Slide 2-1 ECON 3A UCSB ANDERSON ECON 3A UCSB ANDERSON Financial Statements and the Financial Statements and the Annual Report Annual Report Chapter 2 Chapter 2
Dec 19, 2015
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Financial Statements and Financial Statements and the Annual Reportthe Annual Report
Financial Statements and Financial Statements and the Annual Reportthe Annual Report
Chapter 2Chapter 2
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Objectives of Financial ReportingObjectives of Financial ReportingObjectives of Financial ReportingObjectives of Financial Reporting
(a)(a) PROVIDE USEFUL INFORMATIONPROVIDE USEFUL INFORMATION
Financial reporting should provide information that is Financial reporting should provide information that is useful to present and potential investors and useful to present and potential investors and creditors and other users in making rational creditors and other users in making rational investment, credit, and similar decisions. investment, credit, and similar decisions.
The information should be comprehensible to those The information should be comprehensible to those who have a reasonable who have a reasonable understanding understanding of business of business and economic activities and are willing to study the and economic activities and are willing to study the information with reasonable diligence.information with reasonable diligence.11
(a)(a) PROVIDE USEFUL INFORMATIONPROVIDE USEFUL INFORMATION
Financial reporting should provide information that is Financial reporting should provide information that is useful to present and potential investors and useful to present and potential investors and creditors and other users in making rational creditors and other users in making rational investment, credit, and similar decisions. investment, credit, and similar decisions.
The information should be comprehensible to those The information should be comprehensible to those who have a reasonable who have a reasonable understanding understanding of business of business and economic activities and are willing to study the and economic activities and are willing to study the information with reasonable diligence.information with reasonable diligence.11
LO 1 Describe the objectives of financial reporting.
1Statement of Financial Accounting Concepts (SFAC) No. 11Statement of Financial Accounting Concepts (SFAC) No. 1
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Objectives of Financial ReportingObjectives of Financial ReportingObjectives of Financial ReportingObjectives of Financial Reporting
(b)(b) REFLECT INFORMATION ON CASH FLOWSREFLECT INFORMATION ON CASH FLOWS
Financial reporting should provide information to help Financial reporting should provide information to help present and potential investors and creditors and present and potential investors and creditors and other users in assessing the amounts, timing, and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts from uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans. redemption, or maturity of securities or loans.
Since investors' and creditors' cash flows are related Since investors' and creditors' cash flows are related to enterprise cash flows, financial reporting should to enterprise cash flows, financial reporting should provide information to help investors, creditors, and provide information to help investors, creditors, and others assess the amounts, timing, and uncertainty of others assess the amounts, timing, and uncertainty of prospective net cash inflows to the related enterprise.prospective net cash inflows to the related enterprise.11
(b)(b) REFLECT INFORMATION ON CASH FLOWSREFLECT INFORMATION ON CASH FLOWS
Financial reporting should provide information to help Financial reporting should provide information to help present and potential investors and creditors and present and potential investors and creditors and other users in assessing the amounts, timing, and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts from uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans. redemption, or maturity of securities or loans.
Since investors' and creditors' cash flows are related Since investors' and creditors' cash flows are related to enterprise cash flows, financial reporting should to enterprise cash flows, financial reporting should provide information to help investors, creditors, and provide information to help investors, creditors, and others assess the amounts, timing, and uncertainty of others assess the amounts, timing, and uncertainty of prospective net cash inflows to the related enterprise.prospective net cash inflows to the related enterprise.11
LO 1 Describe the objectives of financial reporting.
