Professional Documents
Culture Documents
ACCOUNTING
SESSION 1
ACTIVELY participation
PRACTICING – In class
exercises & Homework
ZOOM ID: Student Name_Student ID
• Learning Guide
• Course outcomes
• Assessments
• Learning Materials
• Homework
This is one course where
learning by doing
& Learning before
doing
It’s NOT just attend the class
It’s more about
READING
& DOING THE
EXERCISES
Tutorial Test
• Work in group
• Due: END of Each session (18:45)
• Bonus +10 (highest), -10 (lowest)
• Submit on Canvas
• ONLY ONE MEMBER in group submit 01 PDF file. File name:
PA1_TT1_Group 1
• PEER EVALUATION will be done separately and submitted
by each student on elearning (-10 if don’t submit).
Online Quizzes
• Online via elearning
• Due:
• Pre-class Quiz: Tuesday Evening, from 9:30-10:30 pm
• Post-class Quiz: Friday Evening, from 9:30-10:30 pm
• Each student only has ONE attempt
• Backtracking is not allowed
• Answer can be reviewed when the text is over and after
you submit it.
• You should take the photo of the answer for studying
purposes.
1 Accounting in Action
Learning Objectives
1 Identify the activities and users associated with accounting.
records, and
communicates
1-16 LO 1
Three Activities
Illustration 1-1
The activities of the accounting process
1-17 LO 1
Who Uses Accounting Data
INTERNAL
USERS
Illustration 1-2
Questions that internal
users ask
1-18 LO 1
1-19 LO 1
Who Uses Accounting Data
EXTERNAL
USERS
Illustration 1-3
Questions that external
users ask
1-20 LO 1
DO IT! 1 Basic Concepts
4. The two most common types of external users are investors and
company officers.
Solution: 1. True
2. 3. 4. False
5. False False True
1-21 LO 1
LEARNING Explain the building blocks of accounting:
2
OBJECTIVE ethics, principles, and assumptions.
1-22 LO 2
Ethics in Financial Reporting
Illustration 1-4
Steps in analyzing ethics cases
and situations
1-23 LO 2
Ethics in Financial Reporting
Question
Ethics are the standards of conduct by which one's actions
are judged as:
a. right or wrong.
b. honest or dishonest.
c. fair or not fair.
d. all of these options.
1-24 LO 2
1-25 LO 2
Generally Accepted Accounting Principles
Financial Statements
Various users Balance Sheet
need financial Income Statement
Statement of Owner's Equity
information Statement of Cash Flows
Note Disclosure
1-26 LO 2
Generally Accepted Accounting Principles
Standard-setting bodies:
► Financial Accounting Standards
Board (FASB)
► Securities and Exchange
Commission (SEC)
► International Accounting
Standards Board (IASB)
1-27 LO 2
Measurement Principles
1-28 LO 2
Assumptions
1-29 LO 2
Forms of Business Ownership
1-30 LO 2
Assumptions
Question
Combining the activities of Kellogg and General Mills
would violate the
a. cost principle.
b. economic entity assumption.
c. monetary unit assumption.
d. ethics principle.
1-31 LO 2
Assumptions
Question
A business organized as a separate legal entity under state
law having ownership divided into shares of stock is a
a. proprietorship.
b. partnership.
c. corporation.
d. sole proprietorship.
1-32 LO 2
DO IT! 2 Building Blocks of Accounting
1-33 LO 2
DO IT! 2 Building Blocks of Accounting
1-34 LO 2
LEARNING State the accounting equation, and define
3
OBJECTIVE its components.
Owner's
Assets = Liabilities +
Equity
1-35 LO 3
Basic Accounting Equation
Owner's
Assets = Liabilities +
Equity
Assets
Resources a business owns.
Provide future services or benefits.
Cash, Supplies, Equipment, etc.
1-36 LO 3
Basic Accounting Equation
Owner's
Assets = Liabilities +
Equity
Liabilities
Claims against assets (debts and obligations).
Creditors (party to whom money is owed).
Accounts Payable, Notes Payable, Salaries and Wages
Payable, etc.
1-37 LO 3
Basic Accounting Equation
Owner's
Assets = Liabilities +
Equity
Owner's Equity
Ownership claim on total assets.
Referred to as residual equity.
Investment by owners and revenues (+)
Drawings and expenses (-).
1-38 LO 3
Owner’s Equity Illustration 1-6
Expanded accounting
equation
1-39 LO 3
Owner’s Equity Illustration 1-6
Expanded accounting
equation
1-40 LO 3
DO IT! 3 Owner's Equity Effects
1-41 LO 3
LEARNING Analyze the effects of business transactions
4
OBJECTIVE on the accounting equation.
1-42 LO 4
Transaction Analysis
Record/
Don’t Record
1-43 LO 4
Transaction Analysis
1. +15,000 +15,000
Illustration 1-8
Tabular summary of
Softbyte transactions
1-44 LO 4
TRANSACTION 2. PURCHASE OF EQUIPMENT FOR CASH Softbyte
Inc. purchases computer equipment for $7,000 cash.
Illustration 1-8
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-45 LO 4
TRANSACTION 3. PURCHASE OF SUPPLIES ON CREDIT Softbyte Inc.
purchases for $1,600 headsets and other accessories expected to last
several months. The supplier allows Softbyte to pay this bill in October.
Illustration 1-8 Assets = Liabilities + Owner's Equity
Trans- Accounts Accounts Owner's Owner's
Cash + + Supplies + Equipment = + + + Rev. - Exp.
action Receivable Payable Capital Drawings
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-46 LO 4
Equipment & Supplies
• Equipment is considered more permanent and
longer lasting than supplies, which are used up
quickly.
