Lecture 3 Balance Sheet 1

Lecture 3 Balance Sheet 1 - Balance Sheet (I) ACCT 410...

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1 Balance Sheet (I) ACCT 410 Accounting for Non-Business Majors Fall 2008 Professor Jieying Zhang Leventhal School of Accounting University of Southern California Sep. 2, 2007
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2 Summary of last session Balance Sheet Assets= Liabilities + Owners’ equity Income Statement Revenue - Expenses = Net Income Statement of cash flows Operating, Investing and Financing activities Two methods of recording a transaction Spreadsheet method Journal entry
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3 Learning objective of this session Understand what assets, liabilities, and owners’ equity are, and what the line items are under each category. Recognition Valuation Be able to classify an item into assets, liabilities, and owners’ equity.
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4 Balance Sheet: Assets Definition Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Important phrases Probable Future economic benefits Obtained or controlled Car financed through a loan Capital leases
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5 Balance Sheet: Assets The specific types of assets a firm owns depends on the nature of its business -- manufacturing (e.g., General Motors) vs. merchandising (e.g., Target) vs. financial (e.g., Citicorp) vs. service (e.g., H & R Block) business.
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6 Balance Sheet: Assets Current assets Cash and other assets that are reasonably expected to be realized in cash or consumed during the normal operating cycle of the business or within one year, whichever is longer whichever is longer . Cash and cash equivalents Short-term investments -- at market value -- We will discuss this in detail later. Accounts receivable -- Net realizable value Inventory -- Lower of Historical Cost or Market Value (current replacement cost) Prepaid expenses (insurance and rent)
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7 Balance Sheet: Assets
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Lecture 3 Balance Sheet 1 - Balance Sheet (I) ACCT 410...

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