1Statement of Financial Accounting Concepts (SFAC) No. 11Statement of Financial Accounting Concepts (SFAC) No. 1
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Objectives of Financial ReportingObjectives of Financial ReportingObjectives of Financial ReportingObjectives of Financial Reporting
(c)(c) REFLECT THE FINANCIAL POSITION OF THE ENTITYREFLECT THE FINANCIAL POSITION OF THE ENTITY
Financial reporting should provide information about Financial reporting should provide information about the economic resources of an enterprise, the claims the economic resources of an enterprise, the claims to those resources (obligations of the enterprise to to those resources (obligations of the enterprise to transfer resources to other entities and owners' transfer resources to other entities and owners' equity), and the effects of transactions, events, and equity), and the effects of transactions, events, and circumstances that change its resources and claims to circumstances that change its resources and claims to those resources.those resources.11
(c)(c) REFLECT THE FINANCIAL POSITION OF THE ENTITYREFLECT THE FINANCIAL POSITION OF THE ENTITY
Financial reporting should provide information about Financial reporting should provide information about the economic resources of an enterprise, the claims the economic resources of an enterprise, the claims to those resources (obligations of the enterprise to to those resources (obligations of the enterprise to transfer resources to other entities and owners' transfer resources to other entities and owners' equity), and the effects of transactions, events, and equity), and the effects of transactions, events, and circumstances that change its resources and claims to circumstances that change its resources and claims to those resources.those resources.11
LO 1 Describe the objectives of financial reporting.
1Statement of Financial Accounting Concepts (SFAC) No. 11Statement of Financial Accounting Concepts (SFAC) No. 1
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
ASSUMPTIONSASSUMPTIONS
Economic entityEconomic entity
Going concernGoing concern
Monetary unitMonetary unit
PeriodicityPeriodicity
PRINCIPLESPRINCIPLES
Historical costHistorical cost
Revenue recognitionRevenue recognition
MatchingMatching
Full disclosureFull disclosure
CONSTRAINTSCONSTRAINTS
Cost-benefitCost-benefit
MaterialityMateriality
Industry practiceIndustry practice
ConservatismConservatism
OBJECTIVESOBJECTIVES1. Useful in investment and credit 1. Useful in investment and credit
decisionsdecisions
QUALITATIVE QUALITATIVE CHARACTERISTICSCHARACTERISTICS
RelevanceRelevance
ReliabilityReliability
ComparabilityComparability
ConsistencyConsistency
ELEMENTSELEMENTSAssets, Liabilities, and Assets, Liabilities, and
EquityEquityInvestments by ownersInvestments by ownersDistribution to ownersDistribution to owners
Comprehensive incomeComprehensive incomeRevenues and Revenues and
ExpensesExpensesGains and LossesGains and LossesConceptual
Framework for Financial Reporting 2. Useful in assessing future 2. Useful in assessing future
cash flowscash flows
3. About enterprise resources, 3. About enterprise resources, claims to resources, and claims to resources, and
changes in themchanges in them
LO 2 Describe the qualitative characteristics of accounting information.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
ASSUMPTIONSASSUMPTIONS
Economic entityEconomic entity
Going concernGoing concern
Monetary unitMonetary unit
PeriodicityPeriodicity
PRINCIPLESPRINCIPLES
Historical costHistorical cost
Revenue recognitionRevenue recognition
MatchingMatching
Full disclosureFull disclosure
CONSTRAINTSCONSTRAINTS
Cost-benefitCost-benefit
MaterialityMateriality
Industry practiceIndustry practice
ConservatismConservatism
QUALITATIVE QUALITATIVE CHARACTERISTICSCHARACTERISTICS
RelevanceRelevance
ReliabilityReliability
ComparabilityComparability
ConsistencyConsistency
Relevance and ReliabilityRelevance and ReliabilityRelevance and ReliabilityRelevance and Reliability
Conceptual Framework for Financial Reporting
• VerifiabilityVerifiability• Representational faithfulnessRepresentational faithfulness• NeutralityNeutrality
• VerifiabilityVerifiability• Representational faithfulnessRepresentational faithfulness• NeutralityNeutrality
OBJECTIVESOBJECTIVES1. Useful in investment and credit 1. Useful in investment and credit
decisionsdecisions2. Useful in assessing future 2. Useful in assessing future
cash flowscash flows
3. About enterprise resources, 3. About enterprise resources, claims to resources, and claims to resources, and
changes in themchanges in them
Capable of making a difference Capable of making a difference in a decision.in a decision.
Capable of making a difference Capable of making a difference in a decision.in a decision.
