tailieunhanh - Lecture Introduction to financial accounting - Chapter 2: More on financial statements, ratios

Chapter 2 - More on financial statements. Generally contains the following standard classifications: Current assets; long-term investments; property, plant, and equipment; intangible assets; current liabilities; long-term liabilities; stockholders' equity. | 1 A BALANCE SHEET: i - changes constantly (every time an activity occurs) ii - shows assets, liabilities and equities as of a specific date. Prepared at least once per year. iii - uses original cost (historical cost principle) for most items. Current Fair Market Value (FMV) used for some assets like marketable securities since daily price is readily available. iv - Only shows items that can be expressed in monetary units ($) Which assets or liabilities can’t be expressed in $$$? More on Financial statements Chapter 2 01/23/16 1 21 2 Generally contains the following standard classifications: The Classified Balance Sheet ASSETS Current Assets Long-Term Investments Property, Plant, and Equipment Intangible Assets Current Liabilities Long-Term Liabilities LIABILITIES Stockholders' Equity 01/23/16 2 21 Assets that are expected to be converted to cash or used in the business within a short period of time, usually one year. Current assets are listed in order of liquidity (convert them to cash). Examples: Cash Short-term investments Receivables Inventories Supplies on hand Prepaid expenses 3 Current Assets 01/23/16 3 22 4 Assets That A Company Depreciates. Subtotals are usually made for current items: CHUCK CORPORATION Balance Sheet December 31, 2015 Assets Current Assets: Cash $ 2,000 Accounts receivable 4,000 Total Current Assets $ 6,000 Long-term investments: Stocks 5,000 Real estate 90,000 95,000 Property, plant & equipment: Equipment 24,000 Less: Accumulated Depreciation - 8,000 16,000 Intangible assets Patents 50,000 Total assets $167,000 01/23/16 4 24 Assets whose conversion to cash is not expected within one year. Assets not intended for use within the business. Examples: Investments of stocks, notes and bonds of other corporations. Land held for speculation Rental buildings 5 Long-Term Investments 01/23/16 5 23 Assets with relatively long useful lives. Assets used in operating the business. Examples: land buildings machinery delivery equipment . | 1 A BALANCE SHEET: i - changes constantly (every time an activity occurs) ii - shows assets, liabilities and equities as of a specific date. Prepared at least once per year. iii - uses original cost (historical cost principle) for most items. Current Fair Market Value (FMV) used for some assets like marketable securities since daily price is readily available. iv - Only shows items that can be expressed in monetary units ($) Which assets or liabilities can’t be expressed in $$$? More on Financial statements Chapter 2 01/23/16 1 21 2 Generally contains the following standard classifications: The Classified Balance Sheet ASSETS Current Assets Long-Term Investments Property, Plant, and Equipment Intangible Assets Current Liabilities Long-Term Liabilities LIABILITIES Stockholders' Equity 01/23/16 2 21 Assets that are expected to be converted to cash or used in the business within a short period of time, usually one year. Current assets are listed in order of liquidity .