Chapter+1+Notes+-+Introduction+to+Accounting

__**SO 1 - 2**__ Homework: SS1, SS2, SS3; BE1-1 Highlights: definition of accounting; internal and external users (stakeholders) of financial information; bookkeeping vs. accounting; historical accounting designations - CA, CGA, CMA -> since replaced by CPA designation in Canada; accounting fields/occupations within public, private/managerial (industry), not-for profit, government, education


 * in order to become a licensed CPA, ** ** each of these associations requires its members to complete **


 * (a) a university degree that includes a number of specified courses (e.g., economics, accounting, law, etc.) within that program of study **
 * (b) 30 months of practical work experience within an accounting environment **
 * (c) a six-module specialized training course with evaluations known as the Professional Education Program (PEP) and **
 * (d) a standardized three-day exam known as the Common Final Examination (CFE) **

- click here for a link to the CPA Ontario website containing a summary of the requirements to become a CPA in Ontario

__**SO 3 - 5**__ Homework: SS4, SS5, SS6, SS7; BE1-2; E1-1, E1-2 Highlights: ethics in accounting; solving ethical dilemmas; generally accepted accounting principles (GAAPs) - cost principle supported by going concern assumption, monetary unit assumption, economic/business entity assumption -> GAAPs recently replaced by IFRS for public companies and ASPE for private companies in Canada; legal forms of business ownership: sole proprietorships, partnerships, private and public corporations

Homework: SS8, SS10, SS11; BE1-5, BE1-7, BE1-8; E1-3(a), E1-6 Highlights: basic/fundamental accounting equation (A = L + OE); assets, liabilities, owner's equity; owner's equity: owner investments, owner drawings, revenues, expenses; balance sheet equity section of sole proprietorship, partnership and corporation; business transactions/economic events (external & internal); transaction analysis using fundamental accounting equation
 * __SO 6 - 7__**

Please note the following:

a. the textbook refers to net profit (R - E when R > E) as net income on page 16 b. in chapter 1 of the textbook, all transactions involving owner equity accounts (revenues, expenses, investments and drawings) are recorded under the __Capital__ account in order to illustrate the fundamental accounting equation.

Homework: BE1-10, BE1-11, BE1-12; E1-7, E1-10 (a) Highlights: four primary financial statements: income statement (statement of earnings/operations), statement of owner's equity, balance sheet (statement of financial position), cash flow statement (statement of changes in financial position); annual reports of public corporations containing financial statements and accompanying data; accountant's role to analyze and interpret data found in financial statemen
 * __SO 8__**


 * __Analyzing transactions using the fundamental accounting equation (A = L + OE)__**

1) Purchased supplies for $300 cash

(300) ||  ||   ||
 * ** Assets ** || ** Liabilities ** || **Owner’s Equity**   **(CRED**)  ||
 * 300

2) Owner invested $1000 cash


 * ** Assets ** || ** Liabilities ** || **Owner’s Equity**   **(CRED**)  ||
 * 1000 ||  || 1000 ||

3) Received $500 prepayment from client (Unearned Revenue - liability)


 * ** Assets ** || ** Liabilities ** || ** Owner’s Equity ** ** (CRED) ** ||
 * 500 || 500 ||  ||

4) Provided service for $1600 on account


 * ** Assets ** || ** Liabilities ** || **Owner’s Equity**   **(CRED**)  ||
 * 1600 ||  || 1600 ||

5) Purchased automobile for $8000, paid $3000 with balance outstanding

(3000) || 5000 ||  ||
 * ** Assets ** || ** Liabilities ** || ** Owner’s Equity ** ** (CRED) ** ||
 * 8000

6) Received $100 bill for advertising

. . Owner investments (Capital) and ordinary revenues __increase__ Owner's Equity Owner withdrawals (Drawings) and ordinary expenses __decrease__ Owner's Equity Sale of a company asset for a gain in an extraordinary transaction __increases__ Owner's Equity (Capital) Sale of a company asset for a loss in an extraordinary transaction __decreases__ Owner's Equity (Capital)
 * ** Assets ** || ** Liabilities ** || ** Owner’s Equity ** ** (CRED) ** ||
 * || 100 || (100) ||
 * __Impact of specific transactions on Owner's Equity__**