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Accounting = Language of Business
Glencoe Accounting
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Identify career opportunities in the accounting field.
Describe the types of businesses and organizations that hire
accountants.
Compare for-profit businesses and not-for-profit organizations.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Section 1.2
Accounting Careers:
The Possibilities are Endless!
Key Terms
accountant
accounting clerk
for-profit business
not-for-profit organization
public accounting firm
audit
certified public accountant (CPA)
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
The Changing Horizon
1.2
Section 1.2
Accounting Careers:
The Possibilities are Endless!
As an accountant, you could work for
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Big-name businesses
like Nike or Hard Rock
Cafe
Movie producers
Well-known celebrities
like Will Smith or Natalie
Portman
Publishers of magazines
such as PC World or Sports
Illustrated
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Organizations
Section 1.2
Accounting Careers:
The Possibilities are Endless!
There are many career
opportunities for accountants in
For-profit businesses
Not-for-profit organizations
for-profit business
A business that operates to
earn money for its owners.
not-for-profit organization
An organization that operates
for purposes other than making
a profit.
Public accounting firms
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Organizations
Section 1.2
Accounting Careers:
The Possibilities are Endless!
What Is an
Accounting Clerk?
accounting clerk
An entry-level job that can vary from
specializing in one part of the system to
doing a wide range of tasks.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Organizations
Section 1.2
Accounting Careers:
The Possibilities are Endless!
Not-for-profit organizations
$
Donations
$
Tax Dollars
Revenues
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Expenses
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Types of Organizations
Section 1.2
Accounting Careers:
The Possibilities are Endless!
Public Accounting Firms
Certified public accountants perform:
Some well-known public accounting
firms are:
 audits
 financial planning
 tax document preparation




Ernst & Young
Deloitte & Touche
KPMG
PricewaterhouseCoopers
audit
The review of a company’s accounting systems
and financial statements to confirm that they
follow generally accepted accounting principles.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Question 1
Fill in the blank to identify:
 F = businesses you think are for-profit businesses
 N = businesses you think are not-for-profit organizations
 P = businesses you think are public accounting firms
F
1. General Motors
6.
Deloitte & Touche
P
2. MTV
F
7.
National Cathedral
N
3. American Lung Association
N
8.
Boeing
F
4. PricewaterhouseCoopers
P
9.
Ernst & Young
P
5. Walt Disney World
F
10. KPMG
P
What about our list?
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Disclosure Time
Glencoe Accounting
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End of
The accounting system produces
information used by businesses to
make decisions.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Describe profit, risk-taking, and entrepreneurs.
Describe service, merchandising, and manufacturing businesses.
Compare the sole proprietorship, partnership, and corporate forms of
businesses.
List the advantages and disadvantages of each form of business
organization.
Describe the purpose of accounting.
Explain financial and management accounting.
Describe the three basic accounting assumptions.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Section 2.1
Exploring the World
of Business
Key Terms
Glencoe Accounting
free enterprise system
merchandising business
profit
manufacturing business
loss
sole proprietorship
entrepreneur
partnership
capital
corporation
service business
charter
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
The Environment of Business
Section 2.1
Exploring the World
of Business
Free Enterprise
System
Profit
Loss
free enterprise system
A system in which individuals are
free to produce the goods and
services they choose.
profit
The amount of money earned
over and above the amount spent
to keep the business operating.
loss
When a business spends more
money than it earns.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
The Environment of Business
Section 2.1
Exploring the World
of Business
Operate at a
profit
What a business
needs to survive
An individual willing
to take the risk
Glencoe Accounting
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The Environment of Business
Section 2.1
Exploring the World
of Business
Inventors
Entrepreneurs
Roles in
a Business
Managers
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Investors
entrepreneur
A person who
transforms ideas for
products or services
into real-world
businesses.
Employees
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The Environment of Business
Section 2.1
Exploring the World
of Business
Self-Starters
Organizational
Skills
Traits of
Entrepreneurs
Accounting
Skills
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Marketing
Knowledge
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Types and Forms of
Businesses
Section 2.1
Exploring the World
of Business
Three Types of Business Operations
Service
Business
service
business
A business that
provides a
needed service
for a fee.
Merchandising
Business
merchandising
business
A business that buys
finished products and
resells them to
individuals or other
businesses.
Manufacturing
Business
manufacturing business
A business that buys raw
materials, uses labor and
machinery to transform them
into finished products, and
sells the finished products to
individuals or other
businesses.
What about our list?