LO 2 Describe the qualitative characteristics of accounting information.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
FUNDAMENTALS OF GAAPFUNDAMENTALS OF GAAPFUNDAMENTALS OF GAAPFUNDAMENTALS OF GAAP
Consistency/ Comparability:Consistency/ Comparability: All companies for all All companies for all periods account for things the sameperiods account for things the same
Monetary Unit:Monetary Unit: Only items which can be expressed Only items which can be expressed in money are reflectedin money are reflected
Economic Entity:Economic Entity: The entity can be separated. The entity can be separated. Time Period/ Periodicity:Time Period/ Periodicity: At least annually At least annually Historical Cost:Historical Cost: Items are reported at their cost and Items are reported at their cost and
depreciated if appropriate… but changes in value depreciated if appropriate… but changes in value are excluded.are excluded.
Going Concern:Going Concern: Entity will continue in existence for Entity will continue in existence for the foreseeable future. This is why historical cost is the foreseeable future. This is why historical cost is acceptable… if there is no going concern, then acceptable… if there is no going concern, then liquidation basis may be appropriate.liquidation basis may be appropriate.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Relevance and reliability are the two primary Relevance and reliability are the two primary qualities that make accounting information qualities that make accounting information useful for decision making.useful for decision making.
Relevance and reliability are the two primary Relevance and reliability are the two primary qualities that make accounting information qualities that make accounting information useful for decision making.useful for decision making.
True or False?True or False?True or False?True or False?
TrueTrueTrueTrue
Qualitative CharacteristicsQualitative CharacteristicsQualitative CharacteristicsQualitative Characteristics
LO 2 Describe the qualitative characteristics of accounting information.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
ASSUMPTIONSASSUMPTIONS
Economic entityEconomic entity
Going concernGoing concern
Monetary unitMonetary unit
PeriodicityPeriodicity
PRINCIPLESPRINCIPLES
Historical costHistorical cost
Revenue recognitionRevenue recognition
MatchingMatching
Full disclosureFull disclosure
CONSTRAINTSCONSTRAINTS
Cost-benefitCost-benefit
MaterialityMateriality
Industry practiceIndustry practice
ConservatismConservatism
QUALITATIVE QUALITATIVE CHARACTERISTICSCHARACTERISTICS
RelevanceRelevance
ReliabilityReliability
ComparabilityComparability
ConsistencyConsistency
ELEMENTSELEMENTSAssets, Liabilities, and Assets, Liabilities, and
EquityEquityInvestments by ownersInvestments by ownersDistribution to ownersDistribution to owners
Comprehensive incomeComprehensive incomeRevenues and Revenues and
ExpensesExpensesGains and LossesGains and Losses
Comparability and ConsistencyComparability and ConsistencyComparability and ConsistencyComparability and Consistency
Conceptual Framework for Financial Reporting
OBJECTIVESOBJECTIVES1. Useful in investment and credit 1. Useful in investment and credit
decisionsdecisions2. Useful in assessing future 2. Useful in assessing future
cash flowscash flows
3. About enterprise resources, 3. About enterprise resources, claims to resources, and claims to resources, and
changes in themchanges in them
LO 2 Describe the qualitative characteristics of accounting information.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Qualitative CharacteristicsQualitative CharacteristicsQualitative CharacteristicsQualitative Characteristics
LO 2 Describe the qualitative characteristics of accounting information.
Adherence to the concept of consistency Adherence to the concept of consistency requires that the same accounting principles requires that the same accounting principles
be applied to similar transactions by all be applied to similar transactions by all companies and for all periods?companies and for all periods?
Adherence to the concept of consistency Adherence to the concept of consistency requires that the same accounting principles requires that the same accounting principles
be applied to similar transactions by all be applied to similar transactions by all companies and for all periods?companies and for all periods?
True or False?True or False?True or False?True or False?
