records accounting entries in the books.
     d. Inquires about a suspected error made by the bank.

                                                            21
3.    Multiple choice:
5.    Which of the following does not fit the facts about
      computers?
     a.   Ideal machine for use in an accounting environment.
     b.   Handles large quantities of data.
     c.   Produce better profit figures.
     d.   Provide information for management very quickly.

4.    Homework Assignment:
 Assignment: Log on to the various accounting
 association websites (www.cica.ca www.cma-canada.org
 www.cga-canada.org ) and investigate the “focus” of the
 various designations, the educational / work experience
 requirements and how to become an accountant.
                                                            22

								
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