In Alberta, you cannot take a

picture of a man with a wooden

leg. Why not?

Accounting Principles 30SAn Introduction

Why Study Accounting?

• Accounting on the Job– Finding employment in a

business is easier if you have a background in accounting

• Accounting in Daily Life– Accounting will help you to

better handle your personal business affairs such as preparing a personal budget, keeping personal financial records, and preparing your income tax return

• Accounting for Your Own Business– If a business is to be successful, the

owner must be able to make sound management decisions based on good financial records

• Accounting as a Profession– Chartered Accountant (CA)– Certified General Accountant (CGA)– Certified Management Accountant

(CMA)

What is Accounting?

• The purpose of accounting is to provide financial information for decision making– Is the business earning enough profit?– How much does the business owe?– Is this a good investment opportunity?

• Every accounting system must:– Record day-to-day financial activities of the

business (e.g. all money coming in and out)– Summarize and report information in financial

statements for analysis and decision making

What is a Business?

• A business involves the manufacture and/or sale of goods or services in order to earn profit

Four Types of Business

1. Service Business– Sells a service to the

public (does not sell a product)

– e.g. Hair Salon2. Merchandise Business

– Buys goods and resells them at a higher price for profit

– e.g. Supermarket

3. Manufacturing Business– The manufacturing business

buys raw materials, converts them into a new product, and sells these products to earn a profit

– e.g. Paper Mill4. Non-Profit Organization

– Carries on activities to meet social needs and not for a financial profit

– e.g. Cancer Society

Accounting Cycle