actg 2010 - 2013w - week 2
TRANSCRIPT
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Intro. to Financial Accounting I
ACTG 2010 SWinter 2013
Week 2
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Reminders
Lyryx Lab Assignment #1 due next week
By 11:59pm on Tuesday, Jan 22!
Take attendance (final time)
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Financial Statements
What are they?
Lets look at an example: http://www.alarmforce.com/pdf/2011_Annual_Report.pdf
What information can we obtain from thefinancial statements?
http://www.alarmforce.com/pdf/2011_Annual_Report.pdfhttp://www.alarmforce.com/pdf/2011_Annual_Report.pdf -
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Financial Statements
General purpose
Prepared at least once a year
Report information for a fiscal period
Public companiesmust use IFRS
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Balance Sheet
Financial position at a point in time
Assets = Liabilities + Owners Equity
In-class problemexercise E2-1
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Assets
IFRS criteria:
Controlled by entity
Result of past transaction or event
Provides measurable future benefit
It is probable that the future benefit will berealized by the entity
Consider: inventory, car, advertising
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Liabilities
Obligations to pay $ or provide
goods/services to other entities, as a resultof a past transaction or economic event
May or may not represent a legal liability
Consider: car loan, unearned revenue, warranty..
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Owners Equity
The investment in or value of an entity
Capital Stock
Retained Earnings
Called deficit if negative
In-class exercise E2-10prepare BS
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Revenue = money earned
Expenses = costs incurred to earn money
Revenue less Expenses = Net Income
Reports activities over a period of time
In-class exerciseP2-3prepare IS
Income Statement
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Statement of Retained Earnings
Beginning Retained Earnings
plus Net Income
minus Dividends
Ending Retained Earnings
Often shown at bottom of IS, not as aseparate statement
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Accountingcash vs. accrual
Cash actg. measures impact of
transactions involving cash Accrual accounting measures economic
impact of transactions and economic
events, whether they involve cash or not See chart on page 93 of textbook
Eg. Consider amortization
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Cash Flow Statement
Summarizes changes to the cash balance
over the fiscal period
Divided into 3 types of activities:
Operating
Investing
Financing
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Link Between BS, IS and CFS
Refer to chart on page 53 of the textbook
This is fundamental
Need IS to do BS, so usually do IS first
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Notes to Financial Statements
Provide further information/description of
the figures shown on the FS
Disclose basic information regarding the
business of the entity
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Special-Purpose Reports
FS are general purpose
Many users may need more specificinformation
This is referred to as a special-purpose
report when provided by the entity tousers
E.g. operating budget for upcoming year
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Analysis of Financial Statements
Current ratio
Debt-to-equity ratio
Gross margin percentage
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Comprehensive Income
Mentioned in chapter 2
Ignore this concept for purposes of thiscourse
It will be covered in detail in chapter 10(ACTG 2011)
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Wrap-up
In-class problemexercise E2-12
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Next Week
Chapter 3Accounting Cycle