This document discusses various aspects of a company's cash and accounts receivable, including:
- How much cash a business needs and how excess cash can be invested temporarily
- How financial assets like cash, accounts receivable, and short-term investments are valued on the balance sheet
- Techniques for estimating uncollectible accounts, writing off accounts, and adjusting the allowance for doubtful accounts based on accounts receivable aging
This chapter discusses adjusting entries which are needed at the end of an accounting period to update accounts for the financial statements. There are four main types of adjusting entries: 1) converting assets to expenses to recognize the usage of prepaid expenses, 2) accruing unpaid expenses to record expenses incurred but not paid, 3) converting liabilities to revenue to recognize unearned revenue as it is earned, and 4) accruing uncollected revenues to record revenue earned but not received. Examples of each type are provided.
The document contains slides from a chapter on income and changes in retained earnings. It discusses how net income can be divided into income from continuing operations versus discontinued operations and extraordinary items. It provides examples of how discontinued operations, extraordinary items, and changes in accounting principles would be reported on the income statement. Other topics summarized include the calculation of earnings per share and the accounting treatment for cash and stock dividends.
This document discusses key concepts in the accounting cycle, including:
- The ledger contains all accounts and records increases and decreases for each account.
- Accounts track increases on the debit side and decreases on the credit side.
- The double-entry system requires equal debit and credit amounts for every transaction to maintain the accounting equation.
- Examples are provided to illustrate how common business transactions are recorded through journal entries and posted to accounts in the ledger, including recording revenues, expenses, assets, and owner's equity.
The document discusses accounting concepts and methods for merchandising companies. It covers the operating cycle of merchandisers involving purchasing inventory, selling inventory on credit, and collecting receivables. It compares merchandisers to manufacturers and different types of merchandisers. The document also discusses the income statement, general and subsidiary ledgers, perpetual and periodic inventory systems, physical inventory counts, and closing entries for each system. It provides examples of entries for purchases, sales, returns, discounts, and taxes.
This document discusses various aspects of a company's cash and accounts receivable, including:
- How much cash a business needs and how excess cash can be invested temporarily
- How financial assets like cash, accounts receivable, and short-term investments are valued on the balance sheet
- Techniques for estimating uncollectible accounts, writing off accounts, and adjusting the allowance for doubtful accounts based on accounts receivable aging
Here are the journal entries for the transactions:
A. Debbie ordered shelving worth $750.
Debit: Shelving $750
Credit: Accounts Payable $750
B. Debbie's selling price on a gallon of milk is increased to $3.25.
No journal entry needed.
C. A customer buys a gallon of milk paying cash.
Debit: Cash $3.25
Credit: Sales $3.25
D. The shelving is delivered with an invoice for $750.
Debit: Accounts Payable $750
Credit: Cash $750
The accounting events that will be recorded are transactions A, C, and D since they involve
The document discusses financial statements that companies prepare to report their financial performance and position. It introduces the three primary financial statements - the income statement, balance sheet, and statement of cash flows. It provides an overview of each statement's purpose including what is depicted on an income statement, balance sheet, and statement of cash flows. It also gives an example balance sheet for a travel agency to demonstrate assets, liabilities, and owners' equity.
The document discusses the statement of cash flows, which reports a company's cash inflows and outflows during an accounting period. It has three sections - operating, investing, and financing activities. The statement of cash flows helps investors understand a company's ability to generate cash flows, meet obligations, and need for external financing by reporting cash receipts, payments and transactions. It must be prepared using the direct or indirect method, with the direct method showing actual cash amounts for items like cash received from customers and cash paid to suppliers.
This chapter discusses adjusting entries which are needed at the end of an accounting period to update accounts for the financial statements. There are four main types of adjusting entries: 1) converting assets to expenses to recognize the usage of prepaid expenses, 2) accruing unpaid expenses to record expenses incurred but not paid, 3) converting liabilities to revenue to recognize unearned revenue as it is earned, and 4) accruing uncollected revenues to record revenue earned but not received. Examples of each type are provided.
The document contains slides from a chapter on income and changes in retained earnings. It discusses how net income can be divided into income from continuing operations versus discontinued operations and extraordinary items. It provides examples of how discontinued operations, extraordinary items, and changes in accounting principles would be reported on the income statement. Other topics summarized include the calculation of earnings per share and the accounting treatment for cash and stock dividends.
This document discusses key concepts in the accounting cycle, including:
- The ledger contains all accounts and records increases and decreases for each account.
- Accounts track increases on the debit side and decreases on the credit side.
- The double-entry system requires equal debit and credit amounts for every transaction to maintain the accounting equation.
- Examples are provided to illustrate how common business transactions are recorded through journal entries and posted to accounts in the ledger, including recording revenues, expenses, assets, and owner's equity.