• Equipment includes machinery, furniture, fixtures,
vehicles, computers, electronic devices, and
office machines.
• Supplies often refers to nonmanufacturing items
and materials are those that will be used for the
production of items
TRANSACTION 4. SERVICES PERFORMED FOR CASH Softbyte Inc.
receives $1,200 cash from customers for app development services it has
performed. Illustration 1-8
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-48 LO 4
TRANSACTION 5. PURCHASE OF ADVERTISING ON CREDIT Softbyte
Inc. receives a bill for $250 from the Daily News for advertising on its
online website but postpones payment until a later date. Illustration 1-8
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-49 LO 4
TRANSACTION 6. SERVICES PERFORMED FOR CASH AND CREDIT.
Softbyte performs $3,500 of services. The company receives cash of
$1,500 from customers, and it bills the balance of $2,000 on account.
Illustration 1-8 Assets = Liabilities + Owner's Equity
Trans- Accounts Accounts Owner's Owner's
Cash + + Supplies + Equipment = + + + Rev. - Exp.
action Receivable Payable Capital Drawings
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-50 LO 4
TRANSACTION 7. PAYMENT OF EXPENSES Softbyte Inc. pays the
following expenses in cash for September: office rent $600, salaries and
wages of employees $900, and utilities $200. Illustration 1-8
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-51 LO 4
TRANSACTION 8. PAYMENT OF ACCOUNTS PAYABLE Softbyte Inc.
pays its $250 Daily News bill in cash. The company previously (in
Transaction 5) recorded the bill as an increase in Accounts Payable.
Illustration 1-8 Assets = Liabilities + Owner's Equity
Trans- Accounts Accounts Owner's Owner's
Cash + + Supplies + Equipment = + + + Rev. - Exp.
action Receivable Payable Capital Drawings
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-52 LO 4
TRANSACTION 9. RECEIPT OF CASH ON ACCOUNT Softbyte Inc.
receives $600 in cash from customers who had been billed for services
(in Transaction 6). Illustration 1-8
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $4,700 - $1,950 - $1,300
1-53 LO 4
TRANSACTION 10. WITHDRAWAL OF CASH BY OWNER Ray Neal
withdraws $1,300 in cash in cash from the business for his personal use.
Illustration 1-8
Assets = Liabilities + Owner's Equity
Trans- Accounts Accounts Owner's Owner's
Cash + + Supplies + Equipment = + + + Rev. - Exp.
action Receivable Payable Capital Drawings
1. +15,000 +15,000
2. -7,000 +7,000
3. +1,600 +1,600
4. +1,200 +1,200
5. +250 -250
6. +1,500 +2,000 +3,500
7. -1,700 -600
-900
-200
8. -250 -250
9. +600 -600
10. -1,300 -1,300
$8,050 + $1,400 + $1,600 + $7,000 = $1,600 + $15,000 + $1,300 - $4,700 - $1,950
1-55 LO 4
DO IT! 4 Tabular Analysis
1-56 LO 4
DO IT! 4 Tabular Analysis
2. +7,000 +7,000
3. +8,000 +8,000
4. -850 -850
5. -1,000 -1,000
$18,050 $18,050
1-57 LO 4
DO IT! 4 Tabular Analysis
2. +7,000 +7,000
3. +8,000 +8,000
4. -850 -850
5. -1,000 -1,000
$18,050 $18,050
1-58 LO 4
DO IT! 4 Tabular Analysis
2. +7,000 +7,000
3. +8,000 +8,000
4. -850 -850
5. -1,000 -1,000
$18,050 $18,050
1-59 LO 4
DO IT! 4 Tabular Analysis
2. +7,000 +7,000
3. +8,000 +8,000
4. -850 -850
5. -1,000 -1,000
$18,050 $18,050
1-60 LO 4
DO IT! 4 Tabular Analysis
2. +7,000 +7,000
3. +8,000 +8,000
4. -850 -850
5. -1,000 -1,000
$38,150 $38,150
1-61 LO 4
LEARNING Describe the four financial statements
5
OBJECTIVE and how they are prepared.
Owner’s Statement
Income Balance
Equity of Cash
Statement Sheet
Statement Flows
1-62 LO 5
Financial Statements
Question
Net income will result during a time period when:
a. assets exceed liabilities.
b. assets exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses.
1-63 LO 5
Net income is needed to determine the
Financial Statements ending balance in owner’s equity.
SOFTBYTE
Income Statement
For the Month Ended September 30, 2017
Illustration 1-9
Financial statements and
their interrelationships
SOFTBYTE
Owner’s Equity Statement
For the Month Ended September 30, 2017
1-64 LO 5
SOFTBYTE
Owner’s Equity Statement
For the Month Ended September 30, 2017
Illustration 1-9
The ending
balance in SOFTBYTE
owner’s equity Balance Sheet
is needed in September 30, 2017
preparing the
balance sheet.
Illustration 1-9
Financial statements
and their
interrelationships
1-65
SOFTBYTE
Financial Balance Sheet
September 30, 2017
Statements
Illustration 1-9
Financial statements
and their
interrelationships
1-66
Income Statement
1-67 LO 5
Owner’s Equity Statement
1-68 LO 5
Balance Sheet
1-69 LO 5
Statement of Cash Flows
1-70 LO 5
Financial Statements
Question
Which of the following financial statements is prepared as
of a specific date?
a. Balance sheet.
b. Income statement.
c. Owner's equity statement.
d. Statement of cash flows.
1-71 LO 5
DO IT! 5 Financial Statement Items
1-72 LO 5
DO IT! 5 Financial Statement Items
1-73 LO 5
DO IT! 5 Financial Statement Items
1-74 LO 5
DO IT! 5 Financial Statement Items
1-75 LO 5