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Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Objective 1
Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Accounting...
is an information system that... measures business activities, processes information, and... communicates financial information.
2002 Prentice Hall, Inc. Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1-3
Accounting...
Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Fields of Accounting
Financial Accounting
Management Accounting
2002 Prentice Hall, Inc. Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1-6
Business Publishing
Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Proprietorships
What are some advantages? total undivided authority no restrictions on type of business must be legal What are some disadvantages? unlimited liability limitation on size fund raising power
Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1 - 10
Partnerships
What are some advantages? better credit standing possibly more brain power, but consultation with partners required What are some disadvantages? unlimited personal liability for general partners need for written partnership agreement
Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1 - 11
Corporations
What are some advantages? separate legal existence limited liability of stockholders transferability of ownership relatively easy What are some disadvantages? taxes possible double taxation extensive governmental regulation
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Accounting, 5/E
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Accounting, 5/E
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Accounting, 5/E
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Accounting, 5/E
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Accounting, 5/E
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Accounting, 5/E
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Accounting, 5/E
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Accounting, 5/E
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Assets
Economic Resources
Business Publishing
Assets
What is an asset? It is something a company owns which has future economic value. land building equipment goodwill
Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1 - 23
Liability
What is a liability? It is something a company owes. money service legal retainers product magazines
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Accounting, 5/E
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Owners Equity
What is owners equity? It is whats left of the assets after liabilities have been deducted. the same as net assets the owners claim on the entitys assets
Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Revenues
2002 Prentice Hall, Inc. Business Publishing Accounting, 5/E
Expenses
Horngren/Harrison/Bamber 1 - 26
Revenues
What are revenues? They are amounts received or to be received from customers for sales of products or services. sales performance of services rent interest
Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1 - 27
Expenses
What are expenses? They are amounts that have been paid or will be paid later for costs that have been incurred to earn revenue. salaries and wages utilities supplies used advertising
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Objective 4
Business Publishing
Accounting, 5/E
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Business Publishing
Accounting, 5/E
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Gay Gillen invests $30,000 to begin Gay Gillen eTravel. Gillen purchases an office location, paying $20,000 in cash. She buys office supplies, agreeing to pay $500 in 30 days. She earns and collects $5,500 revenues.
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+ $30,000
+ $35,400
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Business Publishing
Horngren/Harrison/Bamber
Business Publishing
Accounting, 5/E
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Accounting, 5/E
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Objective 5
Business Publishing
Accounting, 5/E
Horngren/Harrison/Bamber
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Financial Statements...
are the final product of the accounting process. tell how the business is performing and where it stands.
2002 Prentice Hall, Inc. Business Publishing Accounting, 5/E Horngren/Harrison/Bamber 1 - 37
Financial Statements
income statement statement of owners equity or retained earnings balance sheet statement of cash flows
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Accounting, 5/E
Horngren/Harrison/Bamber
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Objective 6
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Accounting, 5/E
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$8,500
3,100 $5,400
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Horngren/Harrison/Bamber
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Accounting, 5/E
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33,300 $33,500
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$6,500
Horngren/Harrison/Bamber
End of Chapter 1
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