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FA BOOK Final REVIEW

The document provides a summary of key terms from chapters 1-3 of the book "The Accounting Game". It defines terms like assets, liabilities, owner's equity, balance sheet, inventory, earnings, expenses, gross profit, net profit, income statement, cash flow, retained earnings, loans/credit, accounts payable, notes payable. The book uses a story format about a child running a lemonade stand to make accounting concepts easy to understand. It provides color-coded charts and worksheets to help readers learn and apply financial concepts.

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Sayandeep Shill
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65 views31 pages

FA BOOK Final REVIEW

The document provides a summary of key terms from chapters 1-3 of the book "The Accounting Game". It defines terms like assets, liabilities, owner's equity, balance sheet, inventory, earnings, expenses, gross profit, net profit, income statement, cash flow, retained earnings, loans/credit, accounts payable, notes payable. The book uses a story format about a child running a lemonade stand to make accounting concepts easy to understand. It provides color-coded charts and worksheets to help readers learn and apply financial concepts.

Uploaded by

Sayandeep Shill
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 31

TEAM 11

 RISHIKA DINESH GANDHI

 RIYA D

 RISHITA KOTHARI

 RITHIKA CHHETRI

 RAJMAOULI
THE
ACCOUNTING
GAME
BY: Darrell Mullis & Judith Orloff
INTRODUCTION
• The world of accounting can be intimidating.
Whether you're a manager, business owner,
aspiring entrepreneur, or taking a college
course in accounting, you'll find yourself need
to know the basics...but baffled by complicated
accounting books.
• The Accounting Game presents financial
information in a format so simple and so unlike
a common accounting textbook, you may forget
you're learning key skills that will help you get
ahead!
● The book has:
● Interactive format gives you hands-on
experience
● Color-coded charts and worksheets help
you remember key terms
● Step-by-step process takes you from novice
to expert with ease
● Fun story format speeds retention of
essential concepts
● Designed to apply what you learn to the real
world
AUTHORS
Author(s), in their unique childish way, makes us understand the basics of accounting by
telling a story of a 9-year old boy who set up a lemonade stand and does its finances on his
own.

Judith Orloff Darrell Mullis


has been in education industry for more has been teaching learning
than 25 years by transforming people technology and developed training
lives through self-awareness and programs for trainers for twelve
education.  She is also the founder years. He has also taught over 300
Burlington College in Vermont, US and Accounting Games seminar in
Educational Discoveries, Inc. US.
CHAPTER 01
1. Cash
2. Assets
3. Liabilities
4. Notes Payable
5. Owner’s Equity
6. Balance Sheets
7. Inventory
8. Earnings
9. Expenses
CASH
Cash is legal tender—currency or coins
—that can be used to exchange goods,
debt, or services. Sometimes it also
includes the value of assets that can be
easily converted into cash immediately,
as reported by a company.
ASSETS
An asset is anything of value or a
resource of value that can be converted
into cash. Individuals, companies, and
governments own assets. For a company,
an asset might generate revenue, or a
company might benefit in some way
from owning or using the asset.
LIABILITIES
A liability is something a person or
company owes, usually a sum of money.
Liabilities are settled over time through
the transfer of economic benefits
including money, goods, or services.
Recorded on the right side of the 
balance sheet, liabilities include loans, 
accounts payable, mortgages, deferred
revenues, bonds, warranties, and accrued
expenses.
NOTES PAYABLE
Notes payable is a liability account
where a borrower records a written
promise to repay the lender. When
carrying out and accounting for notes
payable, "the maker" of the note creates
liability by borrowing from another
entity, promising to repay the payee with
interest.
OWNER’S EQUITY
The equity meaning in accounting refers
to a company's book value, which is the
difference between liabilities and assets
on the balance sheet. This is also called
the owner's equity, as it's the value that
an owner of a business has left over after
liabilities are deducted.

