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lec01s - Chapter1:OverviewofFinancial Reporting Slide Slide...

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Slide 1 Chapter 1: Overview of Financial  Reporting
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Slide 2 Class objectives Be familiar with the four basic financial statements (the  purpose, info content, structures, key elements, and the  relation among them) Understand the balance sheet equation, income statement  equation, retained earnings equation and cash flow  equation Be able to identify the users of accounting information Understand the players in accounting information  communication process
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Slide 3 What is accounting? Financial accounting:  Provide information primarily to  external  decision makers Investors, creditors, customers, suppliers, employees etc. Managerial accounting Provide information to  internal  decision makers (e.g.  managers) To make better investment decisions For performance evaluation purpose Tax accounting Provide information to the  tax authorities Legal to prepare separate books for tax and financial purpose.
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Slide 4 What is a financial report like? Where to find financial reports? Corporate websites: investor relation http://www.lenovo.com/ww/lenovo/pdf/report/E_099220100628a.pdf http:// i.dell.com/sites/content/corporate/financials/en/Documents/fy10-year-in Data service from exchanges or regulators: Hong Kong HKEx: http://www.hkexnews.hk/index.htm US SEC Edgar: http://www.sec.gov/edgar.shtml Finance websites  Hong Kong: http://www.irasia.com/index.htm US:  http://finance.google.com
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Slide 5 Annual Reports  For  privately  held companies, annual reports  are simple documents that include: 1. Four basic financial statements. 2. Related notes (footnotes). 3. Report of independent accountants (auditor’s  opinion) if the statements are audited.
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Slide 6 Annual Reports   For  public   companies , annual reports are  elaborate due to SEC reporting  requirements: 1. A Nonfinancial Section A letter to the stockholders, a description of  management’s philosophy, products, successes,  etc. 2. A Financial Section
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Slide 7 Annual Reports 1. Summarized financial data for  5- or 10-years. 2. Management Discussion and  Analysis (MD&A). 3. The four basic financial  statements. 4. Notes (footnotes). 5. Independent Accountant’s  Report and the Management  Certification.   6. Recent stock price  information. 7. Summaries of the  unaudited quarterly  financial data. 8. Lists of directors and  officers of the company  and relevant addresses. Click
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Slide 8 Quarterly/interim Reports ü Usually begin with short letter to stockholders ü Condensed  unaudited  income statement and balance sheet  for the quarter.
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