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FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

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FINANCIAL STATEMENTS

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  1. Corporation Financial condition is Public information • Posted on the internet • Posted Quarterly and yearly • Company financials: • Posted in the millions or the thousands • Financial reports will list which format is used • Means rounded to the nearest million • If posted as “in the millions” you add 6 zeros • Or multiply amount X 1,000,000 • If posted “in the thousands” you add 3 zeros • Or multiply amount X 100,000 FINANCIAL STATEMENTS

  2. If posted “in the millions” what is the amount? • Cash = $174 • Total Assets: $9,735 • If posted “in the thousands” • Accounts Payable at $729,195 • Sales at $5,234,124 FINANCIAL STATEMENTS CONTINUED $174,000,000 $9,735,000,000 $729,195,000 $5,234,124,000

  3. Turn to Page B-4 – B6 in back of textbook. • Balance Sheet • Lists Assets, Liabilities and Owner’s Equity • Income Statement (Statement of Earnings) • Lists Revenue, Costs, Expenses, and net income FINANCIAL STATEMENTS CONTINUED

  4. On a piece of paper, answer the following questions: • 1. In 2003, how much Revenue did Best Buy Report • 2. In 2003, how much Accounts Payable did Best Buy Report • 3. Write the Accounting Equation below this and the amount reported for each. Is the accounting Equation Correct • 4. In 2004, how much Revenue did Best Buy Report? • 5. Did Revenue in 2004 increase from 2003? FINANCIAL STATEMENTS CONTINUED

  5. How much did Best Buy Report in Revenue in 2010? • Where can I find this data? • Yahoo Finance Link • Question 6: How much did Best Buy Report in Revenue in 2009? • Question 7: Did Best Buy report more in Revenue in 2009 in comparison to 2004? If so, how much more? • Question 8: How much in total Assets did Best Buy report in 2004; how much in 2009. Did the company experience considerable growth? FINANCIAL STATEMENTS CONTINUED

  6. LESSON 3-1 Journals, Source Documents, and Recording Entries in a Journal

  7. Terms • Journal: a form for recording transactions in chronological order (date order) • Special amount column: a journal amount column headed with an account title: • General amount column:a journal with two amount columns in which all kinds of entries can be recorded

  8. Terms • Journal: a form for recording transactions in chronological order (date order) • Special amount column: a journal amount column headed with an account title: • General amount column: a journal with two amount columns in which all kinds of entries can be recorded • Journalizing: recording transactions in a journal • Entry: information for each transaction recorded in a journal (can not be entered without a source document) • Double-entry accounting: the recording of debit and credit parts of a transaction

  9. Terms • Source document: a business paper from which information is obtained for a journal (the transaction) • Concept: • Objective Evidence: accounting concept applied when a source document is prepared for each transaction

  10. JOURNALS A GENERAL JOURNA L: has only General Amount Columns Type of business and number of transactions determines the type of journal a business will use. SPECIAL JOURNAL: both special amount and general amount columns

  11. Transaction information entered in the journal is obtained from source documents: • Transactions must be • Accurate • In chronological order • In Double entry accounting (1 debit, 1 credit) Journalizing Concepts:

  12. Types of Source Documents Check: a business form ordering a bank to pay cash from a bank account Invoice: a form describing the goods or services sold, the quantity, and the price Sales invoice: an invoice used for recording a sale on account entry Memorandum: a form on which a brief message is written describing a transaction Receipt: a business form giving written acknowledgement for cash received

  13. CHECKS (c) page 58 Check Stub • Pre-numbered for accountability • Written in sequential order • Used to pay cash for something – i.e. bought supplies with cash….. • Both sides completed with check information. • Check stub kept for records • Source Code = (C)

  14. SALES INVOICES (s) • What is a Sales Invoice used for? • Describes goods or services sold onaccount • Describes: • The date services were sold • The quantity and price • AKA sales slip or sales ticket and sales number • Source Code = (S)

  15. Receipt – cash is received from sources other than sales (i.e. received cash on account, investments). CASH RECEIVED FROM OWNER and PAYMENTS ON ACCOUNT (R) • Received Cash • Company writes a Receipt • We keep left side • Source Code = (R) • Receipt – Received cash for payment on account from Supply Depot for $250

  16. calculator tape CASH RECEIVED FROM SALES (T) • Received cash for sales • One tape per day • One entry for full sales per day • Used when low sales justify no cash register • Source Code = (T)

  17. MEMORANDUM • Completed at time of purchase • Source Code = (M) Memorandum – bought supplies on account

  18. Important Concepts When journalizing: Must be accurate Must have a source document Must be in date order (chronological) Entered in double entry (1 debit, 1 credit) Permanent record - done in ink (for class use pencil) Dollar and cent signs not used (cents added, not sign) Debit entered first, followed by credit, when no special amount column is used Month on First line only

  19. INVESTMENT FROM OWNER August 1. Received cash from owner as an investment, $5,000.00. What source document is used when you received cash as an investment? Receipt (R) Sales Invoice Checks Receipt Memorandum Calculator Tape

  20. INVESTMENT FROM OWNER August 1. Received cash from owner as an investment, $5,000.00. Receipt No. 1. 1. What two accounts are impacted? 2. Do I have any with special account columns? 3. Write the date in the Date column 4. Account title used for accounts without a special amount column 5. Enter Kim Parker, Capital in the Account Title and use the General Amount column either debit or credit 5. Write the source document number in the Doc. No. column 6. Enter Cash amount in special amount column

  21. INVESTMENT FROM OWNER August 1. Received cash from owner as an investment, $5,000.00. August 3. Paid cash for supplies, $275.00. What source document is used when you paid cash? Check (c) Sales Invoice Checks Receipt Memorandum Calculator Tape

  22. PURCHASED SUPPLIES WITH CASH August 3. Paid cash for supplies, $275.00. Check No. 1. • 1. What two accounts are impacted? • 2. Do I have any with special amount columns? • 3. Write the date in the Date column • 4. Account title used for accounts without a special • amount column • Write the source document number in the Doc. No. column • Complete special amount column

  23. Two Transactions use 2 lines as a result of Special Amount Columns • If no special amount columns: • More lines needed • More journal space used • More time to complete transactions

  24. journal journalizing entry general journal double-entry accounting source document check calculator tape sales invoice receipt memorandum TERMS REVIEW

  25. WORK TOGETHER 3-1