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Austin Community College

Austin Community College

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Austin Community College

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  1. Austin Community College Accounting Department Presents Math for Accounting: Basic Concepts

  2. Examples • Basic math concepts • Used in accounting applications

  3. Actual Accounting Examples Some of the concepts may be new you. Don’t worry – you will cover these in detail. For now – let’s focus on the math concepts.

  4. Tools Use your calculator Print the narrative

  5. Vertical Analysis Course Syllabus

  6. Percentages 56.25% 450/800 X 100 12.50% 100/800 X 100 6.25% 50/800 X 100 25.00% 200/800 X 100 100% 56.25 +12.5 +6.25 +25 = 100

  7. Horizontal Analysis • Inflation Rate: 5% • Current Salary: $40,000 • New Salary: $42,500 Did the salary increase keep up with the inflation rate?

  8. Horizontal Analysis Ending Amount - Beginning Amount Beginning Amount X 100 $42,500 - $40,000 $40,000 $2,500 $40,000 6.25% = X 100 =

  9. Horizontal Analysis Percent of Increase: 6.25% Inflation Rate: 5.00%

  10. Take Home Pay Monthly Salary Information:

  11. Take Home Pay (400) 4,000 X .10 (248) 4,000 X .062 (58) 4,000 X .0145 $3,294 4,000 – 400 – 248 – 58 = 3,294

  12. Allocation Two friends contribute to an investment: Friend A – $100,000 Friend B – $200,000 • Agreement: • after 2 years • allocate the value $500,000 • based on the original contributions

  13. Step 1 Determine the percentage that each originally invested: 33.33 100,000/300,000 X 100 ≈ 33.33% 66.67 200,000/300,000 X 100 ≈ 66.67% 100 % Rounding Issue

  14. Step 2 Allocate the $500,000 based on the %: $ 166,650 500,000 X .3333 $ 333,350 500,000 X .6667 $ 500,000

  15. Average Balance Sheet Amounts The actual amounts are $1,360,000,000 and $1,840,000,000 Add 3 zeros

  16. Average Beginning Amount + Ending Amount 2 $1,360,000 + $1,840,000 2 = $1,600,000 (in thousands)

  17. Summary • Proper Tools • Calculator, Excel, Pencil and Paper • Reasonable answer • Practice • Help • Instructor/Tutor • Classmates, friends, family