Student Version
o Repetition is an important component, a key part
of learning. In memory, the more times patterns of
thought are repeated, the more likely you will be
able to recall information.
o These PowerPoint slides have been modified from
the lecture decks by making them fill-in-the-blank.
Why? So that you get an opportunity to repeat a
visual cue (from the lecture or the book) via
completing text here.
o In addition, most text book exhibits have been
removed as they are available in your text directly.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Nature of Business and Accounting
o
A ______________ is an _____________ in which
_____________ (_________), such as materials
and labor, are ___________and ___________to
provide ___________ or ___________
(_________) to customers.
Nature of Business and Accounting
o The objective of most businesses is to _______a
_________.
o Profit is the _______ between the amounts
_______ from customers for goods or services
and the amounts _______ for the _______used
to provide the goods or services.
The Role of Accounting in Business
o
____________ can be defined as an __________
__________ that provides _______ to _______
about the _______ _______ and _______ of a
_______.
The Role of Accounting in Business
o The process by which accounting provides
information to users is as follows:
 ___________________________
 ___________________________
 ___________________________
 ___________________________
 ___________________________
_____________ Accounting
o
The area of accounting that provides internal
users with information is called _______
_______ or _______ _______ .
o
____________ accountants employed by a
business are employed in _______ accounting.
_____________ Accounting
o
The area of accounting that provides external
users with information is called _______
_______ .
o
The objective of financial accounting is to
provide _______ and _______ information for
the ____________________ needs of users
_______ of the business.
o
____________ _______ _______ are ______ one
type of financial accounting report that is
distributed to _______ users.
Role of Ethics in Accounting and Business
o The objective of accounting is to provide
relevant, timely information for user _______
_______ .
o Accountants must behave in an _______
manner so that the information they provide
users will be _______ and, thus, _______ for
decision making.
o _______ are _______ principles that guide the
_______ of individuals.
Opportunities for Accountants
o
Accountants and their staff who provide
services on a _______ _______ are said to be
employed in _______ accounting.
o
Accountants employed by a _______ _______,
______, or a ____________ _______ are said to
be employed in _______ accounting.
o Public accountants who have met a _______
__________, __________, and _____________
requirements may become _______ _______ _______
(_______).
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Generally Accepted Accounting Principles
o
Financial accountants follow _______ _______
_______ _______ (_______) in preparing
reports.
o
Within the U.S., the _______ _______ _______
_______ (_______) has the _______
responsibility for _________ accounting
principles.
Generally Accepted Accounting Principles
o The _______ ___ _______ _______ (_______), an
_______ of the U.S. government, has authority
over the accounting and financial ___________
for companies whose _______ of _______
(_______) are _______ and sold to the _______ .
o Many countries _______ the United States use
generally accepted accounting principles
adopted by the _______ _______ _______
_______ (_______).
Business _______ Concept
o
Under the _______ _______ concept, the
_______ of a business are recorded _______
from the activities of its _______ , _______ , or
_______ _______ .
________________
A ______________ is
owned by _______
individual.

70% of business
entities in the U.S. are
proprietorships.

They are easy and
cheap to organize.

Resources are limited
to those of the owner.

Used by small
businesses.
________________
A ______________ is
similar to a
________________
except that it is
owned by _________
or _________
individuals.


10% of business
organizations in the
U.S. (combined
with limited
liability
companies) are
partnerships.
Combines the skills
and resources of
more than one
person.
_____________
A _________ is
organized under
_________ or
_________ statutes as
a separate ________
_________ entity.





Generates 90% of
business revenues.
20% of the business
organizations in the U.S.
Ownership is divided
into shares, called
stock.
Can obtain large
amounts of resources
by issuing stock.
Used by large
businesses.
_________ _________ _________ (LLC)
A _______ _______
_______ (_______)
combines the
attributes of a
___________ and a
___________.

10% of business
organizations in the
U.S. (combined
with partnerships).

Often used as an
alternative to a
partnership.

Has tax and legal
liability advantages
for owners.
________ Concept
o Under the ________ concept, amounts are
________ recorded in the accounting records at
their ________ or ________ ________ .
Cost Concept
o Aaron Publishers purchased a building on
February 20, 2012, for $150,000. Other amounts
related to this purchased are shown on the next
slide.
Cost Concept





