Main Ideas in CH 5 Handout Solution Part 1

Main Ideas in CH 5 - MAIN IDEAS IN CH 5 HANDOUT SOLUTION PART 1 BALANCE SHEET AND STATEMENT OF CASH FLOWS(NOTE Handouts are not a sub stitute for

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MAIN IDEAS IN CH 5 HANDOUT SOLUTION PART 1 BALANCE SHEET AND STATEMENT OF CASH FLOWS (NOTE:  Handouts  are  not a  substitute  for reading  and  studying  the  text. Handouts  do  not cover  everything  that you  need  to know.) The  main  ideas  you  NEED TO  KNOW  on  the  balance  she et  from  CH  5 include  the  following: PART  1 OF  THE HANDOUT: LO1 EXPLAIN THE USES  AND LIMITATIONS  OF  A BALANCE  SHEET. LO2 IDENTIFY   THE   MAJOR   CLASSIFICATIONS   OF   THE   BALANCE   SHEET,   INCLUDING   HOW   RATIO  ANALYSIS  CAN  BE USED TO  EXTRACT  INFORMATION. LO3 PREPARE  A CLASSIFIED BALANCE  SHEET  USING  THE REPORT  AND ACCOUNT  FORMATS. LO4 DETERMINE   WHICH   BALANCE   SHEET   INFORMATION   REQUIRES   SUPPLEMENTAL   DISCLOSURE. LO5 DESCRIBE  THE MAJOR  DISCLOSURE  TECHNIQUES  FOR  THE BALANCE  SHEET. INTRODUCTION CH  5 intends  to acco mplish  what CH  4 did  for the  incom e  statem e nt,  but for the  balance  she et  and  statem e nt  of cash  flows.   CH  5 pre   discus sion  of the  concepts  and  technique s  that underlie  the  preparation  and  analysis  of the  balance  she et.  Along  with the  mechanics   acceptable  disclosure  requirem e nts  are  examined  and  illustrated.  A brief  introduction  to the  statem ent  of cash  flows  is also  pres ented,     foundation  for   the   more  compreh e n sive  discus sion  of   this  subject  presented  in  CH  24   (you’ll   see  this   in ACCT   306).    The   financia     disclosure s  find their  way  into  actual  financial  statem ents.    LO1 EXPLAIN THE USES  AND LIMITATIONS  OF  A BALANCE  SHEET. For  many  years,  users  generally  considered  the  incom e  statem e nt  to be  superior  to the  balance  she et  as  a  basis  for judging  the  econo being  of an   enterprise.  However,  the  balance  sheet  is pretty  important.    In one  glance  it shows  the  econo mic  resource s  invested  into  the  busines s  (ASSET S)  an   those  assets  have  been  financed  through  LIABILITIES  and  STO CKHOLDERS’  EQUITY.   It portrays  how  the  decisions  of manag e m e nt     the  busines s  to  this  point,  by  the  operating,  investing,  and  financing  activities  carried  out  to  the  balance  she et  date  and  reflected  in   position  portrayed. 1
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This note was uploaded on 05/07/2010 for the course ACCT 306 taught by Professor Intermediateaccounting during the Spring '10 term at Winthrop.

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Main Ideas in CH 5 - MAIN IDEAS IN CH 5 HANDOUT SOLUTION PART 1 BALANCE SHEET AND STATEMENT OF CASH FLOWS(NOTE Handouts are not a sub stitute for

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