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types and Forms of
Businesses
Section 2.1
Exploring the World
of Business
$
All types of businesses need capital to begin.
capital
Money that investors, banks, or
business owners supply for a
business to begin.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types and Forms of
Businesses
Section 2.1
Exploring the World
of Business
Three Types of Business Organization
Sole
Proprietorship
Partnership
Corporation
sole proprietorship
A business owned by one person.
partnership
A business owned by two or more persons.
corporation
A business recognized by law to have a life of its own.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types and Forms of
Businesses
Section 2.1
Glencoe Accounting
Exploring the World
of Business
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types and Forms of
Businesses
Section 2.1
Glencoe Accounting
Exploring the World
of Business
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Types and Forms of
Businesses
Section 2.1
Exploring the World
of Business
A corporation must obtain a charter.
charter
Legal permission to operate.
What about our list?
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Section 2.2 Accounting: The Universal
Language of Business
Key Terms
accounting system
management accounting
manual accounting system
business entity
computerized accounting
system
accounting period
going concern
GAAP
financial reports
financial accounting
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
The Accounting System
Section 2.2 Accounting: The Universal
Language of Business
Manual Accounting
System
Two types of
accounting systems
Computerized
Accounting System
accounting system
Designed to collect, document, and report on financial transactions affecting
the business.
manual accounting system
When accounting information is
processed by hand.
Glencoe Accounting
computerized accounting system
When accounting information is
processed by recording it into a
computer.
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
The Accounting System
Section 2.2 Accounting: The Universal
Language of Business
What Is
GAAP?
GAAP (generally accepted accounting principles)
The set of rules that all accountants use to prepare
financial reports.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
The Accounting System
Section 2.2 Accounting: The Universal
Language of Business
What Are
financial reports?
financial reports
Documents that present summarized information
about the financial status of a business.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using Accounting Reports for
Making Business Decisions
Section 2.2 Accounting: The Universal
Language of Business
Individuals outside the business who
have an interest in the business
Two groups that use
accounting reports
Individuals inside the business
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using Accounting Reports for
Making Business Decisions
Section 2.2 Accounting: The Universal
Language of Business
Those interested in the financial accounting reports of a business include:
Investors
Local, state, and
federal
government
Employees,
consumers, and
competitors
financial accounting
The type of accounting that focuses on
reporting information to external users.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Using Accounting Reports for
Making Business Decisions
Section 2.2 Accounting: The Universal
Language of Business
Management accounting
reports are prepared for
managers involved in:
Purchasing decisions
Hiring decisions
Production decisions
Payments
Sales
Collections
management accounting
The type of accounting that focuses on reporting
information to management; often referred to as
accounting for internal users of accounting
information.
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Accounting Assumptions
Section 2.2 Accounting: The Universal
Language of Business
GAAP Assumptions
Business entity
Accounting period
business entity
The accounting assumption that
a business exists independently
of its owner’s personal holdings.
The accounting records and
reports are maintained separately
and contain financial information
related only to the business.
Going concern
Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Accounting Assumptions
Section 2.2 Accounting: The Universal
Language of Business
GAAP Assumptions
Business entity
accounting period
The period of time covered by
an accounting report.
Accounting period
Going concern
Glencoe Accounting
going concern
The accounting assumption that a
business is expected to operate
indefinitely.
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Question 1
DePalm Pizza had the following cash transactions yesterday.
Receipts (money in): Checks: $650.00, Cash $500.00
Expenditures (money out): Gas and oil for delivery vehicle $75.98,
supplies $477.50, salaries $380.00, and miscellaneous expenditures
$123.76.
Did DePalm have a “profit” or “loss” for the day?
Step 1
Step 2
Step 3
Glencoe Accounting
Calculate the total receipts.
$650.00 + $500.00 = $1,150
Calculate the total expenditures.
$75.98 + $477.50 + $380.00 + $123.76 = $1,057.24
Calculate the net profit (loss).
$1,150.00 - $1,057.24 = $92.76 profit (Receipts exceed expenditures)
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Question 2
Sole proprietorship is the most popular form of business
ownership, yet very few large businesses are sole proprietorships.
Give at least two reasons to explain this.
1. Sole proprietorships have the expertise of only the owner to call on.
For example, the owner may be a great accountant but only a fair
salesperson.
2. The business has the promise of only one owner to use to try to
secure money from investors or lenders.
3. The owner bears all of the risk of loss, or unlimited liability. The
owner could lose personal equity if the business fails.
4. The most talented potential employees would tend to prefer the job
security of working in larger firms.
Glencoe Accounting
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