Accounting – Recording, classifying, summarizing and interpreting of financial events and transactions in an organization to provide interested parties needed financial information
• Outside parties - like employees, owners, creditors, unions, investors and the government make use of a firm’s accounting information.
17-6
What is Accounting?
The ACCOUNTING SYSTEM
LG1
Accounting – Recording, classifying, summarizing and interpreting of financial events and transactions in an organization Which part of the system do you think is the most difficult?
What is Accounting? LG1
ACCOUNTANTS’ ’ RESPONSIBILITIES
17-8
Managerial Accounting LG2
MANAGERIAL & FINANCIAL ACCOUNTING
• Managerial Accounting -- Provides information and analysis to managers inside the organization to assist them in decision making. (CMA)
• Financial Accounting -- Financial information and analyses are generated for people primarily outside the organization.(CPA)
Financial Accounting LG2
HOW to READ an ANNUAL REPORT
Key things to watch for and read: - Management’s discussion and analysis of operations - Balance sheet - Income statement - Statement of cash flows - Auditor’s opinion
• Bookkeeping -- The recording of business transactions. Bookkeepers divide a firm’s transactions into meaningful categories and post them into a record book or computer program called a journal.
• Double-Entry Bookkeeping -- Bookkeepers record all transactions in two places so they can check one list of transactions against the other for accuracy.
17-20
Accounting Technology
COMPUTERIZED ACCOUNTING
LG3
Intuit’s QuickBooks and Sage’s Peachtree address the specific needs of small businesses.
17-22
Understanding Key Financial Statements
FINANCIAL STATEMENTS
LG3
Financial Statement -A summary of financial transactions that have occurred over a particular period.
Key financial statements of business are: - Balance sheet - Income statement - Statement of cash flows Lets look at each of them 17-24
The Fundamental Accounting Equation LG4
The FUNDAMENTAL ACCOUNTING EQUATION
The basis for the balance sheet. Assets = Liabilities + Owners Equity
17-26
The Balance Sheet LG3
The BALANCE SHEET
The Income Statement LG4
The INCOME STATEMENT
The Income Statement
AMORTIZATION
Can only write off interest portion as an expense
LG4
30 year loan chart – Notice the payment and the interest paid Expense more interest at start of the loan Less interest to write off toward the end of the loan
The Income Statement
The INCOME STATEMENT
LG4
Looking at the income statement: Which parts are often referred to as "paper profit"?
Deceptive nature of (1) “depreciation”, and (2) “interest-only” accounting on debt repayment
The Statement of Cash Flows
The STATEMENT of CASH FLOWS
LG4
A financial report showing a firm’s income (cash) when it is received and expenses when they are paid. 1. Cash flows from normal operations (operating activities) 2. Cash flows related to the investment in or sale of assets (investment activities) 3. Cash flows related to financing the firm (financing activities)
The Need for Cash Flow Analysis LG4
UNDERSTANDING CASH FLOW PATTERNS
Pattern 1. This firm has positive cash flows from operations, negative investment cash flows, and positive cash flows from financing. It is using its cash flows from operations and new financing to expand the firm’s operations.
Pattern 2. This firm is using cash flows from operations to expand the business, pay down debt, and/or pay its owners.
Pattern 3. This firm is encountering negative cash flows from operations, which are being covered by selling assets and by borrowing or acquiring more equity financing.
Pattern 4. This firm has negative cash flows from operations and is growing the company’s fixed assets through increased financing. This firm is a startup business that has yet to break even, is investing in assets to produce future cash flows, and is having to raise capital to make that happen.
The Statement of Cash Flows
ACCOUNTING CAREERS
Pair up (x2) - Individual papers:
LG4
Go to: onetonline.org 1. In Occupation Quick Search (top right of page) enter: 2. Click “Show all occupations” 3. As a pair, select any two occupations of interest 4. Write a brief summary in a matrix (like below): Job 1: 5 Key Tasks Education required Wages -> Median wage Wages -> Projected growth Wages -> Projected job openings Your overall interest in this type of job
Job 2:
Career Project Due soon …
After you have prioritized your occupational list, you will conduct detailed research for your priority occupation. 1. Go to the onetonline.org web site • Complete all sections. Please use complete sentences 2. Click on the link to the Occupational Outlook Handbook The general link is: http://www.bls.gov/ooh/ • List an additional 5 tips from this source • Helpful to click the “Similar Occupations” tab
Career Project - LinkedIn The last section is LinkedIn. Although not required, I would highly recommend that you create a FREE account. 1. Develop your profile 2. Make connections 3. Join appropriate LinkedIn groups 4. Search using your preferred occupation • Find and connect with people • Check out jobs
