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Class_2_Balance_Shee - W2261/4261 Zhang Int 1 Intro to Accounting& Finance W2261/4261 Columbia University Lecture 2 W2261/4261 Zhang Int 2 In

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Unformatted text preview: W2261/4261 Zhang Int 1 Intro to Accounting & Finance W2261/4261, Columbia University Lecture 2 Jan 18, 2007 W2261/4261 Zhang Int 2 In Today’s Class: 1. Accounting concepts of Assets, Liabilities, and Shareholders’ Equity. 2. When firms recognize such items (recognition issues). 3. How to quantify their amounts (valuation issues). 4. Where these items appear on the balance sheet (classification issues). W2261/4261 Zhang Int 3 Outline of Class 1. An overview of the Balance Sheet 2. Assets: recognition, measurement, and classification. 3. Liabilities: recognition, measurement, and classification. 4. Shareholders’ Equity 5. GAAP 6. Class Summary W2261/4261 Zhang Int 4 Balance Sheet Three important parts: Assets Liabilities Shareholder’s Equity Uses of funds = Sources of funds Assets are listed in the order of liquidity Liabilities are listed in the order of maturity Equity consisted of contributed capital and retained earnings. The sheet has to “balance”: Assets = Liabilities + Shareholders’ Equity This holds in each year W2261/4261 Zhang Int 5 Recall: Exhibit 1.1 -- Balance Sheet W2261/4261 Zhang Int 6 Balance Sheet Data from the exhibit: Year 9: assets=$73,381; liabilities=$47,547; shareholder’s equity=$25,834 Year 10: assets=$82,613; liabilities=$51,270; shareholder’s equity=$31,343 The sheet “balances” in both years: Year 9: 73,381=47,547+25,834 Year 10: 82,613=51,270+31,343 W2261/4261 Zhang Int 7 Account Form Balance Sheet Assets Assets Liabilities Liabilities Asset one Asset one $$$ $$$ Liability one Liability one $$$ $$$ Asset two Asset two $$$ $$$ Liability two Liability two $$$ $$$ Asset three Asset three $$ $$ Total liabilities Total liabilities $$$$ $$$$ Asset four Asset four $$ $$ Owners’ equity Owners’ equity $$$ $$$ Asset five Asset five $$ $$ Total liabilities and Total liabilities and Total assets Total assets $$$$$ $$$$$ owners’ equity owners’ equity $$$$$ $$$$$ These amounts must be equal W2261/4261 Zhang Int 8 Report Form Balance Sheet Assets: Assets: Asset one, etc....
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This note was uploaded on 04/16/2008 for the course ECON 2261 taught by Professor Frankzu during the Spring '07 term at Columbia.

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Class_2_Balance_Shee - W2261/4261 Zhang Int 1 Intro to Accounting& Finance W2261/4261 Columbia University Lecture 2 W2261/4261 Zhang Int 2 In

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