Accounting Chapter 1

What is accounting?

• The process of recording, summarizing, analyzing, and reporting financial transactions of a business.

• The process of managing human resources in a business.

• The process of manufacturing goods in a business.

• The process of marketing products and services in a business.

What are the main objectives of accounting?

• To provide financial information, facilitate decision-making, ensure compliance, and enable effective communication.

• To analyze market trends, forecast future sales, and develop marketing strategies.

• To manage payroll, track inventory, and process invoices.

• To maximize profits, minimize expenses, and reduce taxes.

What is the accounting equation?

• Assets = Liabilities - Equity

• Assets + Liabilities = Equity

• Assets = Liabilities + Equity

• Assets - Liabilities = Equity

Accounting

• keeping records of all financial transactions related to an individual

• what you owe

• financial information

Accounting system

• compile financial data, summarize the results in accounting records and reports

• information that must be documented

• language of business

financial statements

• financial reports that summarize the financial conditions and operations of a business

• is a planned process to compile financial data

• what you earn in total

Net Worth Statement

• A financial report that shows what an individual owns and owes

• language of business

• amounts owed to friends and family

Personal Net Worth

• The difference between personal assets and personal liabilities

• financial reports

• a formal report that shows what an individual owns and owes

GAAP

• Generally Accepted Accounting Principles

• Generally

  Accepted

  Accounting

  procedures

• I don't know

Equities

• financial rights to the assets of a business

• the relationship between assets, liabilities, and owner's equity

• the name given to a account