The document discusses accounting concepts and methods for merchandising companies. It covers the operating cycle of merchandisers involving purchasing inventory, selling inventory on credit, and collecting receivables. It compares merchandisers to manufacturers and different types of merchandisers. The document also discusses the income statement, general and subsidiary ledgers, perpetual and periodic inventory systems, physical inventory counts, and closing entries for each system. It provides examples of entries for purchases, sales, returns, discounts, and taxes.
This document discusses various aspects of a company's cash and accounts receivable, including:
- How much cash a business needs and how excess cash can be invested temporarily
- How financial assets like cash, accounts receivable, and short-term investments are valued on the balance sheet
- Techniques for estimating uncollectible accounts, writing off accounts, and adjusting the allowance for doubtful accounts based on accounts receivable aging
Here are the journal entries for the transactions:
A. Debbie ordered shelving worth $750.
Debit: Shelving $750
Credit: Accounts Payable $750
B. Debbie's selling price on a gallon of milk is increased to $3.25.
No journal entry needed.
C. A customer buys a gallon of milk paying cash.
Debit: Cash $3.25
Credit: Sales $3.25
D. The shelving is delivered with an invoice for $750.
Debit: Accounts Payable $750
Credit: Cash $750
The accounting events that will be recorded are transactions A, C, and D since they involve
The document discusses financial statements that companies prepare to report their financial performance and position. It introduces the three primary financial statements - the income statement, balance sheet, and statement of cash flows. It provides an overview of each statement's purpose including what is depicted on an income statement, balance sheet, and statement of cash flows. It also gives an example balance sheet for a travel agency to demonstrate assets, liabilities, and owners' equity.
The document discusses the statement of cash flows, which reports a company's cash inflows and outflows during an accounting period. It has three sections - operating, investing, and financing activities. The statement of cash flows helps investors understand a company's ability to generate cash flows, meet obligations, and need for external financing by reporting cash receipts, payments and transactions. It must be prepared using the direct or indirect method, with the direct method showing actual cash amounts for items like cash received from customers and cash paid to suppliers.
The document discusses adjusting entries in accounting. Adjusting entries are needed at the end of an accounting period to ensure revenues and expenses are recorded in the appropriate periods. There are four types of adjusting entries: converting assets to expenses, converting liabilities to revenue, accruing unpaid expenses, and accruing uncollected revenues. Examples are provided for each type along with sample journal entries to record the adjustments.
Large businesses divide operations into responsibility centers to improve management control. Responsibility accounting provides financial information on resource usage and output for each center. Managers are evaluated on centers' performance. Centers include cost centers, which control costs but not revenues, profit centers controlling both, and investment centers controlling capital allocation. Traceable costs are directly assigned, while common costs apply to the whole business. Transfer prices set the cost when one division provides goods or services to another and impact each division's reported profits. Non-financial metrics also measure manager and center performance. Public companies report high-level financial data by business segment.
This document discusses inventory valuation methods including specific identification, average cost, FIFO, and LIFO. Examples are provided to illustrate how inventory and cost of goods sold transactions are recorded under each method. The key inventory accounting principles of consistency, physical inventory counts, obsolescence, and lower of cost or market are also overviewed.
This document provides an overview of exercises, problems, cases, and internet assignments from Chapter 2 of an accounting textbook. It lists 23 exercises that cover topics such as preparing basic financial statements, accounting principles, effects of transactions, and evaluating financial statements. For each exercise, it provides the learning objectives, estimated time to complete, and difficulty level. It also provides brief descriptions and estimated times for 10 problems and 5 cases designed to reinforce chapter concepts.
The document discusses accrual accounting concepts and adjusting journal entries. It introduces accrual accounting and the revenue recognition and matching principles. It explains that adjusting entries are needed at the end of each accounting period to recognize revenues and expenses that have been earned or incurred but not yet recorded. The major types of adjusting entries are accruals, which record unrecorded revenues and expenses, and deferrals, which defer the recognition of revenues or expenses. Examples are provided for accrued revenues, accrued expenses, unearned revenues, and prepaid expenses. The document also discusses accounting estimates such as depreciation expense.
This document discusses accrual versus cash basis accounting and the adjusting process. It begins by distinguishing between accrual accounting, where transactions are recorded when revenues are earned or expenses incurred, and cash basis accounting, where transactions are recorded when cash is paid or received. The key aspects of the adjusting process covered are: applying the revenue and matching principles, making adjusting entries for prepaid, accrued, and deferred items, preparing an adjusted trial balance, and using that to make the final financial statements. The overall goal is to ensure revenues and expenses are recorded in the appropriate accounting period.
The document discusses key financial statements including the balance sheet, income statement, and statement of cash flows. It provides an example balance sheet and income statement for a sample company, U.S. Composite Corporation, and explains some of the key components and analysis of each statement. The balance sheet presents a company's assets, liabilities, and equity at a point in time, while the income statement measures financial performance over a period of time by reporting revenues, expenses, and net income.
