Lecture Financial accounting - Chapter 1: Accounting activities and financial statements

Chia sẻ: Hàn Nguyệt | Ngày: | Loại File: PPT | Số trang:46

Thêm vào BST

Báo xấu

44
lượt xem 4
download

Download Vui lòng tải xuống để xem tài liệu đầy đủ

After completing this chapter you should be able to: Principal activities of business firms, understanding four financial statements, the users of financial statements, the financial reporting reform, the types of business entity,...and other contents.

Chủ đề:

Bình luận(0) Đăng nhập để gửi bình luận!

Lưu

Nội dung Text: Lecture Financial accounting - Chapter 1: Accounting activities and financial statements

Chapter 1 Accounting Activities and Financial Statements ACCT 100
Objectives of the Chapter 1. Principal activities of business firms. 2. Understanding four financial statements. 3. The users of financial statements. 4. The financial reporting reform. 5. The types of business entity. 6. The authorities prescribing accounting standards and the need for international accounting standards. 7. Accounting concepts and principles. The Financial Statements 2
I. Principal Activities of Business Firms Establishing Corporate Goals and Strategies Obtaining Financing (from owners and creditors) Making Investments (i.e., Investments, Purchase of Property, Plant and Equipment, Purchase of Intangibles, etc.) Carrying Out Operations (i.e., purchase of materials/inventory, production, marketing and administration) Overview of Financial Statements 3
2. Understanding Four Financial Statements Q1: What is accounting? An information system to account for business transactions and to communicate the financial information to users. Q2: How do accountants communicate financial information to users? Overview of Financial Statements 4
Annual Financial Reports Public firms communicate their financial information via the annual reports to shareholders. The content of an annual report includes: 1. A letter to shareholders from the CEO (i.e., IBM 2008 Annual Report, p1-9). 2. Management’s Discussion and Analysis (MD&A) (i.e., IBM 2008 Annual Report, p18-57). Overview of Financial Statements 5
Annual Financial Reports (contd.) 3. Report of Management (i.e., on the effectiveness of Internal control; required by Sarbanes-Oxley Act of 2002). (IBM 2008 Annual Report, p58) 4. Report of Independent Registered Public Accounting Firm. (i.e., IBM 2008 Annual Report, p59) 5. Audited Consolidated Financial statements and Notes. (i.e., IBM 2008 Annual Report60-119) Overview of Financial Statements 6
The Four Financial Statements 1. Consolidated Income Statement 2. Consolidated Statement of Retained Earnings 3. Consolidated Balance Sheet 4. Consolidated Statement of Cash Flows Overview of Financial Statements 7
The Content of Four Financial Statements The Income Statement (Statement of Earnings): reports the operating results of a firm for a period of time. Accounts reported include revenue, expenses, gains, losses, the net income and the earnings per share. Overview of Financial Statements 8
The Content of Four Financial Statements (Contd.) The Statement of Retained Earnings: reports the earnings not distributed to shareholders. Accounts reported include beginning balance of retained earnings, current year’s net income, dividends distributed for the reporting period and the ending balance of retained earnings. Overview of Financial Statements 9
The Content of Four Financial Statements (contd.) The Balance Sheet Statement (Statement of Financial Position) : reports the financial position of a firm on a particular date. Accounts reported include assets, liabilities and stockholders’ equity. Overview of Financial Statements 10
The Content of Four Financial Statements (contd.) The Statement of Cash Flows: reports cash flows from three business activities and the net increase (or decrease) of the cash during the year. Business activities affect cash flows: operating, investing and financing. Overview of Financial Statements 11
Exhibit 1-1 (from Financial Accounting by Harrison and Horngren) LANDS’ END, INC. & SUBSIDIARIES Consolidated Statement of Earnings For the fiscal years ended (In thousands) 2/2/2006 1/27/2005 1. Net sales $1,031,548 $992,106 2. Cost of sales 588,017 571,265 3. Gross profit 443,531 420,841 4. Selling, general, and admin. exps. 392,484 357,516 5. Charges from sale of subsidiary 1,882 3,500 6. Income from operations 49,165 59,825 7. Other income (expense): 8. Interest expense (2,771) (1,769) 9. Interest income 253 307 10. Other 4,278 1,300 11. Total other income (expense), net 1,760 (162) 12. Income before income taxes 50,925 59,663 13. Income tax provision 20,370 23,567 14. Net income $ 30,555 $ 36,096 The Financial Statements 12
