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notes for lecture #2

notes for lecture #2 - Lecture#2 Page 1 Financial...

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Lecture #2, Page 1 Financial Accounting Lecture #2 September 2, 2008 Notes 42. Balance sheet Asset: what company owns…something that will give it value Liability: what they owe to others..usually cash…can be something else Equity à residual claim of firm….value of firm after assets are taken away Balance sheet is static – state of company at certain point in time Income statement shows operating performance over specific period of time…showing changes in value of company 43. In reality, not everything overlaps…but a lot of things do 44. Operating relates to the core business…central activity of the firm…what exactly they do….e.g. for supermarket, core business, selling groceries…operating expenses and revenues are for selling groceries à Supermarket can make money in other way, e.g. sell their carts…that is not how they make money usually, so it is other à People would look at operating expenses because you can see how the company is doing based
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