SM121+Accounting+2+2010+RW

SM121+Accounting+2+2010+RW - Accounting and Financial...

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Click to edit Master subtitle style Accounting and Financial Statements 2
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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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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 Business Balance Sheet Shows Results of All Investing and Financing Activities n Assets : economic resources of a business that are expected to be used in future operations n Liabilities : obligations of the business (monetary or nonmonetary) to non-owners n Equity : claims of the owners after creditor claims. Assets = Liabilities + Equity
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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
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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 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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1/10/11SM 121 Fall 2006 Income Statement Lists Revenues and Expenses Over A Certain Period Of Time n Revenues: value received from exchange of goods or services to customers n Expenses: cost of doing business; assets and resources used to provide those revenues n Net income: revenues less expenses associated with getting those revenues
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Revenues – Expenses = Net Income (millions of U.S. dollars) Total Revenue 5,431 Expenses Cost of Goods Sold 2,716 Advertising and Promotion 833 Other Selling and Administrative 1,150 Interest Expense 72 Income Taxes 131 Total Expenses 4,902 Net Income 529 $ Income Statement For the Year Ended December 31, 2009 MATTEL, INC.
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SM121+Accounting+2+2010+RW - Accounting and Financial...

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