TRUETRUETRUETRUE
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
ASSUMPTIONSASSUMPTIONS
Economic entityEconomic entity
Going concernGoing concern
Monetary unitMonetary unit
PeriodicityPeriodicity
PRINCIPLESPRINCIPLES
Historical costHistorical cost
Revenue recognitionRevenue recognition
MatchingMatching
Full disclosureFull disclosure
CONSTRAINTSCONSTRAINTS
Cost-benefitCost-benefit
MaterialityMateriality
Industry practiceIndustry practice
ConservatismConservatism
QUALITATIVE QUALITATIVE CHARACTERISTICSCHARACTERISTICS
RelevanceRelevance
ReliabilityReliability
ComparabilityComparability
ConsistencyConsistency
ELEMENTSELEMENTSAssets, Liabilities, and Assets, Liabilities, and
EquityEquityInvestments by ownersInvestments by ownersDistribution to ownersDistribution to owners
Comprehensive incomeComprehensive incomeRevenues and Revenues and
ExpensesExpensesGains and LossesGains and LossesConceptual
Framework for Financial Reporting
OBJECTIVESOBJECTIVES1. Useful in investment and credit 1. Useful in investment and credit
decisionsdecisions2. Useful in assessing future 2. Useful in assessing future
cash flowscash flows
3. About enterprise resources, 3. About enterprise resources, claims to resources, and claims to resources, and
changes in themchanges in them
LO 2 Describe the qualitative characteristics of accounting information.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
What is the underlying concept that supports What is the underlying concept that supports the immediate recognition of a contingent the immediate recognition of a contingent loss?loss?
a.a. Substance over form.Substance over form.
b.b. Consistency.Consistency.
c.c. Matching.Matching.
d.d. Conservatism.Conservatism.
CPA Question, Nov. 94, FARCPA Question, Nov. 94, FARCPA Question, Nov. 94, FARCPA Question, Nov. 94, FAR
LO 2 Describe the qualitative characteristics of accounting information.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
WHAT IS AN OPERATING CYCLE?WHAT IS AN OPERATING CYCLE?WHAT IS AN OPERATING CYCLE?WHAT IS AN OPERATING CYCLE?
The operating cycle is how long it takes a company to initiate, The operating cycle is how long it takes a company to initiate, perform, and deliver their primary product or service.perform, and deliver their primary product or service.
Take a wholesaler for instance. First they buy inventory, then Take a wholesaler for instance. First they buy inventory, then they sell it on account, and ultimately they collect the cash owed they sell it on account, and ultimately they collect the cash owed from their customer. The period of time it takes to accomplish from their customer. The period of time it takes to accomplish this is the “this is the “Operating CycleOperating Cycle”.”.
Accounts Payable
Inventory
Accounts receivable
Cash
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Assets are probable future economic benefits Assets are probable future economic benefits obtained or controlled by a particular entity as a obtained or controlled by a particular entity as a result of past transactions or events.result of past transactions or events.
Assets are probable future economic benefits Assets are probable future economic benefits obtained or controlled by a particular entity as a obtained or controlled by a particular entity as a result of past transactions or events.result of past transactions or events.
AssetsAssetsAssetsAssets
Balance SheetBalance SheetBalance SheetBalance Sheet
LO 3 Explain the concept and purpose of a classified balance sheet.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
ASSETS, EXAMPLES AND MOREASSETS, EXAMPLES AND MOREASSETS, EXAMPLES AND MOREASSETS, EXAMPLES AND MORECASHCASH
PROCESS CULMINATESPROCESS CULMINATES
ACCOUNTS RECEIVABLEACCOUNTS RECEIVABLE, ON BALANCE SHEET BY:, ON BALANCE SHEET BY:SALESSALES
OFF THE BALANCE SHEET WHEN:OFF THE BALANCE SHEET WHEN:COLLECTED, OR WRITTEN OFFCOLLECTED, OR WRITTEN OFF
INVENTORYINVENTORY, ON BALANCE SHEET BY:, ON BALANCE SHEET BY:PURCHASESPURCHASES
OFF THE BALANCE SHEET WHEN:OFF THE BALANCE SHEET WHEN:SOLD- COGSSOLD- COGS
FIXED ASSETSFIXED ASSETS, ON BALANC SHEET BY:, ON BALANC SHEET BY:PURCHASESPURCHASES
OFF THE BALANCE SHEET AS IT IS:OFF THE BALANCE SHEET AS IT IS:DEPRECIATED- DEPRECIATION EXPENSEDEPRECIATED- DEPRECIATION EXPENSE
PREPAID EXPENSESPREPAID EXPENSES, ON BALANCE SHEET BY:, ON BALANCE SHEET BY:PAYMENTPAYMENT
OFF THE BALANCE SHEET AS IT IS:OFF THE BALANCE SHEET AS IT IS:CONSUMED- “BENEFIT IS REALIZED”- I.E INSURANCE EXPENSECONSUMED- “BENEFIT IS REALIZED”- I.E INSURANCE EXPENSE
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
OR more commonly stated:OR more commonly stated:
An asset that is expected to be realized in cash or An asset that is expected to be realized in cash or sold or consumed within one year or the operating sold or consumed within one year or the operating cycle, whichever is longer.cycle, whichever is longer.
