8/12/2022

WHAT IS WHAT IS
ACCOUNTING? ACCOUNTING?
Accounting is the process of identifying, recording, summarizing, and reporting financial information.
ACCOUNTING - is a system used to measure business activities, process financial
ACCOUNTING PROCESS :
information into reports and make these reports available to decision-makers. The GENERAL PROCESS:
documents which communicate these reports about the performance of an organization in 1. Identify 1. Identifying Transactions
monetary terms, are called Financial Statements.
2. Journalizing
Financial Statements is composed of the following financial reports: 2. Record
1. Balance Sheet or Statement of Financial Position 3. Posting
2. Income Statement or Statement of Financial Performance “Accounting
3. Summarize 4. Trial Balance Preparation Cycle”
3. Cash Flow Statement 5. Adjusting Entries Recording
4. Statement of Changes in Equity 6. Adjusted Trial Balance Preparation
5. Notes to the Financial Statements 4. Report

7. Financial Statements Preparation

8. Closing the Books

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STUDENT’S LIFE BUSINESS STUDENT’S LIFE BUSINESS

1. Identify Activities 1. Identify Transactions 3. Summarize Activities 3. Summarize Transactions
Activities: Transactions:
1. Purchase of Drinks 1. Single-entry System
1. Quiz
2. Exam 2. Loan from RBK
3. Recitation 3. Sell Drinks
4. Homework 4. Give salary to employee
5. Inquire from Teacher 5. Go to bank

2. Record Activities 2. Record Transactions ( “Journalizing”)

P.E.
2 Types of Recording:

1. Single-entry System

BUSINESS MATH

2. Double-entry System (debit/credit)

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STUDENT’S LIFE BUSINESS STUDENT’S LIFE BUSINESS

4. Report Activities 4. Report Transactions 4. Report Activities 4. Report Transactions
REPORT CARD BALANCE SHEET REPORT CARD BALANCE SHEET

“Accounts”

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STUDENT’S LIFE BUSINESS

4. Report Activities
REPORT CARD
4. Report Transactions INCOME STATEMENT
WHY FINANCIAL STATEMENTS
ARE PREPARED?
Financial Statements prepared by companies are used by different categories of
individuals and corporates in a sense relevant to them. The most common users of the
financial statements are listed below:

1. Management of the Company 6. Employees

2. Investors 7. Investment Analysts
3. Customers 8. Lenders
4. Competitors 9. Rating Agency
“Accounts” 5. Government 10. Suppliers

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WHAT IS AN ACCOUNT? 1. Balance Sheet (Statement of Financial Position)

ACCOUNT – is simply an accounting “name” that stores and tracks financial transactions.
The list of accounts is listed in the “Chart of Accounts”.
Categories:
Accounts are categorized per financial report:
A. Assets
1. Balance Sheet 2. Income Statement
(Statement of Financial Position) (Statement of Financial Performance) - Current
Categories: Categories: - Non-current (Long-term)
A. Assets A. Revenue (Income) B. Liabilities
B. Liabilities B. Expenses - Current
C. Equity - Non-current (Long-term)

Bale Isre C. Equity

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1. Balance Sheet (Statement of Financial Position) 1. Balance Sheet (Statement of Financial Position)

“Accounts”

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1. Balance Sheet (Statement of Financial Position) 2. Income Statement (Statement of Financial Position)

REVENUE (INCOME) – EXPENSES = NET INCOME

=
ASSETS = LIABILITIES + OWNER’S EQUITY
“Basic Accounting Equation”

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BASIC ACCOUNTING To do’s August 14 session:

EQUATION 1. Check FB group and see links of videos for more detailed discussion.

BSU 2022-2023 Accounting Class

ASSETS = LIABILITIES + OWNER’S EQUITY

(Capital + Net Income - Drawings)

Quiz on August 20
(Income - Expenses)

ASSETS = LIABILITIES + CAPITAL + INCOME – EXPENSES - DRAWINGS

or
ASSETS + EXPENSES + DRAWINGS = LIABILITIES + CAPITAL + INCOME

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