FIN4320_Lecture_2_Accounting_Concepts(49p)

FIN4320_Lecture_2_Accounting_Concepts(49p) - 4 1 0011 0010...

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Unformatted text preview: 4 1 0011 0010 1010 1101 0001 0100 1011 1 Accounting Concepts 4 1 0011 0010 1010 1101 0001 0100 1011 2 Accounting Concepts Accounting Principles GAAP FASB 4 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 4 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 4 1 0011 0010 1010 1101 0001 0100 1011 5 Financial Statements Income Statement Balance Sheet Statement of Cash Flows 4 1 0011 0010 1010 1101 0001 0100 1011 6 Income Statement Revenues or Sales minus Cost Of Goods Sold equals Gross Profit 4 1 0011 0010 1010 1101 0001 0100 1011 7 Income Statement Gross Profit minus Operating Expenses Depreciation equals EBIT Or Operating Profit 4 1 0011 0010 1010 1101 0001 0100 1011 8 Income Statement EBIT Or Operating Profit plus or minus Other Income/Expense equals EBT 4 1 0011 0010 1010 1101 0001 0100 1011 9 Income Statement EBT minus Taxes equals Net Income 4 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 4 1 0011 0010 1010 1101 0001 0100 1011 11 Balance Sheet Assets Current Assets Intangible Assets Fixed or Capital Assets Long-term Assets 4 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 4 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 4 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...
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This note was uploaded on 03/31/2009 for the course MANAGERIAL 4310 taught by Professor Frank during the Fall '08 term at Southwest Texas Junior College.

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FIN4320_Lecture_2_Accounting_Concepts(49p) - 4 1 0011 0010...

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