This document provides an overview and objectives of Chapter 1 of an accounting principles textbook. It introduces key concepts in accounting including what accounting is, its users and uses, ethics, generally accepted accounting principles, assumptions, the basic accounting equation and its components, how business transactions affect the equation, and the four main financial statements. It also briefly discusses accounting career opportunities. The objectives are to explain these foundational accounting topics and how the financial statements are prepared from the summarized transaction data.
Principal accounting - Ch02 analyzing transactionArfan Fahmi
The document provides objectives and content for analyzing transactions in accounting. It discusses accounts and their characteristics, debit and credit rules, analyzing transaction effects on financial statements, preparing trial balances, and discovering and correcting errors. It also covers horizontal analysis to compare financial statements over different periods.
This document discusses partnerships and provides information on:
1. What a partnership is and some examples of partnership businesses. A partnership consists of 2-20 members who share profits.
2. The advantages and disadvantages of partnerships, including easy formation, combining expertise, and spreading workload as advantages, and more people to share profits and unlimited liability as disadvantages.
3. Partnership agreements, which outline capital contributions, profit/loss sharing, drawings, and other terms, and how Section 24 of the Partnership Act 1890 provides default rules in the absence of an agreement.
The document discusses key accounting concepts like assets, liabilities, equity, income, and expenses. It provides examples of how business transactions affect accounts - such as taking out a loan which increases assets and liabilities, or an owner withdrawing cash which decreases assets and equity. It also defines important terms like profit as income exceeding expenses, and explains the differences between income/expenses and cash received/paid.
The document discusses key accounting principles such as revenue recognition, matching principle, and adjusting entries. It defines different types of adjusting entries including prepaid expenses, unearned revenues, accrued revenues, and accrued expenses. Examples are provided for journal entries to record accrued revenues and expenses. The summary identifies the major concepts covered in the document which are the different types of adjusting entries and how to prepare adjusting entries for accruals.
Understanding Basics of Financial StatementsAnkita6745
Understanding the basic concepts and term used in the Financial Statements.Understanding the ratios used for analyzing the Financial Statements.Discussing factors that drive corporate valuations.
Lecture 23 expenditure cycle part ii -fixed assets accounting information sy...Habib Ullah Qamar
The document discusses fixed asset systems and their differences from inventory systems. Fixed asset systems process transactions for acquiring, maintaining, and disposing of long-term assets like land, buildings, and equipment. They record asset costs, depreciation, and location. Fixed asset transactions require approval since assets are long-term investments, unlike routine inventory purchases. Additionally, fixed assets are capitalized and depreciated over multiple periods, unlike inventories which are expensed immediately. The document also describes the acquisition, maintenance, and disposal processes in a computerized fixed asset system and the authorization and verification controls used.
Understand the difference between bookkeeping and accounting
Understand why business need to keep accounting records
Understand the meaning of of the terms assets, liabilities and capital
Understand and apply the accounting equation
Prepare a simple Balance Sheet.
This document discusses stockholders' equity, which is increased in two ways: paid-in capital from investor contributions for stock, and retained earnings from corporate profits. It describes different types of stock like preferred stock and common stock. Preferred stock typically has priority over common stock in dividends and asset distribution. The document also discusses stock splits which increase outstanding shares while decreasing par value, treasury stock which is reacquired shares recorded at cost, and accounting treatment of stocks by issuers and investors.
- The document discusses incremental analysis and relevant cost information for managerial decision making.
- It provides an example of a company, JamCo, deciding whether to accept a special order of 10,000 additional units.
- When considering total costs and revenues, including only incremental/relevant amounts, it is clear that accepting the special order will increase JamCo's profits by $20,000 despite the lower per unit price. Considering only average costs per unit would have led to an incorrect decision. Accepting the special order is therefore the best choice.
This document provides an overview of depository institutions, including commercial banks, thrifts, savings banks, and credit unions. It discusses their size, structure, products, balance sheets, regulation, and recent performance trends. The largest U.S. depository institutions are Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo. Regulation comes from agencies like the FDIC, OCC, and Federal Reserve. There has been significant consolidation in the industry and a blurring of product lines between different financial institution types over time.
The document discusses adjusting entries in accounting. Adjusting entries are needed at the end of an accounting period to ensure revenues and expenses are recorded in the appropriate periods. There are four types of adjusting entries: converting assets to expenses, converting liabilities to revenue, accruing unpaid expenses, and accruing uncollected revenues. Examples are provided for each type along with sample journal entries to record the adjustments.
Large businesses divide operations into responsibility centers to improve management control. Responsibility accounting provides financial information on resource usage and output for each center. Managers are evaluated on centers' performance. Centers include cost centers, which control costs but not revenues, profit centers controlling both, and investment centers controlling capital allocation. Traceable costs are directly assigned, while common costs apply to the whole business. Transfer prices set the cost when one division provides goods or services to another and impact each division's reported profits. Non-financial metrics also measure manager and center performance. Public companies report high-level financial data by business segment.
