ACCT504 - Live Lecture

Week 1 Tuesday, September 3, 2013 Anita Wibbert 262-673-7064 wibbert@netwurx.net

Topics for Week 1

Monday 9/3/13
Chapter One: Introduction to Financial Statements Problem Prepare Income Statement, Statement of Retained Earnings, Balance Sheet

Chapter One: Introduction to Financial Statements

Why Prepare Financial Statements? Communicate the financial activities of an organization.
Who Reads the Statements? Internal Users External Users

Annual Reports
1. Financial Statements
Balance Sheet Income Statement Statement of Retained Earnings Statement of Cash Flows

2. Notes to Financial Statements 3. Auditors Report 4. Management Discussion and Analysis

Balance Sheet
Shows ASSETS, LIABILITES and EQUITY as of a POINT IN TIME. Assets: Resources an organization owns (cash, a/r, prepaid expenses, inventory, equipment, vehicles, machinery) Liabilities: Debts owed to others (a/p, notes payable, wages payable, taxes payable) Equity: Owners investment plus earnings retained by company (common stock, preferred stock, treasury stock, retained earnings) Accounting Equation:
Assets = Liabilities + Equity

Income Statement
Shows the revenues and expenses of a time period. Revenues - Expenses = Net Income Examples of accounts: Sales revenues, service revenues, wage expense, insurance expense, selling expense, cost of sales, cost of goods sold, losses, gains

Statement of Retained Earnings

Provides a roll-forward of the Retained Earnings Account
Beginning Balance + Net Income - Dividends = Ending Balance

Covers a PERIOD OF TIME!

Statement of Cash Flows

Illustrates the changes in the cash balance from the beginning of the year to the end of the year. 3 Categories of Transactions
Operating Activities Investing Activities Financing Activities

Covers a PERIOD OF TIME!

Interrelationships
See page 18 of text (illustration 1-9)!

Other Items in Annual Report

Notes to Financial Statements Auditors Opinion Managements Discussion