Fundamentals of Accounting ACTG 1 - LESSON 2

LESSON 2

ACCOUNTING IN
BUSINESS
A C TG 1 – F U N D A M E N TA L S O F A C C O U N T I N G

ACTG1-LESSON 2
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INTRODUCTION

Market Value: 26.304 Billion USD Market Value: 17.688 Billion USD Market Value: 9.747 Billion USD
Annual Revenue: 377.15 Billion USD Annual Revenue: N/A Annual Revenue: N/A
No. of Employees: 157,288 No. of Employees: 64,373 No. of Employees: 38,510
World Rank: 699 World Rank: 1,015 World Rank: 1,713

Source: VALUE TODAY (https://www.value.today)

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Fundamentals of Accounting ACTG 1 - LESSON 2

MANAGING A BUSINESS
MANAGEMENT may be defined as getting things done by using resources and
directing people as efficiently as possible to be able to accomplish the goals of the
business.

THREE OBJECTIVES:

Resources are used productively.

Customers are satisfied.

Generation of adequate profit.

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SUCCESS EFFECTIVE EFFICIENT

GOAL IS ATTAINED WITH THE LEAST RESOURCES USED

is determining the goals of the business and lining up activities to
PLANNING
accomplish these goals.

requires a formal structure of authority and the direction and flow of

ORGANIZING such authority through which work subdivisions are defined, arranged
and coordinated
deals with leadership, communication, motivation, and supervision so
DIRECTING that the employees perform their activities in the most efficient manner
possible, in order to achieve the desired goals.
undertaken to ensure that the events do not deviate from the pre-
CONTROLLING arranged plans.

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Fundamentals of Accounting ACTG 1 - LESSON 2

I am the PRODUCTION I am the SALES

MANAGER. MANAGER.

I am the FINANCE I am the HUMAN

MANAGER. RESOURCE MANAGER.

How is a business’ success measured? Quality products? Satisfied employees? Popularity? Scholarship grants?

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ACCOUNTING AS A BUSINESS LANGUAGE

BUSINESS – accumulates financial data through its various activities

ACCOUNTING – processes the financial data and prepares financial reports

USERS – read the financial reports and make decisions

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Fundamentals of Accounting ACTG 1 - LESSON 2

ACCOUNTING DEFINED

ACCOUNTING is a service activity

whose function is to provide quantitative information,

primarily financial in nature

about economic entities

that is intended to be useful in making economic

decisions
—Accounting Standards Council

IDENTIFICATION CLASSIFICATION RECORDING SUMMARIZING INTERPRETATION

ACTG25-Chapters
ACTG1-LESSON 2 13 and 14
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STAKEHOLDERS - USERS OF FINANCIAL INFORMATION

OWNER Has the business accumulated sufficient financial wealth to remain stable?

MANAGER Is the business operating profitably?

CREDITOR Will the business be able to pay its debt when it falls due?

SUPPLIER Will I grant the business credit terms?

EMPLOYEE Will the business be able to give my year-end bonus?

GOVERNMENT Is the business paying the right taxes?

CUSTOMER Are the products priced right?

PUBLIC Will the business extend assistance?

ACTG25-Chapters
ACTG1-LESSON 2 13 and 14
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Fundamentals of Accounting ACTG 1 - LESSON 2

FINANCIAL REPORTS

Income Statement of Statement of Statement of

Statement Owner’s Equity Cash Flows Financial Position
• Shows how much • Shows how • Shows how cash • Shows the
is earned. capital changes. is used and business’ assets,
generated. liabilities, and
equity.

ACTG25-Chapters
ACTG1-LESSON 2 13 and 14
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A C TG 1 – F U N D A M E N TA L S O F A C C O U N T I N G

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Fundamentals of Accounting ACTG 1 - LESSON 2

NEXT SESSION
A C TG 1 – F U N D A M E N TA L S O F A C C O U N T I N G

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LESSON 3:
DISCUSSION ANALYZING
ON THIS TRANSACTIONS TO
START A BUSINESS

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Fundamentals of Accounting ACTG 1 - LESSON 2

ANNOUNCEMENTS
A C TG 1 – F U N D A M E N TA L S O F A C C O U N T I N G

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QUIZ APRIL 24 –
Lessons 1 and 2

FINAL EXAM APRIL 30 –

Lessons 1, 2, 3, and “businesses”

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