This document discusses inventory valuation methods including specific identification, average cost, FIFO, and LIFO. Examples are provided to illustrate how inventory and cost of goods sold transactions are recorded under each method. The key inventory accounting principles of consistency, physical inventory counts, obsolescence, and lower of cost or market are also overviewed.
This document provides an overview of exercises, problems, cases, and internet assignments from Chapter 2 of an accounting textbook. It lists 23 exercises that cover topics such as preparing basic financial statements, accounting principles, effects of transactions, and evaluating financial statements. For each exercise, it provides the learning objectives, estimated time to complete, and difficulty level. It also provides brief descriptions and estimated times for 10 problems and 5 cases designed to reinforce chapter concepts.
The document discusses accrual accounting concepts and adjusting journal entries. It introduces accrual accounting and the revenue recognition and matching principles. It explains that adjusting entries are needed at the end of each accounting period to recognize revenues and expenses that have been earned or incurred but not yet recorded. The major types of adjusting entries are accruals, which record unrecorded revenues and expenses, and deferrals, which defer the recognition of revenues or expenses. Examples are provided for accrued revenues, accrued expenses, unearned revenues, and prepaid expenses. The document also discusses accounting estimates such as depreciation expense.
This document discusses accrual versus cash basis accounting and the adjusting process. It begins by distinguishing between accrual accounting, where transactions are recorded when revenues are earned or expenses incurred, and cash basis accounting, where transactions are recorded when cash is paid or received. The key aspects of the adjusting process covered are: applying the revenue and matching principles, making adjusting entries for prepaid, accrued, and deferred items, preparing an adjusted trial balance, and using that to make the final financial statements. The overall goal is to ensure revenues and expenses are recorded in the appropriate accounting period.
The document discusses key financial statements including the balance sheet, income statement, and statement of cash flows. It provides an example balance sheet and income statement for a sample company, U.S. Composite Corporation, and explains some of the key components and analysis of each statement. The balance sheet presents a company's assets, liabilities, and equity at a point in time, while the income statement measures financial performance over a period of time by reporting revenues, expenses, and net income.
This document provides an overview and objectives of Chapter 1 of an accounting principles textbook. It introduces key concepts in accounting including what accounting is, its users and uses, ethics, generally accepted accounting principles, assumptions, the basic accounting equation and its components, how business transactions affect the equation, and the four main financial statements. It also briefly discusses accounting career opportunities. The objectives are to explain these foundational accounting topics and how the financial statements are prepared from the summarized transaction data.
Principal accounting - Ch02 analyzing transactionArfan Fahmi
The document provides objectives and content for analyzing transactions in accounting. It discusses accounts and their characteristics, debit and credit rules, analyzing transaction effects on financial statements, preparing trial balances, and discovering and correcting errors. It also covers horizontal analysis to compare financial statements over different periods.
This document discusses partnerships and provides information on:
1. What a partnership is and some examples of partnership businesses. A partnership consists of 2-20 members who share profits.
2. The advantages and disadvantages of partnerships, including easy formation, combining expertise, and spreading workload as advantages, and more people to share profits and unlimited liability as disadvantages.
3. Partnership agreements, which outline capital contributions, profit/loss sharing, drawings, and other terms, and how Section 24 of the Partnership Act 1890 provides default rules in the absence of an agreement.
The document discusses key accounting concepts like assets, liabilities, equity, income, and expenses. It provides examples of how business transactions affect accounts - such as taking out a loan which increases assets and liabilities, or an owner withdrawing cash which decreases assets and equity. It also defines important terms like profit as income exceeding expenses, and explains the differences between income/expenses and cash received/paid.
The document discusses key accounting principles such as revenue recognition, matching principle, and adjusting entries. It defines different types of adjusting entries including prepaid expenses, unearned revenues, accrued revenues, and accrued expenses. Examples are provided for journal entries to record accrued revenues and expenses. The summary identifies the major concepts covered in the document which are the different types of adjusting entries and how to prepare adjusting entries for accruals.
Understanding Basics of Financial StatementsAnkita6745
Understanding the basic concepts and term used in the Financial Statements.Understanding the ratios used for analyzing the Financial Statements.Discussing factors that drive corporate valuations.
Lecture 23 expenditure cycle part ii -fixed assets accounting information sy...Habib Ullah Qamar
The document discusses fixed asset systems and their differences from inventory systems. Fixed asset systems process transactions for acquiring, maintaining, and disposing of long-term assets like land, buildings, and equipment. They record asset costs, depreciation, and location. Fixed asset transactions require approval since assets are long-term investments, unlike routine inventory purchases. Additionally, fixed assets are capitalized and depreciated over multiple periods, unlike inventories which are expensed immediately. The document also describes the acquisition, maintenance, and disposal processes in a computerized fixed asset system and the authorization and verification controls used.
Understand the difference between bookkeeping and accounting
Understand why business need to keep accounting records
Understand the meaning of of the terms assets, liabilities and capital
Understand and apply the accounting equation
Prepare a simple Balance Sheet.
