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