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Chapter 1 Starting a Proprietorship: Changes that Affect the Accounting Equation

“ We are what we repeatedly do. Excellence, then, is not an act, but a habit. ” --Aristotle. Chapter 1 Starting a Proprietorship: Changes that Affect the Accounting Equation. Accounting: The Language of Business Lesson 1-1: The Accounting Equation. Standards – Accounting Cycle

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Chapter 1 Starting a Proprietorship: Changes that Affect the Accounting Equation

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  1. “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” --Aristotle LESSON 1-1

  2. Chapter 1Starting a Proprietorship: Changes that Affect the Accounting Equation Accounting: The Language of Business Lesson 1-1: The Accounting Equation Standards – Accounting Cycle AC1-1.1 Define accounting and explain the purpose of the accounting system. AC1-1.2 Explain the importance of following Generally Accepted Accounting Principles (GAAP) and interpret the standards correctly. AC1-1.3 Demonstrate a working knowledge of the fundamental accounting equation.

  3. Terms pages 6-7 I can define key accounting terms related to the accounting equation. • Accounting • Accounting system • Accounting records • Financial statements • Service Business • Proprietorship • Business Entity-- (GAAP concepts in purple) I can list reasons why accounting records are important. • I can explain Why the concept of Business Entity is important when starting a business. LESSON 1-1

  4. THE ACCOUNTING EQUATION Page 8 I can for the missing amount in an accounting equation. solve I can define key accounting terms related to the accounting equation. • Asset • Equities: • Equity of those to whom money is owed • Equity of the owner (aka “owner’s equity”) • Liability • Owner’s Equity Do Assessment: Work together 1-1, On Your Own 1-1 LESSON 1-1

  5. accounting accounting system accounting records financial statements service business proprietorship asset equities liability owner’s equity accounting equation ethics business ethics TERMS REVIEW page 9 I can define key accounting terms related to the accounting equation. DO: Application Prob. 1-1 LESSON 1-1

  6. How Business Activities Change the Accounting Equation Terms: Transaction Account Account Title Account Balance Capital Unit of Measurement US=Dollars, Japan=Yen China=Yuan, France=Euro LESSON 1-2 I can define key accounting terms related to the accounting equation. LESSON 1-1

  7. Transaction 1August 1. Received cash from owner as an investment, $5,000.00. RECEIVING CASH page 10 I can balance the accounting equation as transactions take place. LESSON 1-1

  8. Transaction 2August 3. Paid cash for supplies, $275.00. PAYING CASH page 11 I can balance the accounting equation as transactions take place. Transaction 3August 4. Paid cash for insurance, $1,200.00. LESSON 1-1

  9. Transaction 4 August 7. Bought supplies on account from Supply Depot, $500.00. TRANSACTIONS ON ACCOUNT page 12 I can balance the accounting equation as transactions take place. Transaction 5 August 11. Paid cash on account to Supply Depot, $300.00. LESSON 1-1

  10. Guided Practice • DO: • Work together 1-2: • OYO 1-2: Text p 13. Working papers p 8 • Application problem 1-2: I can explain Why the concept of Unit of Measurement is important to using the accounting equation. LESSON 1-1

  11. LESSON 1-3 How Transactions Change Owner’s Equity in an Accounting Equation • Terms: • Revenue • Sale on Account: aka: “charge sale” • Expense • Withdrawals • Realization of Revenue I can define key accounting terms related to the accounting equation.

  12. Transaction 6 August 12. Received cash from sales, $295.00. REVENUE TRANSACTIONS page 14 I can balance the accounting equation as transactions change Owner’s Equity. Transaction 7 August 12. Sold services on account to Oakdale School, $350.00. LESSON 1-1

  13. Transaction 8 August 12. Paid cash for rent, $300.00. EXPENSE TRANSACTIONS page 15 I can balance the accounting equation as transactions change Owner’s Equity. Transaction 9 August 12. Paid cash for telephone bill, $40.00. LESSON 1-1

  14. Transaction 10 August 12. Received cash on account from Oakdale School, $200.00. OTHER CASH TRANSACTIONS page 16 I can balance the accounting equation as transactions change Owner’s Equity. Transaction 11 August 12. Paid cash to owner for personal use, $125.00. LESSON 1-1

  15. Guided Practice and Chapter Assignment Standards – Accounting Cycle AC1-1.1 Define accounting and explain the purpose of the accounting system. AC1-1.2 Explain the importance of following Generally Accepted Accounting Principles (GAAP) and interpret the standards correctly. AC1-1.3 Demonstrate a working knowledge of the fundamental accounting equation. • Do: Work together 1-3 • OYO 1-3 • Application problem 1-3; • Study Guide Chapter 1 • Summative assignments for Chapter 1: • Mastery Problem 1-4 • Challenge Problem 1-5 I can show how business activities change the accounting equation using a dual entry accounting system. I can show how business activities change Owner's Equity in the accounting equation using a dual entry accounting system. LESSON 1-1

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