OR more commonly stated:OR more commonly stated:
An asset that is expected to be realized in cash or An asset that is expected to be realized in cash or sold or consumed within one year or the operating sold or consumed within one year or the operating cycle, whichever is longer.cycle, whichever is longer.
Defined:Defined:
An asset that is expected to be realized in cash or An asset that is expected to be realized in cash or sold or consumed during the operating cycle or sold or consumed during the operating cycle or within one year if the cycle is shorter than one year.within one year if the cycle is shorter than one year.
Defined:Defined:
An asset that is expected to be realized in cash or An asset that is expected to be realized in cash or sold or consumed during the operating cycle or sold or consumed during the operating cycle or within one year if the cycle is shorter than one year.within one year if the cycle is shorter than one year.
Current AssetsCurrent AssetsCurrent AssetsCurrent Assets
Balance SheetBalance SheetBalance SheetBalance Sheet
LO 3 Explain the concept and purpose of a classified balance sheet.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Liabilities are probable future economic sacrifices Liabilities are probable future economic sacrifices obtained or controlled by a particular entity as a obtained or controlled by a particular entity as a result of past transactions or events.result of past transactions or events.
Liabilities are probable future economic sacrifices Liabilities are probable future economic sacrifices obtained or controlled by a particular entity as a obtained or controlled by a particular entity as a result of past transactions or events.result of past transactions or events.
LiabilitiesLiabilitiesLiabilitiesLiabilities
Balance SheetBalance SheetBalance SheetBalance Sheet
LO 3 Explain the concept and purpose of a classified balance sheet.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Defined:Defined:
An obligation that will be satisfied within the next An obligation that will be satisfied within the next operating cycle or within one year, if the cycle is operating cycle or within one year, if the cycle is shorter than one year.shorter than one year.
Defined:Defined:
An obligation that will be satisfied within the next An obligation that will be satisfied within the next operating cycle or within one year, if the cycle is operating cycle or within one year, if the cycle is shorter than one year.shorter than one year.
Current LiabilitiesCurrent LiabilitiesCurrent LiabilitiesCurrent Liabilities
Balance SheetBalance SheetBalance SheetBalance Sheet
LO 3 Explain the concept and purpose of a classified balance sheet.
OR more commonly stated:OR more commonly stated:
An obligation that will be satisfiedAn obligation that will be satisfied within one year within one year or the operating cycle, whichever is longer.or the operating cycle, whichever is longer.
OR more commonly stated:OR more commonly stated:
An obligation that will be satisfiedAn obligation that will be satisfied within one year within one year or the operating cycle, whichever is longer.or the operating cycle, whichever is longer.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
A Classified Balance SheetA Classified Balance SheetA Classified Balance SheetA Classified Balance Sheet
Current assetsCash xxxetc. xxx
Total current assets xxx
Fixed assetsOther long term assets
Total assets xxx
Current liabilitiesAccounts payable xxxetc. xxx Balances?
Total current liabilities xxx
Long-term debt, excluding current portion
EquityCommon stockAPICRetained earnings
Total Liabilities & Equity
Company NameBalance Sheet
As of DATE
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
A Multiple Step Income StatementA Multiple Step Income StatementA Multiple Step Income StatementA Multiple Step Income Statement
Revenue xxxCost of Revenue xxxGross Profit xxx
Selling general & administrativ (SG&A) expense xxxDepreciation expense xxxOther operating expenses xxx
Income before income tax provision xxxTax provision xxxIncome from continuing operations xxx
Discontinued operations, net of tax xxxIncome before extraordinary items xxxExtraordinary items, net of tax xxx
NET INCOME OR LOSS XXX
Company NameIncome Statement
FOR THE PERIOD ….