This document discusses stockholders' equity, which is increased in two ways: paid-in capital from investor contributions for stock, and retained earnings from corporate profits. It describes different types of stock like preferred stock and common stock. Preferred stock typically has priority over common stock in dividends and asset distribution. The document also discusses stock splits which increase outstanding shares while decreasing par value, treasury stock which is reacquired shares recorded at cost, and accounting treatment of stocks by issuers and investors.
- The document discusses incremental analysis and relevant cost information for managerial decision making.
- It provides an example of a company, JamCo, deciding whether to accept a special order of 10,000 additional units.
- When considering total costs and revenues, including only incremental/relevant amounts, it is clear that accepting the special order will increase JamCo's profits by $20,000 despite the lower per unit price. Considering only average costs per unit would have led to an incorrect decision. Accepting the special order is therefore the best choice.
This document provides an overview of depository institutions, including commercial banks, thrifts, savings banks, and credit unions. It discusses their size, structure, products, balance sheets, regulation, and recent performance trends. The largest U.S. depository institutions are Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo. Regulation comes from agencies like the FDIC, OCC, and Federal Reserve. There has been significant consolidation in the industry and a blurring of product lines between different financial institution types over time.
This document discusses different inventory costing methods: last-in, first-out (LIFO), first-in, first-out (FIFO), moving average, and specific identification. It also provides an example of Lucy, who owns a t-shirt shop, and her purchases and sales of t-shirts during the month of January using FIFO costing.
This document provides an overview and analysis of the pros and cons of International Financial Reporting Standards (IFRS) for investors. The author acknowledges there is little established theory or evidence on the advantages and disadvantages of uniform accounting standards within or across countries. On the pro side, the author notes the success in developing comprehensive, high-quality IFRS standards and persuading almost 100 countries to adopt them. However, the author expresses concerns that differences in financial reporting quality among countries will still exist in implementation, concealed by a facade of uniform standards. The author is also skeptical that uniform standards alone will result in uniform financial reporting practice.
The document discusses the global convergence of accounting standards, specifically the increasing adoption of International Financial Reporting Standards (IFRS) globally. It notes that over 100 countries now require or permit the use of IFRS. The document also discusses differences between IFRS and US GAAP, such as IFRS being more principles-based while US GAAP is more rules-based. The SEC roadmap for potential future adoption of IFRS for US public companies by 2016 is also summarized.
This document discusses IFRS (International Financial Reporting Standards), the challenges of implementing IFRS in India, and the benefits of convergence. Some of the key challenges mentioned include shortage of resources like accountants, need for extensive training, modifications to IT systems, impact on taxes and tax treatment, managing expectations during reporting changes, and ensuring compatibility with local regulations. The conclusion states that while a single set of global standards is desirable, full convergence faces challenges and stakeholders need to be informed of changes.
Inventory is an important asset on the balance sheet and impacts the income statement through cost of goods sold. There are two main concerns with inventory valuation - revenue recognition and ending inventory valuation. Companies must count inventory quantities and value them at cost, with adjustments made if the lower of cost or market is below cost. Common inventory costing methods include specific identification, first-in first-out, last-in first-out, and average cost.
The accounting policies adopted in measuring inventories, including the cost formula used.
The total carrying amount of inventories & its classification appropriate to the enterprise.
disclosure of AS2
This document summarizes two Indian accounting standards - AS 2 on inventory valuation and AS 4 on events occurring after the balance sheet date.
AS 2 specifies that inventory should be valued at the lower of cost or net realizable value. Cost includes acquisition, transportation and production costs. Net realizable value is estimated selling price less completion and selling costs.
AS 4 distinguishes between adjusting and non-adjusting events after the balance sheet date. Adjusting events provide evidence of conditions existing on the balance sheet date and require adjustment to reported values. Non-adjusting events do not require adjustment but must be disclosed if material. Exceptions are events contradicting the going concern assumption and proposed dividends.
The document discusses inventory valuation and different methods used for valuing inventories. It defines inventories as assets held for sale, in production for sale, or materials/supplies used in production or rendering services. Inventories arise due to time lags in purchase and sale or processing. They must be valued at the lower of cost or net realizable value. Cost includes all purchase, conversion and other costs to bring inventory to its present condition/location excluding abnormal costs. Common costing methods are FIFO, LIFO and weighted average.
Accounting Standard 2 deals with the valuation of inventories and the determination of cost. It provides guidelines on measuring inventories at the lower of cost or net realizable value. Cost includes all costs to bring inventories to their present location and condition, such as purchase cost, conversion cost, and other attributable costs. Cost formulas like FIFO, weighted average, or standard cost can be used and must be applied consistently. Certain costs like abnormal amounts or selling costs are excluded from the valuation. Disclosures around accounting policies and total inventory carrying amounts are also required.
