1. Balance sheet
1.1. The Rules Of Accounting
1.1.1. GAPPS -Generally -Accepted -Accounting -Principles
1.1.2. IFRS -International -Financial -Reporting -Standards
1.2. Business Entity Concept
1.2.1. Allows for the owner to separate the accounting of the business from their personal affairs. Keep business assets and personal assets separate.
1.2.2. Cost principle
1.2.2.1. Accounting for purchases must be recorded at the price it costs.
1.2.2.1.1. When a business purchases an asset, it should be listed at the price paid not the market value
1.3. ASSETS=LIABILITIES+OWNER'S EQUITY
1.3.1. AL. OE -Left side. -Right side
1.3.2. ASSETS: -Things OWNED by a business
1.3.2.1. ie. Cash, equipment, delivery vehicles, building
1.3.3. LIABILITIES: Things the company owes(debts, loans)
1.3.3.1. ie. Mortgage, debt
1.3.4. OWNER'S EQUITY: -The amount difference between assets and liabilities -"THIS IS THE BUSINESSES NET WORTH"
1.3.4.1. Revenue, Investments=increase in owners equity
1.3.4.2. Expenses, Owners withdrawals from business=decrease in owner's equity
1.4. Balance sheet is a financial statement organized with the financial position of a company on a specific date
1.4.1. Financial positions include: -Assets -Liabilities -Owner's equity
1.4.1.1. Accounts Receivable
1.4.1.1.1. AR-Customers that owe money to the business -Written as: R. Kajendrarajah (Only use the first letter of the first name) -List these in alphabetical order
1.4.1.2. Accounts Payable
1.4.1.2.1. AP: When the business owes its suppliers
1.5. Classified Balance Sheet
1.5.1. Allows for quick analysis of balance sheet and can quickly see whether or not the business is suceeding.
1.5.1.1. There are 5 classifications
1.5.1.1.1. Current assets -organized based on liquidity
1.5.1.1.2. Long-term assets -Organized based on useful life
1.5.1.1.3. Current liabilities -Short-term due dates
1.5.1.1.4. Long-term Liabilities -Long term due dates
1.5.1.1.5. Equity
2. Equation Analysis Sheet
2.1. When business transactions occur, where do you record them?
2.2. Balance sheet?
2.3. NO! the balance sheet is not suitable to record these changes.
2.4. used for displaying individual transactions and the new financial position resulting from each transaction
3. Trial Balance
3.1. Listing of account balances in a ledger
3.2. Trial Balance =All of the account balances make up the trial balance
3.2.1. The trial balances let one know whether or not the ledgers are balanced.
3.2.1.1. Step 1: List all the accounts and their balances.
3.2.1.2. Step 2: Place the debit balances in a debit column
3.2.1.2.1. Include credit balances in a credit column.
3.2.1.3. Step 3: Add up the two columns
3.2.1.4. Step 4: See if the totals are the same. ONLY if the two column totals are the same can you consider your ledger work to be correct.
3.2.1.4.1. two column totals are the same can you
3.2.1.4.2. consider your ledger work to be correct.
3.2.1.5. Step 5: Write a header including (WHO, WHAT, & WHEN)
4. Types of businesses and ownership structure
4.1. Service
4.1.1. Provide intangible service to customers
4.1.1.1. ie. Teachers, Lawyers
4.2. Merchandising
4.2.1. Sells goods
4.2.1.1. ie. Walmart, Shoppers, Sephora
4.3. Manufacturing
4.3.1. Use material to manufacture goods
4.3.1.1. ie. factories
4.4. Non- profit organizations
4.4.1. Not focused on making profit and simply runs to meet the needs of people
4.4.1.1. ie. Charities, church
5. Introductory Accounting Concepts
5.1. Business structures
5.1.1. Limited Liability or Unlimited Liability
5.1.1.1. Partnership
5.1.1.1.1. A partnership owned business with 2+ owners.
5.1.1.2. Corporation
5.1.1.2.1. Highly regulated by government
5.1.1.2.2. Corporate Ownership
5.1.1.2.3. Corporate Management
5.1.1.3. Co-operative
5.1.1.3.1. Operated because of those who buy the products or use the services that the business offers.
5.1.1.4. Franchise
5.1.1.4.1. A business allowing a buyer/owner to use the name, design, and ways of a business
5.1.1.4.2. *FRANCHISER-Seller
5.1.1.4.3. *FRANCHISEE-Buyer
5.1.2. Unlimited = not limited or restricted in terms of number, quantity, or extent
5.1.3. Liability = the state of being responsible for something, especially by law.
6. Account Balances
6.1. Dollar value of an account and shows whether it is a debit or a credit
6.1.1. Can either be debit or credit
6.1.1.1. Exceptional Amount balances
6.1.1.2. An account that would normally have a debit balance ends up with a credit or vice versa.
6.1.1.2.1. BANK: Money received or paid out is called Bank
6.1.1.2.2. ON ACCOUN:used in 4 ways
6.1.1.3. ie. Spending more than the amount on the debit card. This will result in a credit balance.
6.2. STEP #1
6.2.1. Add the two sides of the account separately
6.3. STEP #2
6.3.1. Subtract the smaller total from the larger total. Write the result beside or beneath the larger of the two pin totals.