1 / 30

ACCOUNTING ASW SUMMER 2005

ACCOUNTING ASW SUMMER 2005. Mark Lang. OVERVIEW. Overview of ASW - work through syllabus Overview of accounting - goals - structure - major financial statements. Basics. What is a company? Why do companies exist? How large should a company be?.

braden
Télécharger la présentation

ACCOUNTING ASW SUMMER 2005

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. ACCOUNTING ASWSUMMER 2005 Mark Lang

  2. OVERVIEW • Overview of ASW - work through syllabus • Overview of accounting - goals - structure - major financial statements

  3. Basics • What is a company? • Why do companies exist? • How large should a company be?

  4. Role of Accounting • The communication problem - How to condense millions of transactions in a meaningful way • With whom does it communicate? - Investors--debt and equity - Employees--CEO, store manager, inventory managers, other employees - Taxing authorities--state and local - Others (government, labor, etc.)

  5. Financial Accounting • Why do investors need information? - What to invest in - Performance of management • separation of ownership and control • What kind of information do they need? - To forecast: • the amount • timing • uncertainty of future cash flows

  6. Investor Communication • Problem: - atomistic investors - diversified investors • Answer - generally accepted accounting principles (GAAP)

  7. US GAAP • Congress • Securities and Exchange Commission • Financial Accounting Standards Board - American Institute of CPAs - Emerging Issues Task Force, etc. • IASB may change all that

  8. Basic Statements • Balance Sheet • net worth • Income Statement • change in net worth through firm activities • Statement of Cash Flows • change in cash • Notes to the Statements • Audit Opinion

  9. Balance Sheet • Snap shot of the firm at period-end • Most basic financial statement - All others derive from it - Assets - Liabilities - Owners’ Equity

  10. Assets = Liabilities + Owners’ Equity • Assets--provide future benefits to the firm - cash or expected to provide cash in future • current--cash, sold or consumed within year • noncurrent--held for longer periods

  11. Liabilities--creditor claims - expected to require future cash outflows • current--due within a year • noncurrent--due later • Owners’ Equity-- the residual - contributed capital - retained earnings • RE05 = RE04+ NI05- Dividends05 - Other05 • Other often includes share repurchases • I’ll put repurchases and other in dividends for now • Problem 1.22

  12. Income Statement • Derives from the balance sheet - change in net assets due to operations - assets = liabilities + retained earnings + contributed capital - RE05= RE04+ NI05 - Dividends05

  13. Net income = Revenue - Expense • Revenues - Sales - Other • Expenses - Cost of Goods sold: WM—76% of revenues - Selling, Gen. & Admin: WM—18% of rev. - Other: WM—0% of rev. - Income Tax Expense: WM—2% of rev. • Problem 1.19

  14. Statement of Cash Flows • Derives from the balance sheet - Explains change in cash = Cash05 – Cash04 - Generally begins with net income - Sections • Operating • Investing • Financing • Problem 1-29, 1-34

  15. Other Disclosures • Notes to the financial statements • accounting policies and details on accounts • Audit report • Management’s discussion and analysis • Segment reporting • geographic and industry segments • Quarterly results • Five-year summary

More Related