This document discusses inventory valuation. It defines inventory as assets held for sale, in production, or to be consumed in production or services. There are three main types of inventory: finished goods, work-in-progress, and raw materials/stores. The key methods for valuing inventory are FIFO, LIFO, and weighted average cost. FIFO matches oldest costs to goods sold while LIFO matches newest costs, affecting reported profits. Weighted average smoothes price fluctuations by using average unit costs. The lower of historical cost or net realizable value is the primary valuation standard.
Marginal Costing vs Absorption Costing - ACCA - F5Jessy Chong
This document summarizes the key differences between marginal costing and absorption costing. It outlines how they classify and value costs, calculate profit, and their advantages and disadvantages. It also discusses how idle time and idle facilities are treated differently. Some example questions are provided at the end to test understanding of costing concepts.
This document outlines accounting standards for valuing inventories. It defines inventories as assets held for sale, in production, or as materials used in production. Inventories should be valued at the lower of cost or net realizable value. Cost includes purchase price, conversion costs, and other costs to bring inventories to their present state. Net realizable value is estimated selling price less costs to complete and sell. Accepted cost flow methods for valuing inventories include FIFO, LIFO, and weighted average cost. Financial statements must disclose the accounting policy, cost formula used, and inventory classifications.
This document discusses absorption costing and marginal costing. Absorption costing treats all manufacturing costs, including fixed and variable costs, as product costs. Marginal costing treats only variable manufacturing costs as product costs and regards fixed costs as period costs. Breakeven analysis determines the level of sales or production at which total revenue equals total costs. It can be used to calculate the breakeven point, target profit, margin of safety, and the impact of changes in costs, revenues, and profits.
The document discusses the valuation of inventories under accounting standards. It covers the meaning and significance of inventories, principles of valuation including cost formulas, techniques for measurement of cost, and disclosure requirements regarding inventory valuation policies and amounts. The key principles are that inventories must be valued at the lower of cost or net realizable value, and costs included in inventory valuation comprise costs of purchase, costs of conversion, and other costs to bring inventories to their present location and condition.
- IAS 2 Inventories prescribes the accounting treatment for inventories and provides guidance on determining inventory costs and recognizing them as expenses. It applies to all inventories except work-in-progress for construction contracts and biological assets related to agricultural activity.
- Inventories must be measured at the lower of cost and net realizable value. Cost includes costs of purchase, costs of conversion, and other costs to bring inventories to their present location and condition. Net realizable value is the estimated selling price less costs to complete and sell.
- When inventories are sold, their carrying amount must be recognized as an expense. Write-downs to net realizable value and inventory losses must also be recognized as expenses.
International Financial Reporting Standards- IFRSDipu Thomas joy
International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries
This document discusses inventory valuation methods. It explains that inventory includes raw materials, work in progress, and finished goods. The two main inventory valuation methods are LIFO (last in, first out) and FIFO (first in, first out). Under LIFO, the most recently produced goods are sold first, lowering costs when prices are rising. FIFO sells older goods first, which prevents expiration of inventory and decreases the impact of inflation. The document provides examples to illustrate how inventory quantities and costs are tracked under each method.
This document discusses various aspects of accounting for cash and receivables. It begins by explaining how businesses need sufficient cash on hand to pay bills and covers common types of financial assets like cash, short-term investments, and accounts receivable. It then discusses how these assets are valued on the balance sheet and issues related to cash management, internal controls over cash, bank reconciliations, and estimating and accounting for uncollectible accounts receivable.
The document discusses the statement of cash flows, which reports a company's cash inflows and outflows during an accounting period. It has three sections - operating, investing, and financing activities. The statement of cash flows helps investors understand a company's ability to generate cash flows, meet obligations, and need for external financing by reporting cash receipts, payments and transactions. It must be prepared using the direct or indirect method, with the direct method showing actual cash amounts for items like cash received from customers and cash paid to suppliers.
1) The document provides an overview of accounting principles and the accounting process. It discusses the basic accounting equation, transactions, debits and credits, and the key financial statements.
2) Sample transactions are presented for a new business that purchases equipment, supplies, earns revenue, and pays expenses. Journal entries are provided to record each transaction.
3) Accounting is defined as a system that identifies, records, and communicates financial information about an entity. The accounting process includes recording economic events, classifying data, preparing financial statements, and analyzing and communicating results.
1) The document provides an overview of accounting principles and the accounting process. It discusses the basic accounting equation, transactions, debits and credits, and the key financial statements.
2) Sample transactions are presented for a new business that purchases equipment, supplies, earns revenue, and pays expenses. Journal entries are provided to record each transaction.
3) Accounting is defined as a system for identifying, recording, and communicating financial information about an economic entity. It involves recording economic events, classifying and summarizing data, and preparing financial reports.
1. The document provides an overview of accounting principles and the accounting process. It discusses the basic accounting equation, assets, liabilities, and owner's equity as building blocks of accounting.
2. Sample transactions are presented for a new business called Softbyte to demonstrate how accounting records economic events and their impact on the basic accounting equation.