ASSETS = CAPITAL + LIABILITIES

CAPITAL = ASSETS - LIABILITIES


BALANCE SHEET
A balance sheet is a financial statement
that reports a company's assets, liabilities,
and shareholder equity. The balance sheet
is one of the three core financial
statements that are used to evaluate a
business. It provides a snapshot of a
company's finances (what it owns and
owes) as of the date of publication.
INVENTORY
Inventory is the raw materials used to
produce goods as well as the goods that
are available for sale. It is classified as a
current asset on a company's balance
sheet. The three types of inventory
include raw materials, work-in-progress,
and finished goods.
EARNINGS
A company's earnings are its after-tax 
net income. This is the company's 
bottom line or its profits. Earnings are
perhaps the single most important and
most closely studied number in a
company's financial statements.
EXPENSES
An expense is the cost of operations that
a company incurs to generate revenue.
As the popular saying goes, “it costs
money to make money.” An expense
is the cost of operations that a company
incurs to generate revenue. Businesses
can write off tax-deductible expenses on
their income tax returns, provided that
they meet the IRS’ guidelines.
CHAPTER 02
1. Gross Profit
2.Net Profit
3.Income Statements
4.Cash Flow
GROSS PROFIT

Gross profit is the profit a company makes after


deducting the costs associated with making and
selling it’s products.

SALES – COGS(COST OF GOODS SOLD) = GROSS


PROFIT
NET PROFIT

Net profit is a company’s total earnings after


subtracting all expenses.

GROSS PROFIT – EXPENSES = NET PROFIT


INCOME STATEMENT

An
income statement is a financial statement that shows the
company’s income and expenditures. It also shows
whether a company is making profit or loss for a given
period .
CASH FLOW

Cash flow is the increase or decrease in the


amount of money a business, institution, or
individual has
CHAPTER 03
1.Retained Earnings
2.Loans Credit
3.Accounts Payable
4.Notes Payable
RETAINED EARNINGS
Earnings that are history, or earnings from past accounting periods are called retained
earnings.

Retained earnings (RE) is the amount of net income left over for the business after it
has paid out dividends to its shareholders
The decision to retain the earnings or distribute them among the shareholders is usually
left to the company management.
A growth-focused company may not pay dividends at all or pay very small amounts
because it may prefer to use the retained earnings to finance expansion activities.
Note payable
Loans
Notes payable represent
a thing that is borrowed, liabilities owed to
especially a sum of money financial institutions
that is expected to be paid captured in the form of
back with interest. formal promissory notes
Credit
the ability of a customer to
obtain goods or services
before payment, based on
the trust that payment will
be made in the future.
Accounts Payable
Accounts payable (AP) are
amounts due to vendors or
suppliers for goods or services
received that have not yet been
paid for. The sum of all
outstanding amounts owed to
vendors is shown as the
accounts payable balance on the
company's balance sheet.
CHAPTER 07
1.Cash Statements
2.Fixed Assets
3.Capitalization 4.Depreciation
FIXED ASSET
• Fixed assets refers to a long term tangible assets.

• Difference between non current asset and fixed asset


is that, non current in addition to fixed asset also
include intangible and long term investment.

• The main feature of fixed asset is that it is subject to


periodic depreciation.

• Fixed assets looses value as they age.

• Few examples of fixed assets are: land, building,


furniture etc
DEPRICIATION

The term depreciation refers to


decrease in monetary value of an
asset over time due to use, wear and
hor is licensed under CC BY
tear etc.
OBJECTIVES OF CALCULATING
DEPRICIATION

TRUE FINANCIAL POSITION

CORRECT COST OF PRODUCTION

REPLACEMENT OF ASSETS
CAUSES OF
DEPRICIATION:
• WEAR AND TEAR

• PERISHABILITY

• USUAGE RIGHTS

• NATURAL RESOURCE USUAGE This Photo

• INEFFICIENCY/OBSOLESCENCE
CONCLUSION
The glossary at the end is very helpful to understand the
terminologies used.
It is a book for people without accounting background, but also a
book helps any startup company owners to know their
financial figures or business plan using an example of
lemonade stand.
This method of learning like a child is intended to promote
understanding and retention of the material by accessing the
part of the brain where long-term memory resides. 
THANK
YOU

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