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Accounting IAccounting IChapter 1 – Starting a
Proprietorship
TTERMS REVIEWERMS REVIEWaccounting
accounting system
accounting records
service business
proprietorship
Lesson 1-1, page 8Lesson 1-1, page 8
asset
equities
liability
owner’s equity
accounting equation
TTERMS REVIEWERMS REVIEW
AccountingAccounting
Planning, recording, analyzing, and interpreting financial information.
Lesson 1-1, page 4Lesson 1-1, page 4
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Accounting SystemAccounting System
A planned process for providing financial information that will be useful to management.
Lesson 1-1, page 4Lesson 1-1, page 4
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Accounting RecordsAccounting Records
Organized summaries of a business’s financial activities.
Lesson 1-1, page 4Lesson 1-1, page 4
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Service BusinessService Business
A business that performs an activity for a fee.
Lesson 1-1, page 6Lesson 1-1, page 6
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ProprietorshipProprietorship
A business owned by one person.
Lesson 1-1, page 6Lesson 1-1, page 6
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Business Entity – Accounting ConceptBusiness Entity – Accounting Concept
Keeping the financial information of the business separate from the personal finances of the owner.
Lesson 1-1, page 6Lesson 1-1, page 6
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AssetAsset
Anything of value that is owned.
Lesson 1-1, page 7Lesson 1-1, page 7
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EquitiesEquities
Financial rights to the assets of a business.
Lesson 1-1, page 7Lesson 1-1, page 7
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LiabilityLiability
An amount owed by a business.
Lesson 1-1, page 7Lesson 1-1, page 7
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Owner’s EquityOwner’s Equity
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
Lesson 1-1, page 7Lesson 1-1, page 7
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Accounting EquationAccounting Equation
An equation showing the relationship among assets, liabilities, and owner’s equity.
Lesson 1-1, page 7Lesson 1-1, page 7
THE ACCOUNTING EQUATIONTHE ACCOUNTING EQUATION
Lesson 1-1, page 7Lesson 1-1, page 7
Work Together &Work Together &On Your Own – Page 8On Your Own – Page 8
TTERMS REVIEWERMS REVIEWtransaction
account
account title
account balance
capital
Lesson 1-2, page 12Lesson 1-2, page 12
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TransactionTransaction
A business activity that changes assets, liabilities, or owner’s equity.
Lesson 1-2, page 9Lesson 1-2, page 9
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Unit of Measurement - ConceptUnit of Measurement - Concept
Business transactions are stated in numbers that have common values (dollars)
Lesson 1-2, page 9Lesson 1-2, page 9
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AccountAccount
A record summarizing all the information pertaining to a single item in the accounting equation.
Lesson 1-2, page 9Lesson 1-2, page 9
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Account TitleAccount Title
The name given to an account.
Lesson 1-2, page 9Lesson 1-2, page 9
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Account BalanceAccount Balance
The amount in an account.
Lesson 1-2, page 9Lesson 1-2, page 9
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CapitalCapital
The account used to summarize the owner’s equity in a business.
Lesson 1-2, page 9Lesson 1-2, page 9
RECEIVING CASHRECEIVING CASH
Lesson 1-2, page 9Lesson 1-2, page 9
Transaction 1 August 1. Received cash from owner an an investment, $10,000.00.
PAYING CASHPAYING CASH
Lesson 1-2, page 10Lesson 1-2, page 10
Transaction 2 August 3. Paid cash for supplies, $1,577.00.
Transaction 3 August 4. Paid cash for insurance, $1,200.00.
TRANSACTIONS ON ACCOUNTTRANSACTIONS ON ACCOUNT
Lesson 1-2, page 11Lesson 1-2, page 11
Transaction 4 August 7. Bought supplies on account from Ling Music Supplies, $2,720.00.
Transaction 5 August 11. Paid cash on account to Ling Music Supplies, $1,360.00.
Work Together &Work Together &On Your Own – Page 12On Your Own – Page 12
TTERMS REVIEWERMS REVIEWbalance sheet
Lesson 1-3, page 15Lesson 1-3, page 15
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Balance SheetBalance Sheet
A financial statement that reports assets, liabilities, and owner’s equity.
Lesson 1-3, page 13Lesson 1-3, page 13
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Going Concern - conceptGoing Concern - concept
Financial statements are prepared with the expectation that the business will remain in business indefinitely.
Lesson 1-3, page 13Lesson 1-3, page 13
5. Add amounts and compare the totals.
PREPARING A BALANCE SHEETPREPARING A BALANCE SHEET
Lesson 1-3, page 14Lesson 1-3, page 14
5
1
3
4
2
76
1. Write the heading.
2. Prepare the assets section.
3. Prepare the liabilities section.
4. Prepare the owner’s equity section.
6. Rule single lines.
7. Write the totals.
8. Rule double lines.
8
Work Together &Work Together &On Your Own – Page 15On Your Own – Page 15
