财务基础知识3.pptx

财务基础知识3.pptx

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FinancialStatementPreparation,LearningObjectives:

Understandtheclosingprocessanddevelopanabilitytoprepareastatementofcashflowsfromacomparativebalancesheetandincomestatement.,DiscussionSection#3FinancialReporting-E202LopoMartinez,1,Anadjustingentryisrecordedtobringanassetorliabilityaccountbalancetoitsproperamount.,Transactionswherecashispaidorreceivedbeforearelatedexpenseorrevenueisrecognized.,AdjustingAccountsattheendoftheAccountingPeriod,Transactionswherecashispaidorreceivedafterarelatedexpenseorrevenueisrecognized.,COGS:

CostofGoodsSold,BeginningInventory,MerchandisePurchasesorCostofGoodsManufactured,GoodsAvailableforSale,=,+,Needstobeallocatedbetween:

EndingInventory,CostofGoodsSold,+,-,=,BeginInventory（known）,Purchases（known）,EndingInv（known）,COGS.（solvedfor）,SoyoucanestimateCOGS:

TheClosingProcess,Assets,LiabilitiesandOEarepermanentaccountsnotclosedtoazerobalanceattheendoftheaccountingperiod.Theseaccountsarecarriedforwardtothenextperiod.RevenuesandExpensesaretemporaryaccountsthatareclosedtoazerobalanceattheendofeachaccountingperiod.Closingentriesreducealltemporaryaccountstoazerobalance.,Revenues,Bal.xxx,RetainedEarnings,Beg.Bal.xxxRevenues,TheClosingProcessSingleEntry,xxx,Expenses,Bal.xxx,xxx,Expenses,End.Bal.xxx,RetainedEarningsisaOEaccountandalwayscarriesabalance.,NetIncomefortheperiodisdeterminedbythesetwoentries.,Revenues,Bal.xxx,IncomeSummary,Revenues,TheClosingProcessUsingIncomeSummary,xxx,Expenses,Bal.xxx,xxx,Expenses,Beg.Bal.xxx,xxx,Bal.xxx,End.Bal.xxx,NetIncome,RetainedEarnings,

（1）,

（1）,

（2）,Howdidthebusinessfunditsoperations?

Didthebusinessborrowanyfundsorrepayanyloans?

Doesthebusinesshavesufficientcashtopayitsdebtsastheymature?

Didthebusinessmakeanydividendpayments?

ImportanceofCashFlowsStatement,CurrencyShort-term,highlyliquidinvestments.Readilyconvertibleintocash.Sonearmaturitythatmarketvalueisunaffectedbyinterestratechanges.,CashorCashEquivalents,ComponentsoftheStatementofCashFlows,Cashreceivedfromsaleofgoodsandservices,Cashpaidforoperatinggoodsandservices,cashflowfromoperations,Operations,-,=,CashreceivedfromsalesofinvestmentsandPP&E,Cashpaidforac-quisitionofinvest-mentsandPP&E,cashflowfrominvesting,Investing,-,=,Cashreceivedfromissueofdebtorcapitalstock,Cashpaidfordividendsandreacquisitionofdebtorcapitalstock,cashflowfromfinancing,Financing,-,=,Netchangeincashfortheperiod,=,+-,+-,DCash=DLiabilities+DOE-DNoncashAssets,Thechangesincashcanbedeterminedbyanalyzingthenoncashaccountsonthebalancesheet.,AnalyzingNoncashAccounts,DCash+DNoncashAssets=DLiabilities+DOE,Anychange（D）inanoncashitem（liability,OEorasset）mustbeaccompaniedbyachangeincash.,Assets=Liabilities+OwnersEquity,Cash+NoncashAssets=Liabilities+OwnersEquity,InvestingActivitiesCashFlowfromInvesting,Transactionsthatinvolveacquisitionordisposalofnon-currentassets,FinancingActivitiesCashFlowfromFinancing,Transactionsinvolvingreceiptsfromorpaymentstocreditorsandshareholders,OperationActivitiesCashFlowfromOperations,Cashpaymentsforoperations,Cashreceiptsfromoperations,Netincome,Adjustmentsfornon-cashrevenuesandexpenses,Adjustmentsforreceivables,inventories,payables,othercurrentassets/liabilities,Cashflowfromoperations,Less,Plus/Less,Plus/Less,Equals,Equals,DirectMethod,IndirectMethod,IndirectMethod,ReconcilesaccrualnetincomewithcashflowsfromoperationsAdjustmentstonetincomeinclude:

AmortizationexpenseGainsandlossesChangesincurrentassetsChangesincurrentliabilities,MEASURINGCASHADEQUACYFREECASHFLOW,Freecashflowistheamountofcashavailablefromoperationsafterpayingforplannedinvestmentsinplant,equipment,andotherlong-termassets（nofinanceactivities）.,FreeCashFlow,CashFlowfromOperations,CashFlowfromInvestingActivities,=,+,FreeCashFlow,=,+,Depreciation,DNoncashWK,NetIncome,-,-,NetCapitalExpenditures,Undersimplifyingassumptions:

DCash=DLiabilities+DOE-DNoncashAssets,P-4.26a）,P-4.26b）,IndirectMethod,P-4.26b）,Duringthecurrentyearafirmsoldfor$5,000equipmentcosting$15,000with$10,000ofAcc.Depreciation.Didthefirmpurchaseanyequipment?

PurchaseofEquip=End.Equip-（Beg.EquipSaleofEquip）830,000（790,00015,000）=$55,000,P-4.27,P-4.27a）,