Kế toán, kiểm toán - Chapter nine: Principles of accounting

CHAPTER NINEPrinciples of Accounting1. Describe the functions of accounting.2. Complete an accounting equation.3. Prepare a balance sheet.4. Demonstrate the process of recording business transactions in equation form.PRINCIPLES OF ACCOUNTINGObjectives:3Beginning an Accounting System(continued)Debts owed by a business are liabilities.Owner’s equity is an accounting term that indicates the financial interest of the owner in a business.4The Accounting Equation Assets = Liabilities + Owner’s Equity5The Balance SheetThe balance sheet is an itemized list of the assets, liabilities, and owner’s equity of a business on one particular date.6The Effect of Business Activities on the Balance SheetBusiness activities such as buying, selling, receiving money, and paying bills cause continual changes in the amounts of the assets, liabilities, and owner’s equity.7The Effect of Business Activities on the Balance Sheet(continued)These business activities are called transactions and need to be recorded as part of the business’ operations.8Accounting TerminologyAccountAccounting Accounting EquationAccounts PayableAssets Balance Sheet Business TransactionsCreditorsInvestInvestmentLiabilitiesOwner’s EquityProprietor9Chapter Summary Assets are the property owned by a business. Liabilities are debts owed by a business. Owner’s equity is the difference between the assets and the liabilities and represents the financial interest of the owner in a business.10Chapter Summary(continued)Liabilities represent the claims of creditors to the assets of a business, and owner’s equity is the claim of the owner to the assets.The fundamental accounting equation is: Assets=Liabilities + Owner’s Equity. 11Chapter Summary(continued)The balance sheet is a statement of assets, liabilities, and owner’s equity. It shows the financial position of a business on one particular date.Every business transaction affects at least two items.121. All the properties a business owns are called assets.2. Debts owed by a business are called liabilities. 3. Owner’s equity is the financial interest of creditors in a business.Topic QuizAnswer the following true/false questions:TRUEFALSETRUE13 Investigating on the InternetSources of information about balance sheets can be accessed at the websites of most major businesses.As a research assignment, access two or three business’ websites. Compare and contrast their use of balance sheets and how they are used to show the state of the business.143. Owner’s equity is the financial interest of creditors in a business.FALSEIt is the financial interest of the owner in a business.Topic Quiz (continued)(Return to Topic Quiz)15