3. The accounting process includes identifying business transactions, recording the financial effects of the transactions, and preparing accounting reports to analyze the entity's performance and financial position.
1) The document provides an overview of accounting principles and the accounting process. It discusses the basic accounting equation, transactions, debits and credits, and the key financial statements.
2) Sample transactions are presented for a new business that purchases equipment, supplies, earns revenue, and pays expenses. Journal entries are provided to record each transaction.
3) Accounting is defined as a system that identifies, records, and communicates financial information about an entity. The accounting process includes recording economic events, classifying data, preparing financial statements, and analyzing and communicating results.
The document discusses the uses and purpose of cash flow statements, which classify cash flows into operating, investing and financing activities to assess a firm's ability to generate cash flows, meet obligations, and need for external financing. It also covers how cash flow statements help investors and the different types of audits including statutory, non-statutory, internal, external, interim and continuous audits.
This document discusses various topics relating to financial assets, including cash, marketable securities, receivables, and notes receivable. It provides information on how these assets are valued for financial statements, cash management techniques, accounting for uncollectible accounts receivable, and calculating interest revenue for notes receivable. Worked examples are provided to illustrate estimating credit losses and recording interest earned on a short-term note receivable.
Adjusting entries are made at the end of an accounting period to properly record revenues and expenses that relate to multiple periods. There are four main types of adjusting entries:
1) Converting assets to expenses, such as depreciating the cost of long-term assets over time.
2) Accruing unpaid expenses, like wages owed to employees at the end of a period.
3) Converting liabilities to revenue, including recognizing revenue from customer payments received in advance.
4) Accruing uncollected revenue, like interest earned but not yet received from a bank.
This document summarizes key concepts about managing cash and receivables for a company. It discusses five pivotal issues including cash needs, credit policies, accounts receivable levels, financing receivables, and estimating credit losses. It then describes methods for estimating uncollectible accounts including the percentage of net sales method and accounts receivable aging method. It also covers topics like cash controls, factoring receivables, and ethics in receivables estimation.
The document discusses adjusting entries, which are journal entries made at the end of an accounting period to allocate revenues and expenses to the appropriate periods. There are four types of adjusting entries: 1) converting assets to expenses, 2) accruing unpaid expenses, 3) converting liabilities to revenue, and 4) accruing uncollected revenues. Examples are provided for each type, including depreciation of long-term assets, recognition of prepaid expenses, and allocation of unearned revenue.
The document discusses adjusting entries, which are journal entries made at the end of an accounting period to properly record revenue and expenses that have been earned or incurred but not yet recorded. There are four main types of adjusting entries: 1) converting assets to expenses, 2) converting liabilities to revenue, 3) accruing unpaid expenses, and 4) accruing uncollected revenues. Examples are provided for each type, including entries to record depreciation expense, rental revenue recognition, accrued wages, and prepaid insurance. The purpose of adjusting entries is to ensure the financial statements accurately reflect the company's financial position and results of operations for the period.
The document discusses adjusting entries, which are journal entries made at the end of an accounting period to adjust accounts and properly state revenues and expenses across periods. There are four types of adjusting entries: 1) converting assets to expenses, 2) accruing unpaid expenses, 3) converting liabilities to revenue, and 4) accruing uncollected revenues. Examples are provided for each type, including depreciation of long-term assets, recognition of prepaid expenses, and allocation of deferred revenues over time.
1. The document summarizes key concepts related to accounting for sales revenue, receivables, and cash including revenue recognition principles, credit card sales, sales discounts, sales returns and allowances, bad debts, and cash controls.
2. It also discusses calculating ratios like gross profit percentage, receivables turnover, average collection period, and preparing bank reconciliations.
3. Examples are provided of journal entries for credit card sales, sales discounts, sales returns, estimating bad debts expense, and reconciling cash accounts.
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Chapter
Statement of
Cash Flows
After studying this chapter, you should be
able to:
1 Indicate the usefulness of the statement
of cash flows.
2 Distinguish among operating, investing,
and financing activities.
3 Prepare a statement of cash flows using
the indirect method.
4 Analyze the statement of cash flows.
S T U D Y O B J E C T I V E S
Feature Story
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13
GOT CASH?
In today’s environment, companies must be ready to respond to changes
quickly in order to survive and thrive. They need to produce new products
and expand into new markets continually. To do this takes cash—lots and
lots of cash. Keeping lots of cash available is a real challenge for a young
company. It requires careful cash management and attention to cash flow.
One company that managed cash successfully in its early years was
Microsoft (www.microsoft.com). During those years the company paid much
of its payroll with stock options (rights to purchase company stock in the
future at a given price) instead of cash. This strategy conserved cash, and
turned more than a thousand of its employees into millionaires during the
company’s first 20 years of business.
In recent years Microsoft has had a different kind of cash problem. Now that
it has reached a more “mature” stage in life, it generates so much cash—
roughly $1 billion per month—that it cannot always figure out what to do
with it. By 2004 Microsoft had accumulated $60 billion.
