财务基础知识3.pptx

1、Financial Statement Preparation,Learning Objectives:Understand the closing process and develop an ability to prepare a statement of cash flows from a comparative balance sheet and income statement.,Discussion Section#3Financial Reporting-E202Lopo Martinez,1,An adjusting entry is recorded to bring an

2、 asset or liability account balance to its proper amount.,Transactions where cash is paid orreceived before a related expenseor revenue is recognized.,Adjusting Accounts at the end of the Accounting Period,Transactions where cash is paid orreceived after a related expenseor revenue is recognized.,CO

3、GS:Cost of Goods Sold,Beginning Inventory,Merchandise PurchasesorCost of GoodsManufactured,GoodsAvailable for Sale,=,+,Needs to be allocated between:,Ending Inventory,Cost of Goods Sold,+,-,=,BeginInventory(known),Purchases(known),Ending Inv(known),COGS.(solved for),So you can estimate COGS:,The Clo

4、sing Process,Assets,Liabilities and OE are permanent accounts not closed to a zero balance at the end of the accounting period.These accounts are carried forward to the next period.Revenues and Expenses are temporary accounts that are closed to a zero balance at the end of each accounting period.Clo

5、sing entries reduce all temporary accounts to a zero balance.,Revenues,Bal.xxx,Retained Earnings,Beg.Bal.xxx Revenues,The Closing Process Single Entry,xxx,Expenses,Bal.xxx,xxx,Expenses,End.Bal.xxx,Retained Earnings is a OE account and always carries a balance.,Net Income for the period is determined

6、 by these two entries.,Revenues,Bal.xxx,Income Summary,Revenues,The Closing Process Using Income Summary,xxx,Expenses,Bal.xxx,xxx,Expenses,Beg.Bal.xxx,xxx,Bal.xxx,End.Bal.xxx,Net Income,Retained Earnings,(1),(1),(2),How did the business fund its operations?,Did the business borrow any funds or repay

7、 any loans?,Does the business have sufficient cash to pay its debts as they mature?,Did the business make any dividend payments?,Importance of Cash Flows Statement,CurrencyShort-term,highly liquid investments.Readily convertible into cash.So near maturity that market value is unaffected by interest

8、rate changes.,Cash or Cash Equivalents,Components of the Statement of Cash Flows,Cash received fromsale of goodsand services,Cash paid foroperating goodsand services,cash flowfrom operations,Operations,-,=,Cash received fromsales of investmentsand PP&E,Cash paid for ac-quisition of invest-ments and

9、PP&E,cash flowfrom investing,Investing,-,=,Cash received fromissue of debt orcapital stock,Cash paid for dividends and reacquisition of debt or capital stock,cash flowfrom financing,Financing,-,=,Net change in cashfor the period,=,+-,+-,D Cash=D Liabilities+D OE-D Noncash Assets,The changes in cash

10、can be determined by analyzing the noncash accounts on the balance sheet.,Analyzing Noncash Accounts,D Cash+D Noncash Assets=D Liabilities+D OE,Any change(D)in a noncash item(liability,OE or asset)must be accompanied by a change in cash.,Assets=Liabilities+Owners Equity,Cash+Noncash Assets=Liabiliti

11、es+Owners Equity,Investing ActivitiesCash Flow from Investing,Transactions that involve acquisition or disposal of non-current assets,Financing ActivitiesCash Flow from Financing,Transactions involving receipts from or payments to creditors and shareholders,Operation ActivitiesCash Flow from Operati

12、ons,Cash payments for operations,Cash receipts from operations,Net income,Adjustments for non-cash revenues and expenses,Adjustments for receivables,inventories,payables,other current assets/liabilities,Cash flow from operations,Less,Plus/Less,Plus/Less,Equals,Equals,Direct Method,Indirect Method,In

13、direct Method,Reconciles accrual net income with cash flows from operationsAdjustments to net income include:Amortization expenseGains and lossesChanges in current assetsChanges in current liabilities,MEASURING CASH ADEQUACYFREE CASH FLOW,Free cash flow is the amount of cash available from operation

14、s after paying for planned investments in plant,equipment,and other long-term assets(no finance activities).,Free Cash Flow,Cash Flow from Operations,Cash Flow from Investing Activities,=,+,Free Cash Flow,=,+,Depreciation,D Noncash WK,Net Income,-,-,Net Capital Expenditures,Under simplifying assumpt

15、ions:,D Cash=D Liabilities+D OE-D Noncash Assets,P-4.26 a),P-4.26 b),Indirect Method,P-4.26 b),During the current year a firm sold for$5,000 equipment costing$15,000 with$10,000 of Acc.Depreciation.Did the firm purchase any equipment?Purchase of Equip=End.Equip-(Beg.Equip Sale of Equip)830,000(790,000 15,000)=$55,000,P-4.27,P-4.27 a),