Chapter 1 - Accounting and business. After completing this chapter, students will be able to: Describe the development of business and accounting; explain the elements of accounting (assets, liabilities, owners' equity, revenue, expense, and net income); identify the differences among the basic types of businesses and business organization structures. | Chapter 1 Accounting and Business Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1- What are the Basic Functions of Business? Marketing Products, pricing, promotion, distribution Human resources Jobs, people, salaries, benefits Production and operations Planning, directing, controlling, evaluating Finance Capital maintenance Accounting and information systems Information infrastructure 1- How do the Functions Use Accounting Information? Marketing Pricing, distribution costs Human resources Pay and fringe benefits, hiring costs Production and operations Production costs—actual and budgeted Finance Cost of borrowing, benefits expected 1- How has Business Evolved? Sole proprietorship One owner Partnership Two or more owners Corporation Many owners Merchandising Buy and sell products Service Provide service Manufacturing Make and sell products 1- How has Accounting Evolved? Determination of wealth What am I worth today Determination of income How has my wealth changed On-going success How is the business doing 1- What are the Characteristics of Business Today? Customer-focused operations Global markets Products, labor, and capital Advanced manufacturing and communications eBusiness B2B and B2C Hybrid organizational structures 1- What are the Basic Concepts of Accounting? Business entity Keep business and personal records separate Monetary unit Maintain business records in currency Going concern Business will continue past the current period Periodicity Profits/losses must be determined periodically 1- What are the 5 Basic Elements of Accounting? Asset Right to use resources with future benefit Liability Obligation to transfer resources in the future to suppliers of goods and services Owners’ equity Net assets belong to owners Revenues (accrual basis) Amounts earned from providing goods and services Expenses (accrual basis) Amounts incurred in an attempt to generate revenues 1- What is GAAP and | Chapter 1 Accounting and Business Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1- What are the Basic Functions of Business? Marketing Products, pricing, promotion, distribution Human resources Jobs, people, salaries, benefits Production and operations Planning, directing, controlling, evaluating Finance Capital maintenance Accounting and information systems Information infrastructure 1- How do the Functions Use Accounting Information? Marketing Pricing, distribution costs Human resources Pay and fringe benefits, hiring costs Production and operations Production costs—actual and budgeted Finance Cost of borrowing, benefits expected 1- How has Business Evolved? Sole proprietorship One owner Partnership Two or more owners Corporation Many owners Merchandising Buy and sell products Service Provide service Manufacturing Make and sell products 1- How has Accounting Evolved? Determination of wealth What am I worth today .
