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FIN4320_Lecture_2_Accounting_Concepts(49p)

FIN4320_Lecture_2_Accounting_Concepts(49p) - Accounting...

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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 1 Accounting Concepts
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 2 Accounting Concepts Accounting Principles ° GAAP ° FASB
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 3 Cash Versus Accrual Accounting Income Recognition Cost Recognition Capitalized Assets And Depreciation Amortization Deferred Taxes Capital And Dividends Management Discretion
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 4 Accounting For Cash Ways To Avoid Reporting A Negative (Red) Cash Balance ° Report Cash Balance In With Marketable Securities ° Report Bank Balance As Cash Balance And Uncleared Checks As Current Liabilities
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 5 Financial Statements Income Statement Balance Sheet Statement of Cash Flows
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 6 Income Statement Revenues or Sales ° minus Cost Of Goods Sold ° equals Gross Profit
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 7 Income Statement Gross Profit ° minus Operating Expenses Depreciation ° equals EBIT Or Operating Profit
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 8 Income Statement EBIT Or Operating Profit ° plus or minus Other Income/Expense ° equals EBT
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 9 Income Statement EBT ° minus Taxes ° equals Net Income
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 10 Income Statement Revenues $320,000,000 Less: Cost of Goods Sold $162,000,000 Gross Profit $158,000,000 Less: Operating Expenses $120,000,000 Less: Depreciation $11,000,000 Operating Profit $27,000,000 Less: Interest Expense $8,500,000 Net Profit Before Taxes $18,500,000 Less: Taxes $6,290,000 Net Income $12,210,000 Earnings Available to Common $12,210,000 Dividends Paid (60% of EAC) $7,326,000 Addition to Retained Earnings $4,884,000 Earnings Per Share $6.11
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 11 Balance Sheet Assets ° Current Assets ° Intangible Assets ° Fixed or Capital Assets ° Long-term Assets
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 12 Assets Current Year Prior Year Change Cash $1,500,000 $3,000,000 ($1,500,000) Marketable Securities $1,500,000 $3,200,000 ($1,700,000) Accounts Receivable $57,000,000 $44,000,000 $13,000,000 Inventory $106,000,000 $99,000,000 $7,000,000 Pre-Paid Expenses $8,400,000 $11,000,000 ($2,600,000) Total Current Assets $174,400,000 $160,200,000 $14,200,000 Long-Term Assets $148,000,000 $154,000,000 ($6,000,000) Total Assets $322,400,000 $314,200,000 $8,200,000 Balance Sheet
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 13 Balance Sheet Liabilities ° Current Liabilities ° Long-Term Debt Equity ° Assets = Liabilities + Equity ° Common Stock Account ° Paid-In-Capital ° Retained Earnings
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4 2 5 1 0011 0010 1010 1101 0001 0100 1011 14 Liabilities Current Year Prior Year Change Accounts Payable $8,716,000 $6,400,000 $2,316,000 Short-Term Debt $102,000,000 $105,000,000 ($3,000,000) Total Current Liabilities $110,716,000 $111,400,000 ($684,000) Long-Term Debt (8%) $115,000,000 $111,000,000 $4,000,000 Total Liabilities $225,716,000 $222,400,000 $3,316,000 Common Stock ($1 Par) $2,000,000 $2,000,000 $0 Paid-In Capital $65,000,000 $65,000,000 $0 Retained Earnings $29,684,000 $24,800,000 $4,884,000 Total Equity $96,684,000 $91,800,000 $4,884,000 Total Liabilities and Equity $322,400,000 $314,200,000 $8,200,000 Balance Sheet
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