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Class_2_Balance_Sheet_(1)_Upload

Class_2_Balance_Sheet_(1)_Upload - Intro to Accounting...

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W2261/4261 Zhang                                   Intr 1 Intro to Accounting & Finance W2261/4261, Columbia University Lecture 2 Jan 18, 2007
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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).
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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
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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
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W2261/4261 Zhang                                   Int 5 Recall: Exhibit 1.1 --  Balance  Sheet  
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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
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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  $$$$  $$$$ Asset four Asset four      $$      $$ Owners’ equity Owners’ equity    $$$    $$$ Asset five Asset five      $$      $$ Total liabilities and Total liabilities and Total assets Total assets $$$$$ $$$$$   owners’ equity   owners’ equity $$$$$ $$$$$ These amounts must be equal
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W2261/4261 Zhang                                   Int 8 Report Form Balance Sheet Assets: Assets: Asset one, etc. Asset one, etc. $$$$$ $$$$$ Total assets Total assets $$$$$ $$$$$ Liabilities: Liabilities: Liability one, etc. Liability one, etc.
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