ch 1 accounting

AC 201 Fundamental Accounting

.201 1 2557

..

Robert Libby, Patricia A. Libby and Daniel G. Short,

Financial Accounting, 7th edition, McGraw-Hill, 2011.

Understanding the Business

2. Manufacture product

Ingredient Coffee Making Process Final Product

1. Purchase parts and labor

Machine Ingredient Staff Furniture


3. Sell products to customers

4. Collect cash from customers and pay to creditors

or

Customer Order Coffee Brewing based on Customer Order Serve/deliver


Sell products to customers : ?

()

/ /

() 1) / ?

= /

()

Lattes @ 50 * 600 30,000 Cappuciano @ 60 * 500 30,000 Espresso @ 70 * 200 14,000 74,000

20,000 30,000 15,000 65,000 9,000

Coffee A Co.

2557


Sell products to customers : ?

()

2.

() 2) ? ? =

()

50,000 30,000 300,000 380,000

30,000 100,000 - 15,000 145,000 235,000

Coffee A Co.

2557


Operating Activities ()

The Role of Accounting in Business ()

/

Staff

/

/ /


Investing Activities ()


/

/

/


(owner) (investor)

(bank)

Ingredient

? 300,000 * 2 = 600,000

?

/

Financing Activities ()

/

/

(Accounting)

(Accounting Process)

1. Recording

2. Classifying

3. Summarizing

4. Interpreting

(Bookkeeping)

(Transaction)

- - -

Reports information to decision

makers

Managers (internal decision makers)

Investors and

Creditors (external decision makers)

(Financial

Accounting)

(Managerial Accounting)

(Tax

Accounting)

1. 2. 3. 4. 5. 6.

1. 2.

(Stakeholders)

(The Role of Accounting in Business) 3 - - -

(Business Activity)

1. (Financing activities)

2. (Investing activities)

3. (Operating activities)

(Financial Statement)

1. (Balance Sheet)

2. (Income Statement)

3. (Statement of Change in

Shareholders Equity)

4. (Cash Flow Statement)

5. (Accounting Policy and Note to Financial Statements)

Users of financial statements

Management Government

Loan providers Potential Investors

Public

Customers

Trade creditors

Employees Shareholders/

Investors

Users Focus on investors

Management Government

Loan providers Manager

Public

Customers

Trade creditors Employees

Shareholders/ Investors

to decide whether to grant a loan or credit to a business.

to assess the risk and return of their investment in the company and take investment decisions based on their analysis

to manage the affairs of the company by assessing its financial performance and position and taking important business decisions

to assess the credit worthiness of a business and ascertain whether to supply goods on credit

(Financial Statement) 1.

2.

3.

(Financial Statement)

2 1. (Accrual basis)

2. (The Going-Concern Principle)

( ) (Statement of Financial Position)

AssetsCash 14,000$ Accounts Receivable 1,000 Supplies 3,000 Equipment 40,000 Total Assets 58,000$

LiabilitiesAccounts Payable 7,000$ Notes Payable 20,000 Total Liabilities 27,000 Stockholders' EquityContributed Capital 30,000 Retained Earnings 1,000 Total Stockholders' Equity 31,000 Total Liabilities and Stockholders' Equity 58,000$

PIZZA AROMA, INC.Balance Sheet

At September 30, 2010

= + ()

(Assets)

1. 2.

3.

1

(Asset)

(Current Assets)

(Non Current Assets)

(Liabilities)

(Current Liabilities)

(Non Current Liabilities)

(Stockholders Equity)

(Capital Stock)

(Retained Earning)

(Short-term investment)

(Accounts receivable)

(Inventories)

- (Prepaid expenses) -

(Accrued revenue)

1

(Tangible assets)

(Intangible assets)

(Liabilities)

1. 2. 3.

(Notes

Payable)

(Accounts Payable)

1

(Loans)

(Bank overdrafts)

(Notes payable)

(Accounts payable)

(Accrued expenses)

1.

2. 3. 12

4.

