Lesson 1-1 - New Bremen Local Schools
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Transcript Lesson 1-1 - New Bremen Local Schools
1
GOLD’S GYM
Franchise – individuals/groups buy the right to open
and operate a Gold’s Gym
Items to consider when opening a new Gold’s Gym:
How big should facility be?
What equipment to include?
How to let people know about the new facility
Location
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GOLD’S GYM
Why is location of a business important to the
success of that business?
If difficult to get to, customers may not make the effort
Not enough parking, customers will not find it convenient
If business depends on drop-in customers, it should be
located where there is high vehicular or pedestrian traffic
If difficult to enter or exit the business, customers may not
return
If customers must walk from parking lot to get to business,
parking lot should be lighted
Beneficial to have other popular businesses in the area to
attract customers
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GOLD’S GYM
What things would you consider when deciding where
to locate a business such as Gold’s Gym?
Lighted parking lot
Accessibility to major roads
Ample parking
Proximity to public transportation
Other popular businesses in the area (Kmart in St. Marys)
Easy entrance/exit
High vehicular and pedestrian traffic (Coffee Shop)
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Forming & Dissolving a Proprietorship p. 7
In groups of 3, complete the following:
1. Read Business Structures – Forming and Dissolving a
Proprietorship
2. Answer the following questions:
A. Why do you think more businesses are organized as
proprietorships than any other form of business organization?
B. What kinds of people do you think would be most successful as
owners of a proprietorship?
C. List some advantages of a proprietorship
D. List some disadvantages of a proprietoship
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Answers
A. Why more proprietorships?
Proprietorships are the easiest way to organize a
business.
Owner has the authority to totally control every
aspect of the business and does not have to get
permission from a partner or from stockholders to
make major changes, etc.
B. What kinds of people would be successful?
Creative, willing to take a risk, self-motivated, good
manager of time, enjoys being in charge, not afraid
of responsibility, ample knowledge related to the
business, good marketing and planning skills
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Answers
C. Advantages:
Ease of formation/dissolving, Total control by owner,
and profits are not shared
D. Disadvantages:
Limited resources, Unlimited liability, Limited
expertise, Limited life, Obligation to follow laws of
federal, state, and city in which business is formed
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What is Accounting?
Planning, recording, analyzing, and interpreting
financial information is called Accounting.
A planned process for providing financial information
that will be useful to management is called an
Accounting System.
Organized summaries of a business’s financial
activities are called Accounting Records.
Accounting is the “Language of Business”
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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What is Accounting?
Many individuals in a business complete accounting
forms and prepare accounting reports
Owners, managers, and accounting personnel use
their knowledge of accounting to understand the
information provided in the accounting reports.
Regardless of a person’s responsibility within an
organization, it is EXTREMELY beneficial to have a
background knowledge of accounting.
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What is Accounting?
Financial Statements are financial reports that
summarize the financial condition and operations of a
business.
Can anyone name some financial statements?
Uses of Financial Statements:
Business owners and managers use these statements to
make business decisions
Suppliers that are considering extending credit to a business
and banks that are considering extending loans to a
business will look at a business’s financial statements before
granting credit or issuing a loan to the business
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Accounting Tidbits…
Inaccurate accounting records often contribute to
business failure and bankruptcy
Failure to understand accounting information can
result in poor business decisions for businesses
Nearly everyone earns money, must submit income
tax reports to the gov’t
Everyone must plan ways to keep spending within
available income in both your personal and business
lives.
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TechKnow Consulting
Service Business – a business that performs an
activity for a fee
Examples???
Proprietorship – A business owned by one person;
also known as sole proprietorship
Kim Park is the owner
Sets up and troubleshoots computer networks
Rents office space and the equipment needed to
troubleshoot network problems
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TechKnow Consulting
Kim Park must design the accounting system since
this is a new business – set up accounts, etc.
Kim must keep her business records separate from
her personal records
Ex. – Kim owns a house and personal car. TechKnow’s
accounting records must not include these items
Ex. – Kim must have a checking account for her personal
expenses and a separate account for TechKnow Consulting
Accounting Concept: Business Entity
Is applied when a business’s financial information is
recorded and reported separately from the owner’s personal
information
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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FUNDAMENTAL ACCOUNTING TERMS
page 8
Assets – anything of value that is owned
Assets have value because they can be used either to acquire other
assets or to operate a business
Ex. - Cash, Supplies
Equities – Financial rights to the assets of a business
Two Types:
1) Equity of those that the business owes money to (TechKnow may
buy supplies from Office Depot and agree to pay for them at a later date.
Office Depot has a right to some of TechKnow’s assets until TechKnow
pays for the supplies
Liabilities – an amount owed by a business
2) Equity of the Owner (Kim Park will own the business and invested
some of her own money into the business. She has a right to some of the
assets)
Owner’s Equity - the amount remaining after the value of all liabilities is
subtracted from the value of all assets
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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THE ACCOUNTING EQUATION
page 8
The relationship among assets, liabilities, and owner’s equity can be
written as an equation.
An equation showing the relationship among assets, liabilities, and
owner’s equity is called the Accounting Equation.
THE ACCOUNTING EQUATION MUST ALWAYS BE IN BALANCE
The Left side of the equation must always equal the Right side of the
equation
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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The Accounting Equation - Remember
Assets = Liabilities + Owner’s Equity
A = L + OE
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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