06+SM121+Accounting+1+2010+RW

06+SM121+Accounting+1+2010+RW - Accounting and Financial...

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Click to edit Master subtitle style Accounting and Financial Statements
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n Strong or weak? n Can it pay bills? n Growing? n Making money? n What does it own? How is your Company Doing?? How do we answer these questions?
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1/10/11SM 121 Fall 2006 Financial Statements Communicate Condition and Performance of Company to Outsiders n Business Scorecard n Everyone uses same rules to keep score (… theoretically) ¡ GAAP: G enerally A ccepted A ccounting P rinciples n Allows analysis and comparison
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Financial Statements Track All Activities of the Business {62595FCB-D595-4F9E-AEC8-28A0ADD4BE62} Investing 4908-8C0 -2 FD108DCE2E} Financing {146F5898-2072-468A-9DB7-13 2071B38A8} Operating Operating: selling goods and services Investing: acquisition and sale of assets Financing: capital from outsiders
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1/10/11SM 121 Fall 2006 Information is Presented Through Three Financial Statements Balance Sheet Income Statement Statement of Cash Flow Statement of Equity
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1/10/11SM 121 Fall 2006 A ssets (what you own ) minus L iabilities (what you owe ) = E quity Balance Sheet is a Picture of Where the Company Is if: A – L = E then: A = L + E At any single point in time A L+E
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1/10/11SM 121 Fall 2006 So Let’s Say We Start Apple Cart LLC n We put in $100 of our own money n ACLLC borrows $200 from a bank n We use the money to buy a
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1/10/11SM 121 Fall 2006 Personal Balance Sheet As of September 30, 2010 Assets: Cash $ 100 What you own Due from friends 200 PS3 and Games 9,200 Computer 2,000 Total Assets: Your Stuff $ 11,500 Liabilities: Due on credit card $ 500 What you owe Due to brother 1,500 Student Loans 7,500 Total Liabilities $ 9,500 Equity: What you are “worth” 2,000
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1/10/11SM 121 Fall 2006 The Balance Sheet Equation What you own = How you paid for it Assets = Liabilities + Equity Investments in Non-owner Owner the business financing financing $$ Borrowed by the company $$ Invested by owners or $$ Earned by the company Stuff Purchased by the company At a Specific Point in Time
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1/10/11SM 121 Fall 2006 So Let’s Say We Start Apple Cart LLC n We put in $100 of our own money n ACLLC borrows $200 from a bank n We use the money to buy a
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(millions of U.S. dollars) Assets Cash 1,117 $ Accounts Receivable 750 Inventories 356 Property, Plant and Equipment 1,418 Other Assets 1,139 Total Assets 4,780 $ Liabilities Accounts Payable 1,008 $ Notes Payable 1,242 Total Liabilities 2,250 Stockholders' Equity Contributed Capital 1,084 Retained Earnings 1,446 Total Stockholders' Equity 2,530 Total Liabilities and Stockholders' Equity 4,780 $ MATTEL, INC. Balance Sheet At December 31, 2009 Cash in bank Owed from customers Goods to sell Buildings, trucks, etc Owed to banks Owed to vendors Invested by owners Profits left in business Current Long Term Current Long Term
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1/10/11SM 121 Fall 2006 Stockholders Current Long Term Equity A 9,838 14,856 5,362 7,585 11,747 B 13,040 5,434 1,305 129 17,040 C 15,267 14,639 9,912 7,288 12,706 Assets Liabilities
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1/10/11SM 121 Fall 2006 Information is Presented Through Three Financial Statements Balance Sheet Income Statement Statement of Cash Flow Statement of Equity
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1/10/11SM 121 Fall 2006 Income Statement Tells the Story for a Certain Period Revenue (what you sold to customers) Expenses (what it cost to run the company) = Net Income (what's left over for you!) Tells what happened to the company over a certain period of time The Important Part
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This note was uploaded on 01/09/2011 for the course SMG 121 taught by Professor Arnold during the Spring '08 term at BU.

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06+SM121+Accounting+1+2010+RW - Accounting and Financial...

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