Professional Documents
Culture Documents
Introduction to
Accounting and Business
Contabilidad Administrativa
Index
1. Describe the nature of a business, the role of accounting,
and ethics in business
2. Summarize the development of accounting principles
and relate them to practice
3. State the accounting equation and define each element
of the equation
4. Describe and illustrate how business transactions can be
recorded in terms of the resulting change in the elements
of the accounting equation
5. Describe the financial statements of a corporation and
explain how they interrelate
1-2
1
1-3
1
Types of Businesses
Service Business Service
Delta Air Lines Transportation services
1-4
1
1-5
1
Managerial Accounting
The area of accounting that provides
internal users with information is called
managerial accounting.
1-6
1
Financial Accounting
The area of accounting that provides
external users with information is
called financial accounting.
The objective of financial accounting
is to provide relevant and timely
information for the decision-making
needs of users outside of the
business.
1-7
1
Role of Ethics in
Accounting and Business
Ethics are moral principles
that guide the conduct of
individuals.
1-8
2
Summarize the
development of accounting
principles and relate them
to practice.
1-9
2
1-10
2
Cost Concept
1-13
2
Objectivity Concept
1-14
2
1-15
3
1-16
3
1-17
4
1-18
18
4
Business Transaction
A business transaction is an
economic event or condition that
directly changes an entity’s
financial condition or its results
of operations.
1-19
4
Transaction A
1-20
4
Transaction A (continued)
Stockholders’
Assets = Equity
CASH CAPITAL STOCK
a. 25,000 = 25,000
1-21
4
Transaction B
On November 5, 2009, NetSolutions
paid $20,000 for the purchase of land
as a future building site.
1-22
4
Transaction B (continued)
Stockholders’
Assets = Equity
CASH + LAND CAPITAL STOCK
Bal. 25,000 = 25,000
b. –20,000 +20,000
Bal. 5,000 20,000 25,000
1-23
4
Transaction C
On November 10, 2009,
NetSolutions purchased supplies
for $1,350 and agreed to pay the
supplier in the near future.
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4
Transaction C (continued)
Stockholders’
Assets = Liabilities + Equity
ACCOUNTS CAPITAL
CASH + SUPPLIES + LAND PAYABLE + STOCK
=
Bal. 5,000 20,000 25,000
c. +1,350 +1,350
Bal. 5,000 1,350 20,000 1,350 25,000
1-25
4
Transaction D
On November 18, 2009, NetSolutions
received cash of $7,500 for providing
services to customers. A business
earns money by selling goods or
services to its customers. This amount
is called Revenue.
1-26
4
Transaction D (continued)
Assets
CASH + SUPPLIES + LAND
Bal. 5,000 1,350 20,000
d. +7,500
Bal. 12,500 1.350 20,000
1-27
4
Transaction D (continued)
1-28
4
Transaction E
On November 30, 2009, NetSolutions
paid the following expenses during
the month: wages, $2,125; rent, $800;
utilities, $450; and miscellaneous,
$275.
1-29
4
Transaction E (continued)
Assets
CASH + SUPPLIES + LAND
Bal. 12,500 1,350 20,000
e. –3,650
Bal. 8,850 1.350 20,000
1-30
4
Transaction E (continued)
1-31
4
Transaction F
On November 30, 2009,
NetSolutions paid creditors on
account, $950.
1-32
4
Transaction F (continued)
Assets
CASH + SUPPLIES + LAND
Bal. 8,850 1,350 20,000
f. –950
Bal. 7,900 1.350 20,000
1-33
4
Transaction F (continued)
1-34
4
Transaction G
On November 30, 2009, Chris Clark
determined that the cost of supplies
on hand at the end of the period was
$550.
1-35
4
Transaction G (continued)
Assets
CASH + SUPPLIES + LAND
Bal. 7,900 1,350 20,000
g. –800
Bal. 7,900 550 20,000
1-36
4
Transaction G (continued)
1-37
4
Transaction H
On November 30, 2009, NetSolutions
pays $2,000 to stockholders (Chris
Clark) as dividends.
1-38
4
Transaction H (continued)
Assets
CASH + SUPPLIES + LAND
Bal. 7,900 550 20,000
h. –2,000
Bal. 5,900 550 20,000
1-39
4
Transaction H (continued)
1-40
5
1-41
5
Income Statement
The income statement reports
the revenues and expenses for
a period of time, based on the
matching concept.
1-42
5
Matching Concept
The matching concept is
applied by matching the
expenses with the revenue
generated during a period
by those expenses.
1-43
5
1-44
5
Exhibit 6 Financial Statements for NetSolutions
1-46
5
Exhibit 6 Financial Statements for NetSolutions (continued)
1-47
5
Exhibit 6 Financial Statements for NetSolutions (continued)
The End