Accounting and Business Management

Company Scandals

Bernie Madoff, Waste Managment, Enron, AIG, Worldcom

Certified public accountant

CPA- passes a test to show they are qualified to operate in a state

Source documents

the first step in accounting- analyze invoice, receipts, memorandum, check stubs to determine accounts and whether its a debit or a credit

Normal balance

the increase side on an account

Management

the process of deciding how best to use a business's resources to produce goods or provide services

Posting

the process of transferring information from the transaction journal to the individual general ledger accounts

Accounting period

the time frame accounting covers: month, quarter, year

personality

the unique qualities that make you-you

Accounting cycle

the various steps in accounting

lifestyle

the way you use your time, energy, and resources

Assets

things that are owned

Equity

total assets-Liabilities

Financial reports

various financial forms to how a business is doing

Investments

assets that in then future will be worth more than what you started with

Permanent accounts

assets, liabilities, and equity

Breakeven

revenue-expenses=0

Profit

revenue-expenses>0

Credit

right

Decrease side

running total goes down

Increase side

running total goes up

Types of business

service, merchandising, and manufacturing

Forms of business

sole proprietorship, partnership, and corporation

Creditor

someone you owe money to

Temporary accounts

start each accounting period with zero/ revenues, expenses, and withdrawals

Entrepreneur

takes risks in order to make a profit for themselves

On account

*If a business buy something on account then it is a liability to the business *If the business sells something on account, it will be an accounts receivable

Skills

-Conceptual (new ideas, new ways of solving) -Human relations -Technical

Roles

-Interpersonal -Information-based -Decision-making

Tasks

-Planing -Organizing -Staffing -Leading -Controlling

Industrial Revolution

1860s Start of mass production

Interstate Commerce Act

1887 law passed to regulate railroad and other interstate businesses

Ledger accounting form

the accounting stationery used to record financial information about specific accounts

Slide error

Accidental misplacement of a decimal point in amount

General ledger

All accounts used to record the company's transactions.

Owner's equity

Assets - Liabilities

Accounting equation

Assets= Liabilities+Equity+Revenue-Expenses

Accounts

Different classification of business transactions

Professional managers

Entrepreneur, intraprenuer

Fredrick Taylor

Father of scientific management

GAAP

Generally Accepted Accounting Principles

shareholders

Investors who purchase shares of stock in a corporation.

Calendar year

Jan 1 to Dec 31

Captains of Industry

John Rockefeller, Cornelius Vanderbilt, Andrew Carnegie, Henry Ford, J.P. Morgan, Thomas Edison

Net loss

the amount by which total expenses exceed total revenue

Hawthorne study

Productivity study

Journal

Records all transactions of a business

Loss

Revenue-expenses<0

Management process

Tasks, roles, and skills

Net income

the amount of revenue that remains after expenses for the period subtracted

Liablities

Things that are owed

Principle

a basic truth or law

General ledger

a book to have each individual account

Small business

a company that is independently owned and operated

Board of Directors

a group of persons elected by the stockholders to manage a corporation

Sherman Antitrust Act

a law that made it illegal to create monopolies or trusts that restrained trade

Trial balance

a proof of the equality of total debits and credits

Rulling

a single line drawn under a column of figures to signify that the entries above the rule are added or subtracted; a double rule under an amount signifies a total

personal interest test

a test to see what you are interested in

Worksheet

a working paper used to collect information from ledger accounts for use in completing end-of-fiscal-period work

Credit

ability to buy something and pay for it later

Public accounting

accounting done of individuals

skills

activities that you perform well

Providing the ledger

adding all the debit balances and the credit balances of ledger accounts and the comparing the two totals to see whether they are equal

Going concern

an accountant states whether a company, based on its financial records, will most likely continue in business

Correcting entry

an entry made to a journal entry discovered after posting

Business transaction

an event in business that causes changes in the financial records of a business

Fiscal year

any business year that does not start Jan 1

Property

anything of value that is owned or controlled

value

concept or ideas held important or worthwhile

for-profit business

earn a profit for the owners

Not-for-profit

earn money to be used for the charitable organization

T account

every account has a debit and a credit

Double entry accounting

every accounting entry must get done twice- one is a debit, one is a credit

Types of partners

general and limited

Trust

gigant industry monopoly

Senior management

highest level of management

Property rights/ financial claims

how much what you own is worth as well who legally has control

Users of accounting

internal and external

Equity

investments made by an owner or profits made by the business

Glass ceiling

invisible barrier that prevents women and minorities from moving up in the business world

Accounting clerk

knows accounting but its not certified

Debit

left

Chart of accounts

listing of each account under the basic account types: assets, liabilities, equity, revenue, and expenses

Supervisory management

lowest level of management; oversees day-to-day operations

Accounting systems

manual and computerized

networking

meeting people to perhaps in the future they might help you in some way

Accounts receivable

money owed to a business

Accounts payable

money that most be paid to pother from a business

Corporation

needs charter, articles of incorporation, and bylaws

Monopoly

occurs when a party maintains total control over a type of industry

Transportation error

occurs when digits within an amount are accidentally reversed or transported

Free enterprise

people are free to produce or consume things they choose

accountant

person who understands how to prepare and use financial records

set career goals

plan, education, training, internships

Journalizing

prepare the business records to a journal

Matching principle

principle stating that expenses are compared to revenues for the same period

Bylaws

recognized by the state to do business

Journal

record of the business transaction

Business entity

regardless of who owns the business, the business has a life of its own

Middle management

responsible for meeting the goals that senior management sets