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Read Preview ■
Read text and answer
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JWCL165_c13_612-673.qxd 8/13/09 11:15 AM Page 612
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The company said it was accumu-
lating cash to invest in new oppor-
tunities, buy other companies, and
pay off pending lawsuits. But for
years, the federal government has
blocked attempts by Microsoft to
buy anything other than small firms
because it feared that purchase of
a large firm would only increase
Microsoft’s monopolistic position.
In addition, even the largest esti-
mates of Microsoft’s legal obligations
related to pending lawsuits would use up only about $6 billion in cash.
Microsoft’s stockholders have complained for years that holding all this cash
was putting a drag on the company’s profitability. Why? Because Microsoft
had the cash invested in very low-yielding government securities. Stockhold-
ers felt that the company either should find new investment projects that
would bring higher returns, or return some of the cash to stockholders.
Finally, in July 2004 Microsoft announced a plan to return cash to stockhold-
ers, by paying a special one-time $32 billion dividend in December 2004.
This special dividend was so large that, according to the U.S. Commerce
Department, it caused total personal income in the United Stat.
The document discusses cash, cash equivalents, and liquidity. It defines cash as currency and bank deposits, while cash equivalents are short-term, highly liquid investments. Liquidity refers to how easily an asset can be converted to cash. The document also covers petty cash systems, operating a petty cash fund, and preparing bank reconciliations to explain differences between bank and book balances.
Advance Corporate Finance Lecture no 2 week 2YasserKhan52
This chapter discusses financial statements and cash flows. It covers key topics like the balance sheet, income statement, taxes, net working capital, and calculating a firm's cash flow. The balance sheet provides a snapshot of a firm's accounting value, with assets equal to liabilities plus equity. The income statement measures financial performance over time as revenue minus expenses. Understanding the difference between accounting income and actual cash flow is also important. The chapter provides examples of various financial statements and outlines how to analyze the information in them.
This document discusses key concepts related to managing cash and receivables. It covers cash needs and considerations, credit policies, evaluating accounts receivable levels, and methods for financing receivables. It also addresses estimating uncollectible accounts, writing off accounts, and making and paying promissory notes. Specific topics include cash requirements, receivable turnover, days' sales uncollected, allowance method for estimating bad debts, percentage of net sales method, accounts receivable aging method, and discounting and factoring receivables.
Assess of borrowers position through Cash Flow Analysis-IUB.pptFaizanHussain87
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The document discusses accounting concepts and methods for merchandising companies. It compares perpetual and periodic inventory systems, with the perpetual system continuously updating inventory records and the periodic system only calculating cost of goods sold at financial reporting dates. It also covers topics like credit terms, cash discounts, and the revenue and expense accounts included in a merchandising company's income statement.
This document discusses the accounting cycle and preparing financial statements. It provides an example of JJ's Lawn Care Service adjusting trial balance, income statement, statement of retained earnings, balance sheet, and statement of cash flows for May. It then discusses closing entries, evaluating the business using financial statements, and preparing interim financial statements at different points in the year.
The document discusses key concepts in the accounting cycle, including:
- The ledger contains accounts that record increases and decreases for assets, liabilities, and equity.
- Transactions are initially recorded in journal entries using debits and credits according to rules.
- Journal entries are then posted to update the appropriate ledger accounts.
- Net income represents an increase in owners' equity resulting from profits, and is tracked in the retained earnings account.
This document provides an introduction to basic financial statements. It discusses the three primary financial statements that companies prepare: the income statement, balance sheet, and statement of cash flows. It describes what each statement depicts or describes. It also provides examples of how transactions impact the accounting equation and financial statements using a fictitious company called JJ's Lawn Care Service.
Commercial banks are key depository institutions that accept deposits and make loans. They play an important role in the economy by mobilizing savings, facilitating credit creation, and supporting agricultural, industrial and economic development. Commercial banks primarily accept deposits and advance loans. They obtain funds from deposit accounts like demand deposits, savings accounts, and time deposits, as well as borrowed funds from the central bank, repurchase agreements, and bonds. Banks then use these funds for cash reserves, lending activities, investing in securities, and other purposes.
This chapter discusses the various risks faced by financial institutions as intermediaries, including interest rate risk, market risk, credit risk, off-balance sheet risk, foreign exchange risk, country risk, technology risk, operational risk, liquidity risk, and insolvency risk. It notes that these risks are interrelated and that changes in one risk can impact other risks. The chapter provides examples of how each risk has materialized historically for financial institutions and the implications for managing these risks.
Financial intermediaries play a special role in the financial system by facilitating the flow of funds between savers and borrowers. Without intermediaries, information and transaction costs would be high and liquidity low. Intermediaries provide important functions such as risk management and maturity transformation that benefit both households and corporations. Their specialness stems from economies of scale in information processing and the provision of public services, which is why intermediaries receive special regulatory attention aimed at maintaining stability and protecting users of the financial system.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
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Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
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