Beruflich Dokumente
Kultur Dokumente
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Objective
Objective 11
Describe the nature of a
business and types of business
organization
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Types of Businesses
Service
ServiceBusiness
Business Service
Service
The
TheWalt
WaltDisney
DisneyCompany
Company Entertainment
Entertainment
Malaysia
MalaysiaAirlines
AirlinesSystem
System(MAS)
(MAS) Transportation
Transportation
Maybank
MaybankCorporation
Corporation Financial
Financialservices
services
Marriott
MarriottInternational
InternationalHotels
Hotels Hospitality
Hospitalityand
andlodging
lodging
KPMG
KPMG Auditing
Auditing
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Types of Businesses
Merchandising
Merchandising Business
Business Product
Product
Giant
Giant General
Generalmerchandise
merchandise
Amazon.com
Amazon.com Internet
Internetbooks,
books,music,
music,video
video
Toy
ToyR
RUs
Us Toys
Toys
Panasonic
Panasonic Consumer
Consumerelectronics
electronics
Gap
GapInc.
Inc. Apparel
Apparel
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Types of Businesses
Manufacturing
Manufacturing Business
Business Product
Product
General
GeneralMotors
MotorsCorporation
Corporation Cars,
Cars,trucks,
trucks,vans
vans
Nokia
Nokia Cell
Cellphones
phones
Dell
DellInc.
Inc. Personal
Personalcomputers
computers
Nike
Nike Athletic
Athleticshoes
shoesand
andapparel
apparel
FF&&NNCompany
Company Beverages
Beverages
Sony
SonyCorporation
Corporation Stereos
Stereosand
andtelevisions
televisions
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Common Forms of Business Organizations
Proprietorship
Partnership
Corporation
Limited liability company
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owned by one individual,
Partnership 1-1
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owned by two or more individuals,
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Corporation
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organized under state or federal statutes as a separate
legal taxable entity
generates 90% of the total dollars of business receipts
received.
comprises only 20% of the business organizations in
Malaysia.
ownership is divided into shares of stock, sold to
shareholders (stockholders)
able to obtain large amount of resources by issuing
stock.
is used only by large businesses. 11
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Limited liability company (LLC)
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A business stakeholder is a
person or entity having an interest
in the economic performance and
well-being of a business.
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Product or service market stakeholders
include customers who purchase the
businesss products or services as well
as the vendors who supply inputs to the
business.
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Government stakeholders
have an interest in the economic
performance of a business. City,
county, state, and federal governments
collect taxes from businesses within
their jurisdiction.
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Internal stakeholders include
individuals employed by the business.
Managers have an incentive to
maximize the economic value of the
business. Employees have an interest
because their jobs depend on it.
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Objective Master title style
Objective 22 and
and 33 2-3
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ethics?to edit Master title style 2-3
Because our actions are watched and judged as
right or wrong, honest or dishonest, and fair or bias.
because it has impact on society and others.
to communicate credible economic information
activities.
These judgments represent the standards of conduct
known as ethics.
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The answer to
Master title style 2-3
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Objective
Objective 44
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Accounting
an information system that provides
reports to stakeholders about the
economic activities and condition of a
business.
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Objective
Objective 55
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Who uses the accounting information?
Internal users
eg. marketing managers, production supervisors,
finance directors, and company officers.
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The process edit
which Master
accounting title style
provides
information to business stakeholders is as follows:
Identify stakeholders.
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Prepare accounting reports for stakeholders.
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Objective
Objective 66
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Financial accounting is primarily concerned
with the recording and reporting of economic
data and activities for a business.
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Accountants employed by a business firm or
a not-for-profit organization are said to be
employed in private accounting [annual
starting salaries $28500-$72500].
Accountants employed individually or within
a public accounting firm in tax or audit
service are said to be employed in public
accounting [annual starting salaries
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$36625-$44375].
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Objective
Objective 77
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GAAPs (Generally Accounting Accepted Principles)
are a standard set of rules and standard system used in
preparing financial statements.
The aim - stakeholders can compare financial
performance and condition of one company to another.
Accounting principles and concepts develop from
research, practice, and pronouncements of authoritative
bodies such as the Malaysian Accounting Standards
Board (MASB).
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Objective
Objective 88
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When developing GAAPs, there are certain basic
style
assumptions made.
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There are FIVE basic accounting
principles guiding accounting practices namely:
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The business entity concept
limits the economic data in
the accounting system to
data related directly to the
activities of the business.
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Example 1
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On August 25, Gallatin Repair Service extended an offer of
$125,000 for land that had been priced for sale at $150,000. On
September 3, Gallatin Repair Service accepted the sellers
counter offer of $137,000. On October 20, the land was assessed
at a value of $98,000 for property tax purposes. On December 4,
Gallatin Repair Service was offered $160,000 for the land by a
national retail chain. At what value should the land be recorded
in Gallatin Repair Services records?
Follow My Example
$137,000. Under the cost concept, the land should be recorded at
the cost to Gallatin Repair Service. 41
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Objective
Objective 99
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The Accounting Equation
The resources
owned by a
company.
Yield benefits in
the future 43
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The Accounting Equation
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The Accounting Equation
Shareholders
claims on assets
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The Accounting Equation
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Objective
Objective 10
10
Analyze the effects of business
transactions on the basic elements
of the accounting equation.
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A business transaction is an
economic event or condition that
directly changes an entitys
financial condition or directly
affects its results of operations.
