C03 - 1 Chapter 3 The Balance Sheet The and the Statement...

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1 The Balance Sheet The Balance Sheet and the Statement of and the Statement of Changes in Changes in Stockholders’ Equity Stockholders’ Equity C hapter 3 An electronic presentation by Douglas Cloud Pepperdine University
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2 1. Understand the purposes of the balance sheet. 2. Define the elements of a balance sheet. 3. Explain how to measure the elements of a balance sheet. 4. Classify the assets of a balance sheet. 5. Classify the liabilities of a balance sheet. 6. Report the stockholders’ equity of a balance sheet. Objectives Objectives Continued Continued
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3 7. Prepare a statement of changes in stockholders’ equity. 8. Understand the other disclosure issues for a balance sheet. 9. Describe the SEC integrated disclosures. 10. Explain the reporting techniques used in an annual report. Objectives Objectives
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4 FASB Statement of Concepts No. 5 FASB Statement of Concepts No. 5 FASB Statement of Concepts No. 5 recommends that a full set of financial statements for an accounting period should show a company’s. ..
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5 (1) Financial position at the end of the period. (2) Net income for the period. (3) Comprehensive income for the period. (4) Cash flows for the period. (5) Investments by and distributions to owners for the period. FASB Statement of Concepts No. 5 FASB Statement of Concepts No. 5
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6 Interrelationship of Interrelationship of Financial Statements Financial Statements Beginning Balance Sheet Assets Liabilities Stockholders’ Equity Transactions and Events Continued Continued
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7 Transactions and Events Income Statement Revenues Expenses Statement of Cash Flows Operating Activities Investing Activities Financing Activities Continued Continued Interrelationship of Interrelationship of Financial Statements Financial Statements
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8 Income Statement Revenues Expenses Statement of Cash Flows Operating Activities Investing Activities Financing Activities Ending Balance Sheet Assets Liabilities Stockholders’ Equity Interrelationship of Interrelationship of Financial Statements Financial Statements
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9 Basic Accounting Equation Basic Accounting Equation Assets = Liabilities + Stockholders’ Equity Economic resources Economic obligations Net assets
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10 Liquidity Liquidity The term liquidity is used to describe how quickly an asset can be converted into cash or a liability paid.
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11 Financial Flexibility Financial Flexibility Financial flexibility refers to the ability of a company to use its financial resources to adapt to change.
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12 Operating Capability Operating Capability Operating capability refers to the ability of a company to maintain a given physical level of operations.
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Three-Stage Process for Disclosing Three-Stage Process for Disclosing Information on the Balance Sheet Information on the Balance Sheet 1. Identification of what items meet the definition of the elements. 2.
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This note was uploaded on 02/18/2011 for the course ECON 101 taught by Professor Unknown during the Spring '10 term at University of Toronto- Toronto.

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C03 - 1 Chapter 3 The Balance Sheet The and the Statement...

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