Unit 5 - Unit 4 How to succeed in Accounting Understanding...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Unit 4: How to succeed in Accounting: Understanding that accounting in MGT 111 is more about understanding key numbers and formulas. Know basic formulas second, fundamental accounting equation, determining profit etc. Be careful with you arithmetic, accounting is not of much use if the figures are wrong. What is accounting: the systematic way by which we show where the money is and how it’s being used. To insiders (Managerial Accounting), or how much we are spending on X, Y, or Z To outsiders (Financial Accounting), what is our/their financial health. To evaluate the financial information used (auditing) or can we prove what we report? To determine tax liability (tax accounting), are we keeping up with changing tax laws? Accountants are like referees: they enforce agreed-upon rules. Accounting vs. bookkeeping The bookkeeper: begins accounting cycle, accurately records financial transactions, prepares the books for accountants. The Accountant: analyzes information prepared by bookkeeper, applies appropriate accounting rules, esp. w/ respect to tax laws. Ends with the preparation of financial statements (three of them), can make recommendations to decision-makers. 1. Analyze/Categorize (BK) 2. Records in Journal (BK) 3. Post in Proper Account Ledger (BK) 4. Perform Trial Balance (BK) or do both sides have balance? 5. Prepare Financial Statements (ACC), income statements, balance sheet, statement of cash flows. 6. Analyze/Recommend (ACC) Q. How do BK’s and ACC’s account for the money? A. By putting everything in its place-twice. -Each and every financial transaction has its place in the FUNDAMENTAL BALANCE EQUATION, where Assets = Liabilities + Owners Equity. Every entry on the left (asset) side MUST be reflected on the right side (liability and/or owner equity side) of the equation. This is called the double-entry method of bookkeeping. See handout. Financial Statements: Balance sheet, Income Statement, Cash Flow -Think each of these are a medical checkup:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
-Each statement tells us something about the firm’s “financial health”, together they work to paint the full financial picture. 1. Balance Sheet
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/03/2011 for the course BUSINESS 111 taught by Professor Schloemer during the Spring '11 term at Miami University.

Page1 / 5

Unit 5 - Unit 4 How to succeed in Accounting Understanding...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online