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Owners
Assets = Liabilities + Equity
Accounts Kris Klarah,
Cash + Supplies + Land Payable Capital
=
Bal. 5,000 20,000 25,000
c. +1,350 +1,350
Bal. 5,000 1,350 20,000 1,350 25,000
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Assets
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Liabilities + Owners Equity
Accounts Kris Klarah, Fees
Payable + Capital + Earned
1,350 25,000 Bal.
+7,500 d.
1,350 25,000 7,500 Bal.
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Expenses
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Assets
Cash + Supplies + Land
Bal. 12,500 1,350 20,000
e. 3,650
Bal. 8,850 1,350 20,000
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Assets
Cash + Supplies + Land
Bal. 8,850 1,350 20,000
f. 950
Bal. 7,900 1,350 20,000
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Assets
Cash + Supplies + Land
Bal. 7,900 550 20,000
h. 2,000
Bal. 5,900 550 20,000
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Liabilities + Owners Equity
Accounts Kris Klarah, Kris Klarah, Fees Wages Rent
Supplies Util. Misc.
Payable + Capital + Drawing Earned Exp. Exp.
Exp. Exp. Exp.
400 25,000 7,500 2,125 800 800 450 275
2,000 h.
400 25,000 2,000 7,500 2,125 800 800 450 275
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Owners Equity
Increased by Decreased by
Owners Owners
investments withdrawals
Revenues Expenses
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Example 3
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Salyo Delivery Service is owned and operated by Jo Salyo.
The following selected transactions were completed by
Salyo Delivery Service during February:
1. Received cash from owner as additional investment,
$35,000.
2. Paid creditors on account, $1,800.
3. Billed customers for delivery services on account,
$11,250.
4. Received cash from customers on account, $6,740.
5. Paid cash to owners for personal use, $1,000.
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Example 3
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Indicate the effect of each transaction on the accounting
equation elements (Assets, Liabilities, Owners Equity,
Drawing, Revenue, and Expense) by listing the numbers
identifying the transactions, (1) through (5). Also, indicate
the specific item within the accounting equation element
that is affected. To illustrate, the answer to (1) is shown
below.
(1) Asset (Cash) increases by $35,000; Owners Equity (Jo
Salyo, Capital) increases by $35,000.
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Follow My Example
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Objective
Objective 11
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Income Statement
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Statement of Owners Equity
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From the income statement
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Balance Sheet
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Statement of Cash Flows
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Income Statement
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Example 4
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The assets and liabilities of Chickadee Travel Service at April 30,
2009, the end of the current year, and its revenue and expenses
for the year are listed below. The capital of the owner, Adam
Cellini, was $80,000 at May 1, 2008, the beginning of the current
year.
Accounts payable $ 12,200 Miscellaneous expense $ 12,950
Accounts receivable 31,350 Office expense 63,000
Cash 53,050 Supplies 3,350
Fees earned 263,200 Wages expense 131,700
Land 80,000
Prepare an income statement for the current year ended April
30, 2009.
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Follow My Example
CHICKADEE TRAVEL SERVICE
INCOME STATEMENT
For the Year Ended April 30,
Fees earned 2009 $263,200
Expenses:
Wages expense $131,700
Office expense 63,000
Miscellaneous expense 12,950
Total expenses 207,650
Net income $ 55,550
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For practice: PE 1-4
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Statement of Owners Equity
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Example 5
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Using the data for Chickadee Travel Service shown
in Example 4, prepare a statement of owners
equity for the current year ended April 30, 2009.
Adam Che Lini invested an additional $50,000 in
the business during the year and withdrew cash of
$30,000 for personal use.
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Follow My Example
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CHICKADEE TRAVEL SERVICE
STATEMENT OF OWNERS EQUITY
For the Year Ended April 30, 2009
Adam Cellini, capital, May 1, 2008 $ 80,000
Additional investment by owner during year $ 50,000
Net income for the year 55,550
$105,550
Less withdrawals 30,000
Increase in owners equity 75,550
Adam Cellini, capital, April 30, 2009 $155,550
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For Practice: PE 1-5
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Balance Sheet
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Example
Using the data for Chickadee Travel Service shown in Example
Exercise 4 and 5, prepare the balance sheet as of April 30, 2009.
Follow My Example
CHICKADEE TRAVEL SERVICE
BALANCE SHEET
Assets April 30, 2009 Liabilities
Cash $ 53,050 Accounts payable $12,200
Accounts receivable 31,350
Supplies 3,350 Owners Equity
Land 80,000 Adam Cellini, capital 155,550
Total assets $167,750 Total liab. & owners eq. $167,750
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For Practice: PE 1-6 89
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Statement of Cash Flows
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A summary of cash flows for Chickadee Travel Service for the
year ended April 30, 2009, is shown below.
Cash receipts:
Cash received from customers $251,000
Cash received from additional
investment of owner 50,000
Cash payments:
Cash paid for expenses 210,000
Cash paid for land 80,000
Cash paid to owner for personal use 30,000
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TRAVEL SERVICE
STATEMENT OF CASH FLOWS
For the Year Ended April 30, 2009
Cash flows from operating activities:
Cash received from customers $251,000
Deduct cash payments for expenses 210,000
Net cash flows from operating activities $ 41,000
Cash flows from investing activities:
Cash payments for purchase of land (80,000)
Cash flows from financing activities:
Cash received from owner as investment $ 50,000
Deduct cash withdrawals by owner 30,000
Net cash flows from financing activities 20,000
Net decrease in cash during year $(19,000)
Cash as of May 1, 2008 72,050
Cash as of April 30, 2009 $ 53,050
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Interrelationships Among Financial Statements
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