Accounting

Accounting
Information science
used to collect and organize financial
data for organizations and individuals
 Accounting
Information science
Concern in:
1. Analyzing
2. Collecting Information Financial Information
3. Organizing MONEY
 Accounting
 Organizations
• Needs to organize financial information that is related to
its business.
• How much product was it able to sell?
• How much it cost to produce the product?
• How much money it has in the bank?
 Accounting
 Individuals
• Needs to be aware of their personal finances
• Pay attention of how much comes in and goes out
 Accounting
helps you to:
use the past in order to take action in the
present and change the future
 Accounting
Principles
Rules and guidelines
that companies and
other bodies must
follow when reporting
Accounting
financial data. Principles
These rules make it
easier to examine
financial data by
standardizing the
terms and methods Accounting
Principles
Accounting standards
are implemented to
improve the quality of
financial information
Accounting
reported by Principles
The ultimate goal of any set
of accounting principles is to
ensure that a company’s
financial statements are
complete, consistent and Accounting
comparable. Principles
 Accounting
Concepts
Accounting
Concepts
Accrual concept
Accounting
Concepts
Accrual concept
 Conservatism
Concepts
Accounting
Concept
 Conservatism
Concepts
Accounting
Concept
 Consistency
Concepts
Accounting
Concept
 Consistency
Concepts
Accounting
Concept
 Economy Entity
Concepts
Accounting
Concept
 Economy Entity
Concepts
Accounting
Concept
 Going Concern
Concepts
Accounting
Concept
 Going Concern
Concepts
Accounting
Concept
 Materiality Concept
Concepts
Accounting
 Materiality Concept
Concepts
Accounting
 Financial
statement
Analysis
  process of analyzing a
company’s financial
statements for decision-
making purposes

Financial
statement Analysis
  used by internal and
external stakeholders to
evaluate business
performance and value

Financial
statement Analysis
 Techniques used to analyze financial
statements

Financial
statement Analysis
 Techniques used
to analyze
financial
statements

Financial
statement Analysis
 Techniques
used to
analyze
financial
statements

Financial
statement Analysis
 How to analyze Financial
Statement
financial data is evaluated on the
basis of past, current, and projected
performance

Financial
statement Analysis
Types of Financial Statements
1. Balance sheets
Provides an overview of a company’s assets,
liabilities, and shareholder’s equity as a
snapshop in time.

Financial
statement Analysis
Types of Financial Statements
1. Balance sheets (item breakdowns)
a. Assets
b. Liabilities
c. Shareholders Equity

Financial
statement Analysis
1. Balance sheets (item breakdowns)
a. Assets
• Cash and cash equivalents - are liquids assets
• Account receivable - are the amount of money owed to the company by its customers
for the sale of its product and service.
• Inventory - is the goods of company on hand it intends to sell as a course of business.
• Prepaid Expenses - are costs that have been pain in advance of when they are due.
• Property, plant, and equipment - are capital assets owned by a company for its long
term benefit.
• Investments - are assets held for speculative future growth.

Financial
statement Analysis
1. Balance sheets (item breakdowns)
b. Liabilities
• Account payable- are the bills due as part of the normal course of operations of a
business.
• Wages payable- are payments due to staff for time worked.
• Notes payable- are recorded debt instruments that record official debt agreement
including the payment schedule and amount.
• Dividends payable- are dividends that have been declared to be awarded to
shareholders but have not yet been paid.
• Long-term dept- include variety of obligations including sinking bond funds,

Financial
mortgages, or others loans that are due in their entirety in longer than one year.

statement Analysis
1. Balance sheets (item breakdowns)
c. Shareholders Equity
• Company’s total assets minus its total liabilities.
• Represents the mount of money that would be returned to shareholders if all of the
assets were liquidated and all of the company’s debt was paid off.
• Retained earnings - part of the shareholders equity.

Financial
statement Analysis
Types of Financial Statements
2. Income Statement
Covers range of time, which is a year for annual
financial statements and a quarter for quarterly
financial statements.
Financial
statement Analysis
Types of Financial Statements
3. Cash Flow Statement
Measures how well a company generates cash to pay its
debt obligations, fund its operating expenses, and fund
investments. The CFS complements the balance sheet
and income statements.
Financial
statement Analysis
Types of Financial Statements
3. Cash Flow Statement
(Components)
Operating Activities
Investing Activities
Financial Activities

Financial
statement Analysis
Types of Financial Statements
3. Cash Flow Statement
(Components)
Operating Activities - it includes any sources and uses
of cash from running the business and selling its
products or services.

Financial
statement Analysis
Types of Financial Statements
3. Cash Flow Statement
(Components)
Investing Activities - it includes any sources and uses of
cash from a company’s investments in the long-term
future of the company.

Financial
statement Analysis
Types of Financial Statements
3. Cash Flow Statement
(Components)
Financial Activities - it includes the sources of cash
paid to shareholders.

Financial
statement Analysis
Types of Financial Statements
4. Free Cash Flow and Other Valuation
Statements
• Companies and analysts also use free cash flow statements and
other valuation statements to analyze the value of a company.
• Free cash flow statements arrive at a net present value by
discounting the free cash flow that a company is estimated to
generate over time
Financial
statement Analysis
Types of Financial Statements
4. Free Cash Flow and Other Valuation
Statements
• FCF tells you how much cash a company has left over after
paying its operating expenses and maintaining its capital
expenditures
• Valuation statements determines the fair value of an asset,
investment, or firm.
Financial
statement Analysis
Types of Financial Statements
5. Financial Performance
• These are maintained by companies daily and used internally for
business management
• The financial performance tells investors about the general well-
being of a firm. It's a snapshot of its economic health and the job
its management is doing.

Financial
statement Analysis
Types of Financial Statements
5. Financial Performance
• A key document in reporting corporate financial performance is
Form 10-K, which all public companies are required to publish
annually.
• Included in the 10K are three financial statements: the balance
sheet, the income statement, and the cash flow statement.

Financial
statement Analysis
 End…
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