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Mgmt_200_Spring_2008_Chap_1_Financial_Statements(1,7)

Mgmt_200_Spring_2008_Chap_1_Financial_Statements(1,7) -...

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MGMT 200 INTRODUCTORY FINANCIAL ACCOUNTING Chapter 1: Financial Statements Users of accounting information The four basic financial statements The Balance Sheet and the accounting equation The Income Statement The Statement of Retained Earnings E1-5, E1-8
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Accounting Accounting is a system that collects and processes (analyzes, measures and records) financial information about an organization and reports that information to decision makers
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The Accounting System Collects and processes financial information Reports information to decision makers Managers (internal decision makers) Investors and Creditors (external decision makers)
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The Four Basic Financial Statements The Balance Sheet Economic resources and claims against them at a point in time The Income Statement Result of operations for a period of time The Statement of Retained Earnings Change in retained earnings for a period of time The Statement of Cash Flows Change in cash for a period of time
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The Balance Sheet Basic Accounting Equation Assets = Liabilities + Stockholders’ Equity Economic Resources Sources of Financing for Economic Resources
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THE HOME DEPOT, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS amounts in millions, except per share data January 28, January 29, 2007 2006 ASSETS Cash and Cash Equivalents $ 600 $ 793 Short-Term Investments 14 14 Receivables, net 3,223 2,396 Merchandise Inventories 12,822 11,401 Other Current Assets 1,341 665 Property and Equipment, net: 26,605 24,901 Other Assets 7,658 4,235 Total Assets $52,263 $44,405
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THE HOME DEPOT, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS amounts in millions, except per share data January 28, January 29, 2007 2006 LIABILITIES Accounts Payable $ 7,356 6,032 Accrued Salaries and Related Expenses 1,295 1,068 Deferred Revenue 1,634 1,757 Other current liabilities 2,628 3,336 Long-Term Debt 11,661 3,185 Other Long-Term Liabilities 2,659 2,118 Total Liabilities 27,233 17,496 STOCKHOLDERS’ EQUITY Common Stock 8,051 7,269 Retained Earnings 33,052 28,943 Other stockholders’ equity (16,073) (9,303) Total Stockholders’ Equity 25,030 26,909 Total Liabilities and Stockholders’ Equity $52,263 $44,405
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The Income Statement Net income = Revenues – Expenses Revenues are the inflow of resources from the sale of goods or services during a period of time Expenses are the resources used up to earn the revenues during a period of time
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THE HOME DEPOT, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF EARNINGS Fiscal Year Ended amounts in millions, except per share data January 28, January 29, January 30, 2007 2006 2005 NET SALES $90,837 $81,511 $73,094 Cost of Sales 61,054 54,191 48,664 GROSS PROFIT 29,783 27,320 24,430
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