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Review from Yesterday

Review from Yesterday

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Review from Yesterday

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  1. Review from Yesterday • Work Sheet is an informal business paper used to organize and plan the information for the financial • Introduced to 6 column work sheet (next chapter we will move onto 8 column work sheet which includes adjustments) • Work sheet includes Trial Balance (ALL accounts are listed), Income Statement (Revenue & Expenses, calculates net income or net loss), and Balance sheet (includes assets, liabilities, owner’s equity (drawings & capital) • Total all 4 columns in Income Statement and Balance Sheet

  2. Review Cont. • Difference in totals should equal in the income statement & balance sheet • When there is a profit the balancing figure is placed in the 2 outside columns Balancing Figure

  3. When there is a loss, the balancing figure is placed in the 2 inside columns

  4. Vulcan RentallsIncome StatementYear Ended December 31, 2011 • Create an Income Statement on the sheet provided for Vulcan Rentalls using the work sheet from yesterdays class • Income Statement requires: Revenue & Expenses • Net Income = Revenue > Expenses • Net Loss = Revenue < Expenses

  5. Vulcan RentallsIncome StatementYear Ended December 31, 2011

  6. Classified Balance Sheet • Has the data grouped according to major categories • We have already been introduced to the report form of the balance sheet. It is when the information is presented in a one-above-the-other, or vertical, format.

  7. Major Categories • Assets: • Current assets- unrestricted cash, an asset that will be converted into cash within one year, or an asset that will be used up within one year • Examples: Bank, Accounts Receivable • Fixed assets- a long-term asset held for its usefulness in producing goods or services. Same as Plant and Equipment

  8. Liabilities • Current liability- a short-term debt, payment of which is expected to occur within one year • Examples: Bank Loan, Accounts Payable • Long-term liability- a liability which, in the ordinary course of business, will not be paid within one year • Example: Mortgage Payment

  9. Peoples’ Security Company Classified Balance Sheet December 31, 2011 Heading Assets < 1 year (very liquid) Assets > 1 year Debts to be paid within 1 year (short term) Debts > 1 year Net Income > Drawings

  10. Vulcan RentallsClassified Balance SheetDecember 31, 2011

  11. For tomorrow: • Complete Exercise #1, 2 p. 276 (t), p.192-193 (w) • Start exercise #2 ‘Ying Lo’ p. 292 (t) p. 202-204 (w) * Check posted answers on board