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Further Look at Financial Statements - Financial Accounting - Lecture Slides, Slides of Financial Accounting

I understand each word of this lecture and I hope you will fine it easy as well. Financial Accounting lecture. Main points are: Further Look At Financial Statements, Classified Balance Sheet, Using the Financial Statements, Financial Reporting Concepts, Current Assets, Ratio Analysis, Standard Setting Environment, Long Term Investments, Characteristics of Useful Information, Using the Statement of Cash Flows

Typology: Slides

2011/2012

Uploaded on 12/18/2012

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A Further Look at
Financial Statements
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A Further Look at

Financial Statements

Study Objectives

  1. Identify the sections of a classified balance sheet.
  2. Identify and compute ratios for analyzing a company’s profitability.
  3. Explain the relationship between a retained earnings statement and a statement of stockholders’ equity.
  4. Identify and compute ratios for analyzing a company’s liquidity and solvency using a balance sheet.
  5. Use the statement of cash flows to evaluate solvency.
  6. Explain the meaning of generally accepted accounting principles.
  7. Discuss financial reporting concepts.

SO 1 Identify the sections of a classified balance sheet.

Presents a snapshot at a point in time. To improve understanding, companies group similar assets and similar liabilities together.

Assets Liabilities and Owner’s Equity Current assets Current liabilities Long-term investments Long-term liabilities Property, plant, and equipment Stockholders’ equity Intangible assets

Standard Classifications Illustration 2-

SO 1 Identify the sections of a classified balance sheet.

Assets that a company expects to convert to cash or use up within one year or the operating cycle , whichever is longer.

Operating cycle is the average time it takes from the purchase of inventory to the collection of cash from customers.

Current Assets

SO 1 Identify the sections of a classified balance sheet.

Companies usually list current asset accounts in the order they expect to convert them into cash.

Current Assets Illustration 2-

SO 1 Identify the sections of a classified balance sheet.

Investments in stocks and bonds of other companies. Investments in long-term assets such as land or buildings that a company is not currently using in its operating activities.

Long-Term Investments

Illustration 2-

Illustration 2-

SO 1 Identify the sections of a classified balance sheet.

Long useful lives. Currently used in operations. Depreciation - allocating the cost of assets to a number of years. Accumulated depreciation - total amount of depreciation expensed thus far in the asset’s life.

Property, Plant, and Equipment

SO 1 Identify the sections of a classified balance sheet.

Assets that do not have physical substance.

Intangible Assets

Illustration 2-

Patents and copyrights are a. Current assets. b. Intangible assets. c. Long-term investments. d. Property, plant, and equipment.

Review Question

SO 1 Identify the sections of a classified balance sheet.Docsity.com

SO 1 Identify the sections of a classified balance sheet.

Current Liabilities

Illustration 2-

SO 1 Identify the sections of a classified balance sheet.

Obligations a company expects to pay after one year.

Long-Term Liabilities

Illustration 2-

SO 1 Identify the sections of a classified balance sheet.

Stockholders’ Equity

Illustration 2-

Common stock - investments of assets into the business by the stockholders. Retained earnings - income retained for use in the business.

Using the Financial Statements

Ratio Analysis Expresses relationship among selected items of financial statement data. Relationship expressed in terms of either a percentage, a rate, or a simple proportion.