•Describe for the students the primary objectives of accounting.

•Explain the basic terminology of the accounting process or financial reporting.
•Explain how accounting can affect your personal life emphasizing professional ethics

A company purchased $4,000 worth of supplies in May. On May 31, the balance in the Supplies account was $2,600. The adjusting entry includes a $1,400 debit to Supplies

1. The primary objectives of accounting are as follows:

a) Recording Financial Transactions: Accounting aims to accurately record all the financial transactions of a business. This includes tracking revenue, expenses, assets, and liabilities to provide an accurate representation of the company's financial position.

b) Communicating Financial Information: Accounting helps in communicating financial information to various stakeholders, such as investors, creditors, and management. It involves preparing financial statements, including the balance sheet, income statement, and cash flow statement, to present a clear picture of the company's financial health.

c) Decision Making: Accounting provides financial data that helps in making informed decisions. By analyzing financial statements and reports, businesses can determine profitability, identify areas of improvement, assess business risks, and make strategic decisions for growth and sustainability.

d) Compliance and Legal Requirements: Accounting ensures that businesses comply with financial reporting regulations and legal requirements. By accurately and transparently reporting financial information, businesses can maintain credibility and avoid penalties or legal consequences.

2. The basic terminology of the accounting process or financial reporting includes:

a) Assets: Assets are resources owned by a company that have economic value and can be used to generate revenue. Examples include cash, inventory, property, and equipment.

b) Liabilities: Liabilities are obligations or debts that an organization owes to external parties. This includes loans, accounts payable, and accrued expenses.

c) Equity: Equity represents the residual interest in the assets of an organization after deducting liabilities. It represents the owner's claim on the company's assets and can be calculated as the difference between assets and liabilities.

d) Revenue: Revenue refers to the inflow of economic benefits generated from the sale of goods or services. It represents the company's income earned from its primary operations.

e) Expenses: Expenses are costs incurred by a business to generate revenue. This includes salaries, rent, utilities, and other operating expenses.

f) Profit/Loss: Profit is the excess of revenue over expenses, indicating the company's positive financial performance. Loss, on the other hand, is the excess of expenses over revenue, indicating negative financial performance.

3. Accounting can affect your personal life by emphasizing professional ethics, which include:

a) Integrity: Accounting ethics emphasizes the importance of honesty, trustworthiness, and accuracy in financial reporting. Upholding integrity in personal financial matters ensures transparency, builds trust, and maintains credibility.

b) Confidentiality: Accounting professionals are often privy to sensitive financial information. Protecting the confidentiality of personal financial data is crucial for maintaining privacy and avoiding misuse or fraud.

c) Objectivity: Being objective means presenting financial information without bias or personal interest. It ensures fair representation and unbiased analysis, both in personal financial decisions and professional accounting practices.

d) Professional Competence: Accounting ethics emphasizes continuous learning and professional development. By improving personal financial knowledge and skills, individuals can make informed decisions and optimize their financial well-being.

e) Compliance with Laws and Regulations: Adhering to legal and regulatory requirements ensures personal financial activities are conducted lawfully. This includes filing tax returns accurately, avoiding tax evasion, and adhering to financial regulations.

By following these ethical principles, individuals can make responsible financial decisions, maintain good financial health, and contribute to a fair and trustworthy financial system.