12

1

(Long-term liabilities)

/

(Stockholders Equity)

(Capital Stock)

(Retained Earnings)

=

(Shareholders Equity)

=

Stock Certificate

Contributed

Capital

Retained Earnings

(Income Statement)

RevenuesPizza Revenue 11,000$ Total Revenue 11,000

ExpensesSupplies Expense 4,000 Wages Expense 2,000 Rent Expense 1,500 Utilities Expense 600 Insurance Expense 300 Advertising Expense 100 Income Tax Expense 500 Total Expenses 9,000 Net Income 2,000$

For the Month Ended September 30, 2010Income StatementPIZZA AROMA, INC.

Revenues

Expenses

=

Net Income

(Accrual Basis Accounting)

( Cash Basis )

()


(Revenue Recognition Principle) 1. (Reward) (Risk)

2.

(Economic Benefit)

(Revenue Recognition Principle)

Case 1: Month 1 Month 2 Case 2: Month 1 Month 2

(Revenue Recognition Principle)

(Matching Principle) Case 1: Month 1 Month 2 Case 2:

Month 1 Month 2

Staff

(MATCHING CONCEPT)

Month 1 Month 2

:

:

(Time Period Concept)

12

12 1 31

Y0 Y1

Y2 Y3 Y4 Y5

1 . 53

31 . 54 1 . 54

31 . 53

(Dividends)

(Retained Earnings) Beg. B/L of

R/E

Net Income

Dividends

End B/L of R/E

Dividends are not an expense() .

3 1.

CFO (Cash Flows from Operating Activities 2. CFI (Cash Flows from Investing Activities) 3. CFF (Cash Flows from Financing Activities)

(Operating Activities)

....

... , , , , ,

(Investing Activities)

... -

-

(Financing Activities) ...

... , , , ,

Operating Activities ()


/

Staff


Investing Activities ()


/

Understanding the Business The Role of Accounting in Business ()

(owner) (investor)

(bank)

Financing Activities ()

/

Ingredient

(bank)

Cash Flow from Operating Activities (CFO)

1 1

2

3

()

CFI CFO CFF Change in Cash

1

2

3

4

(Sole Proprietorship) (SMEs)

(Partnership) 2 1. (Ordinary Partnership) - -

2. (Limited Partnership) - -

(Corporation or Limited

Company)

(Dividend)

1. (Private Company Limited)

7

2. (Public Company Limited)

15

(Triple Bottom Line Reporting: TBL) 3

(Environment) -

(Social) -

(Economic) -

Appendix: Companys Financial Statement and Management Analysis

1 2 3

Value Chain

2

3

Valu

e C

hain

1

1 2 3

4 5

1

2 3 4 5 6 7

8

1

2 3 4 5 6 7

1

2 3 4

Hotel

Food and Beverage

1

2

3

AC 201 Fundamental AccountingSlide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10 (Accounting Process)Slide Number 13 (The Role of Accounting in Business) (Business Activity)Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20 ( )(Statement of Financial Position) (Assets)Slide Number 24Slide Number 25 (Liabilities)Slide Number 27Slide Number 28Slide Number 29 (Shareholders Equity) (Income Statement) Slide Number 32Slide Number 33Slide Number 34Slide Number 35Slide Number 36 (MATCHING CONCEPT) Slide Number 39 (Dividends) (Retained Earnings) (Retained Earnings)(Operating Activities) (Investing Activities) (Financing Activities)Slide Number 48Slide Number 49Slide Number 50 ()Slide Number 53Slide Number 54Slide Number 55Slide Number 56Slide Number 57Value Chain Value Chain Slide Number 60Slide Number 61Slide Number 62Slide Number 63Slide Number 64Slide Number 65Slide Number 66Slide Number 67Slide Number 68Slide Number 69Slide Number 70Slide Number 71Slide Number 72Slide Number 73Slide Number 74Slide Number 75Food and BeverageFood and BeverageFood and BeverageSlide Number 79Slide Number 80Slide Number 81Slide Number 82

ch 1 accounting

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