Transcript BAF 3MI – Introduction to Accounting

Introduction to
Financial Accounting
Grade 11
University/College Preparation
BAF3MI
Room 214
Mr. D. Rourke
Classroom Requirements:





1.
2.
3.
4.
5.
Come to class prepared!
Pencil!
Binder, workbook, textbook & lined paper.
Calculator
Date, title and organize all notes, tests and
handouts in your binder.
 5. Have a friend pick up assignments and
handouts should you be absent from class.
 6. Check website for assigned work.
www.wah.bwdsb.on.ca
Assessment
 Audits 10%
 Assignments 15%
 Tests 45%
 Final Exam 30%
 The final examination consists of sixty
multiple choice questions and five
problems.
 Learning skills.
Principles of Accounting
3rd Edition
D'Amico, Palmer, D'Amico
©2002
Chapter One – The Balance Sheet
Unit One – Financial Position
What Learning You Will Demonstrate:
 determine the financial position of a business
 classify items as assets, liabilities, or owner's
equity
 calculate owner's equity
 prepare a balance sheet and
 use correct recording procedures
The Purpose of Accounting
 to provide financial information for decision
making.
What does a person require in
order to begin a business?
Assets
 items of value owned by a person or business
 Something a person or business owns.
Categories:
1. Cash - currency, cheques, money orders, bank
2.
3.
4.
5.
6.
7.
8.
deposits.
Accounts Receivable - total amount due from
customers.
Government Bonds
Furniture
Office Equipment
Automobiles - cars, trucks
Land
Buildings
How does a business acquire these
assets?
1. Borrowing
Creditor - a
person/business to
whom money or
goods is owed.
Debtor - a
person/business who
owes money or goods.
2. Investment by the owner(s)
Borrowing = Debt = Liabilities
 Liabilities - the debts of a business or person.
- something a business or person owes.
 Categories:
1. Loans
2. Accounts Payable - amounts owing to creditors
for purchases of goods and services.
3. Mortgage - a long-term debt where the building or
land is used as collateral for the debt.
Investment by the owner(s) =
Owner’s Equity
Owner’s Equity - claim of the owner against the asset of
the business.
Personal Equity (Net Worth) - the difference between
the cost of items owned and debts owed.
The Balance Sheet Equation
Assets = Liabilities + Owner’s Equity
$57 000 = $12 000 + ?
$57 000 = $12 000 + $45 000
 Do exercises 1 – 3, page 13
Balance Sheet
 a financial statement that lists the assets,
liabilities and owner’s equity at a specific
date.
 Assets are listed in their order of liquidity
(the order they would likely be converted
into cash).
 Liabilities are listed according to the order
they are due to be paid (maturity order).
GAAPs
 Generally Accepted Accounting
Principles (GAAPs) - standard
accounting rules and guidelines.
GAAPs
 Business Entity Principle-requires that
each business be considered a separate
entity, and that the financial data for the
business be kept separate from the
owner’s personal financial data.
GAAPs
 Cost Principle – assets are shown on the
balance sheet at the cost of their
acquisition.
 Do exercises 4 – 8, pages 13 & 14
Chapter One – The Balance Sheet
Unit Two – Business Transactions
When Learning You Will Demonstrate the skills
necessary to:
 Record trans actions that will affect assets,
liabilities and owner’s equity on a transaction
analysis sheet.
 Prove the mathematical accuracy of a
transaction analysis sheet, and
 Prepare a balance sheet from a completed
transaction sheet.
Business Transaction
 An exchange of things of value.
 a financial event that affects Assets,
Liabilities or Owner’s Equity.
 The term “accounting period” refers to the
length of time between the preparation of
financial reports.
 Do exercises 9 – 14, pages 21 – 24.