Price listed by seller on Jan. 1, 2012
$160,000
Aaron Publishers’ initial offer to buy on Jan. 31, 2012
140,000
Purchase price on Feb. 20, 2012
150,000
Estimated selling price on Dec. 31, 2014
220,000
Assessed value for property taxes, Dec. 31, 2014
190,000
Recorded at: _____________________
____________ Concept
o
The ________ concept requires that the
amounts recorded in the accounting records
be based on ________ evidence.
o
Only the ________ _____________ amount is
________ enough to be recorded in the
accounting records.
Unit __ __________________ Concept
o
The ____ __ ________ concept requires that
________ ________ be recorded in ________ .
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
The ______________ Equation
o
The _______ owned by a business are its
_______ .
o
The rights of _______ are the _______ of the
business and are called _______ .
o
The rights of the owners are called _______
_______ .
o
The equation _______ = _______ + _______
_______ is called the _______ _______ .
THE ACCOUNTING
EQUATION
_______ = _______ + _______ _______
The _______
owned by a
business
THE ACCOUNTING
EQUATION
_______ = _______ + _______ _______
The rights of
_______ are the
_______ of the
business
THE ACCOUNTING
EQUATION
_______ = _______ + _______ _______
The _______ of
the _______
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
_______ Transaction
o
A _______ transaction is an _______ event or
_______ that _______ changes an entity’s
_______ condition or its results of _______ .
TRANSACTION A
On November 1, 2013, Chris Clark deposited
$25,000 in a bank account in the name of
NetSolutions.
TRANSACTION B
On November 5, 2013, NetSolutions paid
$20,000 for the purchase of land as a future
building site.
TRANSACTION C
On November 10, 2013, NetSolutions
purchased supplies for $1,350 and agreed to
pay the supplier in the near future.
Transaction C
o The liability created by a _______ on _______ is
called an _______ _______ .
o Items such as supplies that will be used in the
business in the _______ are called _______
_______ , which are _______ .
TRANSACTION D
On November 18, 2013, NetSolutions received cash of
$7,500 for providing services to customers. A business
earns money by selling goods or services to its
customers. This amount is called _______ .
Transaction D
o _______ from providing services is recorded as
_______ _______ .
o Revenue from the _______ of merchandise is
recorded as _______ .
o Other examples of revenue include rent, which
is recorded as _______ revenue, and _______ ,
which is recorded as interest revenue.
o An account _______ is a _______ against a
_______ , which is an _______ .
TRANSACTION E
During the month, NetSolutions spent cash or
used up other assets in earning revenue.
Assets used in this process of earning revenue
are called _______ .
TRANSACTION E
On November 30, 2013, NetSolutions paid the
following expenses: wages, $2,125; rent, $800;
utilities, $450; and miscellaneous, $275.
TRANSACTION F
On November 30, 2013, NetSolutions paid
creditors on account, $950.
TRANSACTION G
On November 30, 2013, Chris Clark
determined that the cost of supplies on
hand at the end of the period was $550.
TRANSACTION H
On November 30, 2013, Chris Clark
withdrew $2,000 from NetSolutions for
personal use.
SUMMARY
Types of Transactions Affecting _________ _________
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
____________ Statements
o
After transactions have been _______ and
_______ , reports are prepared for users. The
accounting _______ providing this information
are called _______ _______ .
FINANCIAL
STATEMENTS
_______ Statement
o
The _______ _______ reports the revenues and
_______ for a _______ of time, based on the
_______ concept.
o
The _______ concept is applied by “_______ ”
the _______ incurred during a period with the
_______ that those _______ generated.
o
The excess of the _______ over the _______ is
called _______ income, _______ _______ , or
_______ . If _______ exceed _______ , the
_______ is a _______ loss.
Statement of __________ __________
o
The _______ ___ _______ _______ reports the
changes in the _______ equity for a _______ of
time.
o
It is prepared _______ the income statement
because the _______ _______ or _____ _____
for the _______ must be reported in this
statement.
Financial Statements – _______ _______
_______ _______ is
carried to the _______
of _______ _______ .
Financial Statements – _______ of _______ _______
From the _______ _______
To the _______ _______
(continued)
_______ _______
o
A balance sheet is a list of the _______ ,
_______ , and _______ _______ as of a _______
_______ .
_______ _______
o
The _______ form of a _______ _______ lists the
assets on the _______ and the _______ and
_______ _______ on the right. It resembles the
basic format of the _______ _______ .
Financial Statements – _______ _______
This amount is
compared to the
net _______
_______ on the
_______ of _______
_______ .
From the _______
of _______ _______
(continued)
_______ of Cash _______
o
A _______ _______ _______ _______ is a
summary of the cash _______ and cash _______
for a _______ _______ of time.
 It consists of three sections:
(1) _______________________________
(2) _______________________________
(3) _______________________________
Financial Statements – _______ of _______ _______
This amount should match
_______ on the _______ _______
(concluded)
Cash Flows from _______ _______
o
The cash flows from _______ _______ section
reports a summary of cash _______ and cash
_______ from operations.
Cash Flows from _______ _______
o
The cash flows from _______ _______ section
reports the cash transactions for the
_______and _______ of relatively permanent
assets.
Cash Flows from _______ _______
o
The cash flows from _______ _______ section
reports the cash _______ related to cash
_______ by the _______ , _______ , and _______
by the owner.
INTERRELATIONSHIPS AMONG
FINANCIAL STATEMENTS
_______ _______ and
Statement of _______
_______
 Net _______ or
_____ ________
reported on the
_______ _______
is also reported on
the _______ of
_______ _______
and any additional
_______ by the
_______ during the
year.
Interrelationships Among Financial Statements
o In Exhibit 6, NetSolutions’ net income of $3,050
for November is added to Chris Clark’s
investment of $25,000 in the statement of
owner’s equity.
INTERRELATIONSHIPS AMONG
FINANCIAL STATEMENTS
Statement of _______
_______ and _______
_______

The owner’s
_______ at the end
of the period is
reported on the
statement of
_______ _______
and is also
reported on the
_______ _______
as _______ capital.
Interrelationships Among Financial Statements
o In Exhibit 6, Chris Clark, Capital of $26,050 as of
November 30, 2013, on the statement of owner’s
equity also appears on the November 30, 2013,
balance sheet as Chris Clark, Capital.
INTERRELATIONSHIPS AMONG
FINANCIAL STATEMENTS
_______ _______ and
_______ of _______
Flows
 The _______
reported on the
_______ _______
is also reported
as the _____-ofperiod cash on
the statement of
_______ ______.
Interrelationships Among Financial Statements
o In Exhibit 6, cash of $5,900 reported on the
balance sheet as of November 30, 2013, is also
reported on the November statement of cash
flows as the end-of-period cash.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
RATIO OF
LIABILITIES TO
OWNER’S EQUITY
Ratio of Liabilities
to Owner’s Equity
Ratio of Liabilities
to Owner’s Equity
=
=
Total Owner’s Equity
(or
)
$
$
= _______
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.