ch04fall2009bb - Warfield Weygandt Kieso CHAPTER 4 BALANCE...

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CHAPTER 4 BALANCE SHEET INTERMEDIATE ACCOUNTING Principles and Analysis 2nd Edition Warfield Weygandt Kieso
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1. 1. Explain the uses and limitations of a balance sheet. Explain the uses and limitations of a balance sheet. 2. 2. Identify the major classifications of the balance sheet. Identify the major classifications of the balance sheet. 3. 3. Prepare a classified balance sheet using the report and account Prepare a classified balance sheet using the report and account formats. formats. 4. 4. Determine which balance sheet information requires supplemental Determine which balance sheet information requires supplemental disclosure. disclosure. 5. 5. Describe the major disclosure techniques for the balance sheet. Describe the major disclosure techniques for the balance sheet. Learning Objectives Learning Objectives
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Use and Use and Limitations Limitations Usefulness Usefulness Limitations Limitations Classification Classification Additional Additional Information Information Techniques of Techniques of Disclosure Disclosure Parenthetical Parenthetical explanations explanations Notes Notes Cross- Cross- reference and reference and contra items contra items Supporting Supporting schedules schedules Terminology Terminology Contingencies Contingencies Accounting Accounting policies policies Contractual Contractual situations situations Post–balance- Post–balance- sheet events sheet events Fair values Fair values Balance Sheet Balance Sheet Current assets Current assets Noncurrent Noncurrent assets assets Liabilities Liabilities Owners’ equity Owners’ equity Format Format
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Evaluating the capital structure. Assess risk and future cash flows. Analyze the company’s: Liquidity, Solvency, and Financial flexibility. Balance Sheet Balance Sheet Usefulness of the Balance Sheet
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Use of historical cost. Use of judgments and estimates. Many items of financial value are omitted. Limitations of the Balance Sheet Balance Sheet Balance Sheet
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Example of Balance Sheet http://www.barnesandnobleinc.com/for_investors/annual_reports/annual_r eports.html
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Three General Classifications Assets, Liabilities, and Stockholders’ Equity Companies further divide these classifications: Classification in the Balance Sheet Balance Sheet Balance Sheet Illustration 4-1 Illustration 4-1 Balance Sheet Classifications
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Cash and other assets a company expects to convert into cash, sell, or consume either in one year or in the operating cycle, whichever is longer. Current Assets Balance Sheet Balance Sheet Illustration 4-2 Illustration 4-2 Accounts and basis of valuation
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Generally any monies available “on demand.” Cash equivalents are short-term highly liquid investments that will mature within three months or less. Any restrictions or commitments must be disclosed.
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ch04fall2009bb - Warfield Weygandt Kieso CHAPTER 4 BALANCE...

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