02 Lecture 2.1 - Accounting In most organizations, the...

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Accounting In most organizations, the accountants are responsible for tracking transactions as they occur. This can include paychecks getting paid, payment of bills, collection of checks for products sold, payments for new equipment, materials and supplies, etc. This steady stream of transactions is captured in a general ledger system as they occur daily. It is all historical financial data. This capture of data would have no relevance except that periodically, the accountants produce a report that documents the financial position of the firm. There are two types of reports, a financial position report called a Balance Sheet and a flow report known as an Income Statement. Before diving into the Accounting topic, take a minute to reflect on the issue of how evaluators determine the after tax cashflows they use as the fundamental basis of all evaluations. Accounting: Balance Sheet The balance sheet is a report that is produced at a point in time and represents the balance of assets and liabilities of the organization at that point in time. It has a left hand side, (the asset side) and a right hand side (the liabilities side). The following balance sheet for Blandish Industries, Inc. is located on page 13 in your textbook. We will be referring to it throughout the topic. Blandish Industries, Inc. Balance Sheet for December 31, 1992 ($000) ASSETS LIABILITIES
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Current Assets Current Liabilities Cash 520 Accounts payable 1,230 Market securities at cost (Market value 940) 860 Short-term notes payable 740 Accounts receivable 1,900 Accrued expenses 730 Less: Provision for bad debt (90) Total current liabilities 2,700 Inventories 3,100 Long-term liabilities Total current assets 6,290 First mortgage bonds 1,800 Fixed assets Debentures 1,020 Land 540 Total long-term liabilities 2,820 Plant and equipment 5,030 Total Liabilities 5,520 Less: Depreciation (2,120) OWNER EQUITY Total fixed assets 3,450 Preferred stock 320 Other assets Common stock 1,870 Prepayments and deferred charges 480 Capital surplus 480 Intangibles 520 Retained earnings 2,550 Total other assets 1,000 Total Owner Equity 5,220 Total Assets 10,740 Total Liabilities and Owner Equity 10,740
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Accounting: Balance Sheet Assets are located on the left hand side of the Balance Sheet. This includes current assets, fixed assets, and other assets. Follow with me as we discuss each component. Blandish Industries, Inc. Balance Sheet for December 31, 1992 ($000) ASSETS Current Assets Cash 520 Market securities at cost (Market value 940) 860 Accounts receivable 1,900 Less: Provision for bad debt (90) Inventories 3,100 Total current assets 6,290 Fixed assets Land 540 Plant and equipment 5,030 Less: Depreciation (2,120) Total fixed assets 3,450 Other assets Prepayments and deferred charges 480 Intangibles 520 Total other assets 1,000 Total Assets 10,740
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under current assets. Current Assets include: Cash 520 Market securities at cost (Market value 940) 860 Accounts receivable 1,900 Less: Provision for bad debt (90) Inventories 3,100 Total current assets 6,290 Cash and marketable securities are all bank account balances, operating and payroll, and short term invested cash/marketable securities.
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02 Lecture 2.1 - Accounting In most organizations, the...

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