tailieunhanh - Lecture Accounting: What the numbers mean (2/e) - Chapter 7: Accounting for the presentation of owners’ equity

After studying this chapter, you should understand: The characteristics of common stock, and how common stock is presented in the balance sheet; what preferred stock is, what its advantages and disadvantages to the corporation are, and how it is presented in the balance sheet; the accounting for a cash dividend, and the dates involved in dividend transactions;. | CHAPTER 7 Accounting for the Presentation of Owners’ Equity Learning Objectives List the characteristics of ordinary shares and present ordinary shares on the balance sheet. Explain the nature of preference shares. Explain a cash dividend transaction and the dates involved in dividend transactions. Explain the components of reserves, why these items appear in owners’ equity and how they are reported in the financial statements. Explain the nature of minority interest, why it is part of owners’ equity and how this is reported in the financial statements. 1- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Overview This chapter (along with chapter 6) deal with the financial resources available to an entity for financing the assets of the entity. That is the right hand side of the equation. Assets = Liabilities + Owners’ Equity The specific terminology used to identify owners’ equity will depend upon the legal form of the entity. For a sole trader, the term used is owner’s capital. In a company, the capital consists of issued shares, reserves and retained earnings. 1- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Liabilities and Owners’ Equity A = L + OE Accounting Equation Financial resources available to an entity for financing its assets Claim of the entities owners to the assets Obligations of the entity 1- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Owners’ Equity Share capital Retained earnings. Reserves =PARENT ENTITY INTEREST Minority interest in subsidiaries =TOTAL EQUITY INTEREST 1- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn | CHAPTER 7 Accounting for the Presentation of Owners’ Equity Learning Objectives List the characteristics of ordinary shares and present ordinary shares on the balance sheet. Explain the nature of preference shares. Explain a cash dividend transaction and the dates involved in dividend transactions. Explain the components of reserves, why these items appear in owners’ equity and how they are reported in the financial statements. Explain the nature of minority interest, why it is part of owners’ equity and how this is reported in the financial statements. 1- Copyright 2007 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting: What the Numbers Mean 2e by Marshall, McCartney & Van Rhyn Slides prepared by John Tretola Overview This chapter (along with chapter 6) deal with the financial resources available to an entity for financing the assets of the entity. That is the right hand side of the equation. Assets = Liabilities + Owners’ Equity The specific terminology used to identify .