《西方财务会计》课件.ppt

,Chapter 2 Basic Financial Statements,Introduction to Financial Statements,Three primary financial statements.,Introduction to Financial Statements,Introduction to Financial Statements,Introduction to Financial Statements,A Starting Point:Statement of Financial Position,Heading(p39),Body(p39),Assets,Assets are economic resources that are owned by the business and are expected to benefit future operations.,Assets,Resources,Assets,Generate Positive Cash Flows(Cash Inflows),Directly converted into cash(collection of receivables),Indirectly used in operating the business to create other assets that result in positive cash flows(used to produce the products for sale),Tangible(have physical existence),Intangible(like in the form of valuable rights),A summary of p40,Assets,Cost Principle,Going-ConcernAssumption,Objectivity Principle,Stable-DollarAssumption,These accounting principles support cost as the basis for asset valuation.,Liabilities,Liabilities are debts that represent negative future cash flows for the enterprise.,Owners Equity,Owners equity represents the owners claims on the assets of the business.,Owners Equity,Changes in Owners Equity,The Accounting Equation,The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the companys stockholders.Assets=Liabilities+Owners Equity,What things the business owns,Who supplied these resources to the business and how much each group supplied,The Accounting Equation,Assets=Liabilities+Owners Equity$300,000=$80,000+$220,000,P41 Your Turn,Would there be any different motivation when you report the value of your home to the city assessor,when comparing with when reporting to the potential buyers?,Overnight Auto Service p44,Business entity:Overnight Auto ServiceAccounting policies:Prepare formal financial statements,On Jan 21,McBryan and his family invested$8,000 in Overnight Auto Service and received 800 shares of stock.,On Jan 20,Overnight Auto Service purchased the land for$52 000 cash.,On Jan 22,Overnight purchased the abandoned bus garage for$36 000.Overnight made a cash down payment of$6 000 and issued a 90-day non-interest bearing note payable for the$30 000 balance owned.,Purchase on account:a deferral of paymentsInstallment payment,On Jan 23,Overnight purchased tools and automotive repair equipment on account.The purchase was$13,800,due within 60 days.,On Jan 24,Overnight sold the excess tools for$1,800,a price equal to Overnights cost.Ace made no down payment but to pay the amount due within 45 days.,On Jan 26,Overnight received$600 from Ace Towling as partial settlement of its account receivable from Ace.,On Jan 27,Overnight made a partial payment of$6,800 on its account payable to Snappy tools.,On Jan 31,Overnight record the$22,000 accumulated service revenue for January.,On Jan 31,Overnight paid$200 utilities and$1,200 wages.,The expanded accounting equation,Now,lets review how JJs transactions affected the accounting equation.(the expanded accounting equation p50),Income Statement,Statement of Cash Flows,The cash flow statement reports the cash generated and used during the time interval specified in its heading.,Statement of Cash Flows p51,It organizes and reports the cash generated and used in the following categories:Operating activities converts the items reported on the income statement from the accrual basis of accounting to cash.Investing activitiesreports the purchase and sale of long-term investments and property,plant and equipment.Financing activitiesreports the issuance and repurchase of the companys own bonds and stock and the payment of dividends.,Statement of Cash Flows,The operating,investing,and financing categories include both positive and negative cash flows.The combined total of the three categories of the statement explains the total change in cash from the beginning to the end of the period.It is not unusual for a company to report an increase in cash from operating activities,but a decrease in the total amount of cash.,Relationships Among Financial Statements,Financial Statement Articulation,Financial Reporting and Financial Statements,Financial statements are just one source of financial accounting information.,The Use of Financial Statements by External Parties,Creditors,Investors,Two concerns:LiquidityProfitability,The Need for Adequate Disclosure,Managements Interest in Financial Statements,Take action to improve areas of weak performanceThe ability to obtain funds Strong statement of financial positionStrong income statementStrong statement of cash flows,Window dressing occurs when management takes measures to make the company appear as strong as possible in it financial statements.,