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Chapter 1

Chapter 1. The Basics of Accounting. What is Accounting?. Accounting Plan, record, analyze, interpret Accounting System Process of providing the information Accounting Records Organized summaries of a business’s financial activities Financial Statements

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Chapter 1

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  1. Chapter 1 The Basics of Accounting

  2. What is Accounting? • Accounting • Plan, record, analyze, interpret • Accounting System • Process of providing the information • Accounting Records • Organized summaries of a business’s financial activities • Financial Statements • Summarize conditions and operations • Accounting helps to better understand a business.

  3. Who uses this? EVERYONE!! Businesses, employees, cashing checks and paying bills Type of business: Service business- Perform activity for a fee Business Entity Concept- Business’s financial information is recorded and reported separately from the owner’s personal financial information.

  4. The Accounting Equation Assets = Liabilities + Owner’s Equity Shows the relationship between assets and liabilities and owner’s equity. • Assets • Something you own • Liabilities • Something you owe • Equity • Money that you owe to someone • Owner’s Equity- amount remaining after liabilities is subtracted by assets

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