Engler F05 Corporate Accounting

Engler F05 Corporate Accounting - Accounting Outline Table...

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Accounting Outline Table of Contents CH 1. ACCOUNTING PRINCIPLES AND THE LEGAL CONTEXT (1) 1. KFC Formation (1) 2. Beginning Balance Sheet entries (1) 3. GAAP (2) CH 2. THE FUNDAMENTAL EQUATION (2) 1. Balance sheet problems (3) 2. Income statement and balance sheet problems (4) CH 3. THE ACRUAL SYSTEM OF ACCOUNTING (5) CH 4. ACCOUNTING FOR THE ASSET OF INVENTORY (6) 1. Impact on income statement 2. Impact on balance sheet. CH 5. ACCOUNTING FOR FIXED ASSETS-DEPRECIATION (7) CH 6. OTHER ASSET AND LIABILITY ISSUES (8) 1. Ongoing litigation (8) 2. Fair value hedges (8) 3. Lower of cost or market (LCM) (9) 4. Stock options (9) 5. Off-balance sheet financing (9) 6. Consolidation method of acctg. (10) CH 7. CAPITAL ACCOUNTS (10) Stock dividends vs cash dividends. CH 8. STATEMENT OF CASH FLOWS (11) CH 9. FINANCIAL STATEMENT ANALYSIS (11) 1. Cash flow ratios (11) 2. Balance sheet ratios (12) 3. Income statement ratios (13) CH 10. VALUATION PRINCIPLES (13) 1. Time value of money (TVM) (13) 2. Future value (13) 3. Present value (14) CH 11. VALUATION TECHNIQUES (14) 1. Book Value Per Share (14) 2. Earnings per Share (EPS) (15)
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Accounting Outline Professor Engler 1 CH 1. ACCOUNTING PRINCIPLES AND THE LEGAL CONTEXT Accounting is relevant in litigation / corporate law. Need to be able to carry on a dialog with experts: Determining profitability as it relates to the purchase price in the sale of a business. Assessing legal consequences 2 core financial statements. 2 ways to evaluate how to assess the financial prospects of a business: 1. Balance sheet. A snapshot at a particular time. Gives a sense of the net worth of a co. by looking at assets and liabilities 2. Income statement. Performance during a period of time. Is the co profitable? Does it generate a positive return? PROBLEM 1 (P.3) KFC FORMATION IN HUNGARY FACTS: 600,000 invested 50,000 to train staff 150,000 to purchase equipment. Market value goes up to 180,000 40,000 interest earned at the bank CASH: Start 600,000 - 50,000 - 150,000 + 40,000 = 440,000 BALANCE SHEET 12/31/01 : (numbers here not necess correct—that’s the point. There are a lot of ways to report a company’s performance. That’s why we have GAAP.) Assets Liabilities Cash 440,000 Trained staff 50,000 Equipment 150,000 1 Total Assets 640,000 Owners Equity 640,000 1 GAAP provides that this be listed at historical cost, or $150,000 based on administrative difficulties with valuing every asset each time a balance sheet is created.
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Accounting Outline Professor Engler 2 GAAP. There are many ways the above balance sheet can be put together—but we need a set of rules that bring standardization so one can compare one company to another on the same set of criteria. FASB creates GAAP for this purpose—sets guiding principles to narrow the options and variance in the way financial statements are presented. p.7 lists some of these rules: 1. the cost principle. Assets are to be reported at their historical cost and not market value
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This note was uploaded on 02/14/2008 for the course LAW 7060 taught by Professor Haas during the Fall '07 term at Yeshiva.

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Engler F05 Corporate Accounting - Accounting Outline Table...

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