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Starting a Proprietorship. Words to Know. Accounting Accounting System Accounting Records. Accounting is the language of Business By understanding accounting information, businesses and their employers can eliminate poor decisions and create opportunities for them to grow their business.

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Presentation Transcript
slide3

Words to Know

Accounting

Accounting System

Accounting Records

slide4

Accounting is the language of Business

  • By understanding accounting information, businesses and their employers can eliminate poor decisions and create opportunities for them to grow their business.
  • Business owners must also find ways to keep spending within their available income. Some factors include:

- Taxes

- Revenues

slide5

The Accounting Equation

  • Service Business
  • Proprietorship
  • Asset
  • Equities
  • Liability
  • Owner’s Equity
  • Accounting Equation
slide6

Encore Music

Owned by Barbara Trevino, she decided to start her own business of providing musical instrument lessons.

For the accounting system and records in a proprietorship to be correct, Ms. Trevino must record her data in specific way in order to keep the business separate from her personal life.

Encore Music’s financial records should not include any personal items like Ms. Trevino home or personal car because they have no effect on the business

slide7

The Accounting Equation

Assets

=

Liabilities + Owner’s Equity

Equities

slide8

Assets = Liabilities + Owner’s Equity

This equation must always be balanced in order to be sure of correctness of the recording of the financial records.

Therefore the amount on the left MUST equal the amount on the right!