© 2014 cengage learning. all rights reserved. do now ●create a kwl chart regarding corporations....

© 2014 Cengage Learning. All Rights Reserved.

Do Now

● Create a KWL Chart regarding corporations. ● What do you know and what would you like to

know/are unsure about? ● Do not fill in the learned part yet!

● SIMULATION AUDIT TEST

SLIDE 1


Merchandising Businesses

● Goods that a business purchases to sell are called merchandise.

● A business that purchases and resells goods is called a merchandising business.

● A merchandising business that sells to those who use or consume the goods is called a retail merchandising business.

● A wholesale merchandising business buys and resells merchandise primarily to other merchandising businesses, but sometimes sell to individual consumers

SLIDE 2

Lesson 9-1

LO1


Pair & Share

● What are merchandising businesses that you know of in Robbinsville?

SLIDE 3


Forming a Corporation

● A corporation is an organization with the legal rights of a person which many persons or other corporations may own.

● The assets or other financial resources available to a business are called capital.● One way a corporation obtains capital to operate

is by selling units of ownership in the company

SLIDE 4

LO2

Lesson 9-1

Continued on next slide.



● Each unit of ownership in a corporation is called a share of stock.

● The owner of one or more shares of stock is called a stockholder.

● The total shares of ownership in a corporation are called capital stock.

● Corporations can also borrow money to raise capital

SLIDE 5

LO2

Lesson 9-1

Continued on next slide.

Continued from previous slide.



● The articles of incorporation, a legal document that identifies basic characteristics of a corporation, is a part of the application submitted to a state to become a corporation. ● Include name and address of business, purpose,

limitations on activities, and rules for dissolving● A state approves the formation of a corporation

by issuing a charter, the legal right for a business to conduct operations as a corporation.

SLIDE 6

LO2

Lesson 9-1

Continued from previous slide.


Proprietorship vs. Corporation

Proprietorship● Single capital and

drawing account for owner

● Accounting information kept separate from personal record of owners (Business Entity)

Corporation● Separate capital

accounts for stock issued and for earnings kept in business

● Accounting information kept separate from personal record of owners (Business Entity)

SLIDE 7


Corporations

● Financial statements created for stockholders’ knowledge

● Exists independent of owners and expects to continue beyond owner’s lifetime and shares of stock may go to owner’s children in future● Going Concern accounting concept

SLIDE 8


Group Activity

● Illustrate what makes a corporation a corporation, including visuals of the definitions previously mentioned

SLIDE 9


Subsidiary Ledgers and Controlling Accounts

● A business from which merchandise, supplies, or other assets are purchased is called a vendor. ● Business must know amount owed to each vendor

to ensure it pays bills timely● A ledger that is summarized in a single general

ledger account is called a subsidiary ledger. ● Accountants often refer to a subsidiary ledger as a subledger.

SLIDE 10

LO3

Lesson 9-1



● The subsidiary ledger containing vendor accounts is called an accounts payable ledger.● Total amount owed to vendors equals balance in Accounts

Payable general ledger account ● An account in a general ledger that summarizes all accounts

in a subsidiary ledger is called a controlling account.● Three-digit numbers for accounts payable ledger

● First digit identifies division in which controlling accounts appears in general ledger

● Next two digits unique to vendor● Accounts located by number or name in subsidiary ledger

SLIDE 11

LO3

Lesson 9-1



SLIDE 12

LO3

Lesson 9-1


Subsidiary Ledger Form

SLIDE 13

LO3

Lesson 9-1

Same column headings

3Date

1 Account Name 2 Account Number

4 Balance

6 Account Balance

5 Check Mark

Accounts payable has normal credit balance , so it doesn’t need a debit balance column


Think & Ink

● Why are these subsidiary ledgers necessary?

● If you had your own business, which method would you like better and why?

SLIDE 14


Individual Activity

● Create your own controlling and subsidiary ledgers and assign account numbers to each of them

SLIDE 15


Lesson 9-1 Audit Your Understanding

1. What is the primary difference between retail and wholesale merchandising businesses?

SLIDE 16

ANSWER

A retail merchandising business sells to those who use or consume the goods. A wholesale merchandising business buys and resells merchandise primarily to other merchandising businesses.

Lesson 9-1



2. What allows a corporation to own property, incur liabilities, and enter into contracts in its own name?

SLIDE 17

ANSWER

A corporation, through the rights granted in its charter, has the legal rights of a person.

Lesson 9-1



3. What is the principal difference between the accounting records of proprietorships and corporations?

SLIDE 18

ANSWER

Proprietorships have a single capital and drawing account for the owner. A corporation has separate capital accounts for the stock issued and for the earnings kept in the business.

Lesson 9-1



4. What is the relationship between a controlling account and a subsidiary ledger?

SLIDE 19

ANSWER

The sum of the subsidiary ledger accounts is equal to the balance in the general ledger controlling account.

Lesson 9-1



5. What column on a general ledger form is not on an accounts payable ledger form?

SLIDE 20

ANSWER

Debit Balance

Lesson 9-1


Your Turn

● As a class, let’s complete 9-1 Work Together

● Closure:● Finish your KWL Chart!

SLIDE 21

© 2014 cengage learning. all rights reserved. do now ●create a kwl chart regarding corporations....

Documents

cengage learning

business purchases

accountsa business

address of business

retail merchandising

legal rights

corporationa corporation

capital stock