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
LiquidityLiquidity = the ability of a company to pay its debts as = the ability of a company to pay its debts as they come due.they come due.
A comparison of current assets and current liabilities is a A comparison of current assets and current liabilities is a starting point in evaluating the ability of a company to starting point in evaluating the ability of a company to meet its obligations.meet its obligations.
Working CapitalWorking Capital = Current Assets – Current Liabilities = Current Assets – Current Liabilities
Company’s strive for a balance in managing its working Company’s strive for a balance in managing its working capital – not too much or too little.capital – not too much or too little.
Analysis using a Classified Balance Analysis using a Classified Balance SheetSheetAnalysis using a Classified Balance Analysis using a Classified Balance SheetSheet
LO 4 Use a classified balance sheet to analyze a company’s financial position.
$58,100$58,100
Current Current assetsassets
Current Current liabilitiesliabilities
Working Working capitalcapital
$118,000$118,000 – – 59,90059,900 = =
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Current Assets
Current Liabilities
Current Ratio =
$118,000
$59,900 1.97 to 1
=
The current ratio indicates the amount of current The current ratio indicates the amount of current assets available at the balance sheet date relative assets available at the balance sheet date relative to obligations coming due during that period. to obligations coming due during that period.
The current ratio indicates the amount of current The current ratio indicates the amount of current assets available at the balance sheet date relative assets available at the balance sheet date relative to obligations coming due during that period. to obligations coming due during that period.
Analysis using a Classified Balance Analysis using a Classified Balance SheetSheetAnalysis using a Classified Balance Analysis using a Classified Balance SheetSheet
Composition of current asset and current liabilities Composition of current asset and current liabilities important.important.
LO 4 Use a classified balance sheet to analyze a company’s financial position.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
Landon Corporation was organized on January 2, 2002, with the Landon Corporation was organized on January 2, 2002, with the investment of $100,000 by each of its two stockholders. Net investment of $100,000 by each of its two stockholders. Net income for its first year of business was $85,200. Net income income for its first year of business was $85,200. Net income increased during 2003 to $125,320 and to $145,480 during increased during 2003 to $125,320 and to $145,480 during 2004. Landon paid $20,000 in dividends to each of the two 2004. Landon paid $20,000 in dividends to each of the two stockholders in each of the three years.stockholders in each of the three years.
Statement of Retained Earnings Statement of Retained Earnings ExerciseExerciseStatement of Retained Earnings Statement of Retained Earnings ExerciseExercise
Beg. Retained earnings
2002 2003 2004
$ 0
Net income (loss)
85,200
Less: Dividends (40,000)
End. Retained earnings
$45,200
$ 45,200125,320
(40,000)
$130,520
$130,520145,480
(40,000)
$236,000
LO 7 Prepare and identify the components of the statement of retained earnings.
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
BASIC- ALL AUDITED FINANCIAL STATEMENTS MUST BASIC- ALL AUDITED FINANCIAL STATEMENTS MUST INCLUDE:INCLUDE:
Financial statementsFinancial statements Notes to financial statements Notes to financial statements Report of independent accountantsReport of independent accountants
PUBLIC COMPANIES ALSO MUST INCLUDE:PUBLIC COMPANIES ALSO MUST INCLUDE: Management’s assertions (SOX 403)Management’s assertions (SOX 403) Report of independent accountants on internal Report of independent accountants on internal
controls (SOX 404)controls (SOX 404) Management discussion & analysisManagement discussion & analysis Summary of financial dataSummary of financial data Letter to stockholdersLetter to stockholders
Elements of the Annual ReportElements of the Annual ReportElements of the Annual ReportElements of the Annual Report
http://www.starbucks.com/
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ECON 3A UCSB ANDERSONECON 3A UCSB ANDERSON
DATSALLFORTHISCHAPTER