Exhibit 1-2 (from Financial Accounting by Harrison and Horngren) LANDS’ END, INC. & SUBSIDIARIES Consolidated Statement of Retained Earnings For the fiscal years ended (In thousands) 2/2/2006 1/27/2005 Retained Earnings 1. Beginning balance $229,554 $193,460 2. Net income 30,555 36,096 3. Cash dividends paid --- --- 4. Issuance of treasury stock --- (2) 5. Ending balance $260,109 $229,554 The Financial Statements 13
Exhibit 1- 3(from Financial Accounting by Harrison and Horngren) LANDS’ END, INC. & SUBSIDIARIES Consolidated Balance Sheet (In thousands) 2/2/2006 1/27/2005 ASSETS Current assets: 1. Cash $17,176 $5,426 2. Receivables 8,046 4,459 3. Inventory 164,816 168,652 4. Prepaid advertising and other exp. 32,033 19,631 5. Total current assets 222,089 198,168 Property, plant & equip., at cost: 6. Land and buildings 72,248 69,798 7. Fixtures and equipment 83,880 74,745 8. Leasehold improvements 2,912 1,862 9. Total property, plant & equipment 159,040 146,405 10. Less accum. depr. & amortization 60,055 49,414 11. Property, plant, & equipment, net 98,985 96,991 12. Intangibles, net 2,423 2,453 13. Total assets $323,497 $297,612 The Financial Statements 14
Exhibit 1- 3 (contd.) LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current liabilities: 14. Interest payable $ 9,319 $7,539 15. Accounts payable 62,380 52,762 16. Salary payable 4,555 5,011 17. Accrued liabilities 23,751 25,959 18. Accrued profit sharing 1,483 1,679 19. Income taxes payable 13,256 9,727 20. Current maturities of long-term debt --- 40 21. Total current liabilities 114,744 102,717 22. Deferred income taxes 7,212 5,379 23. Long-term liabilities 349 388 Shareholders’ investment: 24. Com. stock, 40,221 shares issued 26,567 26,219 25. Retained earnings 260,109 229,554 26. Other (85,484) (66,645) 27. Total shareholders’ investment 201,192 189,128 28. Total liabilities & shareholders’ inv. $323,497 $297,612 The Financial Statements 15
Exhibit 1- 4 (from Financial Accounting by Harrison and Horngren) LANDS’ END, INC. & SUBSIDIARIES Consolidated Statement of Cash Flows For the fiscal years ended (In thousands) 2/2/2006 1/27/2005 Cash flows from operating activities: 1. Cash received from customers $1,027,943 $991,291 2. Cash received from interest 253 307 3. Cash paid to suppliers & employees (967,075) (926,714) 4. Cash paid for interest (2,833) (2,828) 5. Cash paid for income taxes (16,896) (27,595) 6. Net cash flows from operating activities 41,392 34,461 Cash flows from investing activities: 7. Cash paid for capital additions and businesses acquired (13,904) (32,102) 8. Proceeds from divestiture 1,665 --- 9. Net cash flows used for investing activities (12,239) (32,102) The Financial Statements 16
Exhibit 1-4 (contd.) Cash flows form financing activities: 10. Proceeds from short-term and long-term debt 1,780 $7,539 11. Payment of long-term debt (40) (40) 12. Purchases of treasury stock (20,001) (27,979) 13. Issuance of treasury stock 858 1,978 14. Cash dividends paid --- --- 15. Net cash flows used for financing activities (17,403) (18,502) 16. Net increase (decrease) in cash 11,750 (16,143) 17. Beginning cash 5,426 21,569 18. Ending cash $ 17,176 $ 5,426 The Financial Statements 17
Exhibit 1-5 (from Financial Accounting by Harrison and Horngren) Income Statement -- Fiscal Year 2006 (Details given in Exhibit 1-8) Net income …………………………….. $ 30,555 Statement of Retained Earnings -- Fiscal Year 2006 Beginning retained earnings ………….. $229,554 Net income ……………………………… 30,555 Cash dividends …………………………. --- Ending retained earnings ……………… $260,109 The Financial Statements 18
Exhibit 1- 5 (contd.) Statement of Retained Earnings -- Fiscal Year 2006 Beginning retained earnings ……………... $229,554 Net income …………………………………. 30,555 Cash dividends …………………………….. --- Ending retained earnings …………………. $260,109 Balance Sheet Statement - Fiscal Year 2006 ASSETS Cash ……………………………………... $ 17,176 All other assets …………………………. 306,321 Total assets ……………………………... 323,497 LIABILITIES Total liabilities …………………………... $122,305 STOCKHOLDERS’ EQUITY Common stock …………………………. 26,567 Retained earnings ……………………... 260,109 Other equity …………………………….. (85,484) Total liabilities & stockholders’Theequity … $323,497 Financial Statements 19
Exhibit 1- 5 (contd.) Balance Sheet Statement -- Fiscal Year 2006 ASSETS Cash ……………………………………... $ 17,176 All other assets …………………………. 306,321 Total assets ……………………………... 323,497 LIABILITIES Total liabilities …………………………... $122,305 STOCKHOLDERS’ EQUITY Common stock …………………………. 26,567 Retained earnings ……………………... 260,109 Other equity …………………………….. (85,484) Total liabilities & stockholders’ equity … $323,497 Statement of Cash Flows - Fiscal Year 2006 Net cash flows from operating activities …... $41,392 Net cash flows used for investing activities .. (12,239) Net cash flows used for financing activities .. (17,403) Net increase in cash …………………………. 11,750 Beginning cash ……………………………….. 5,426 Ending cash …………………………………… $17,176 The Financial Statements 20