accrr111 - Do Thi Thuy Phuong Accounting I Chap...

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Unformatted text preview: Do Thi Thuy Phuong Accounting I Chap 1&2 E 1-7 If my grandparents have just given me $20,000 on the condition that I invest the money in the stock market. Before proceeding with the investment, the following accounting information needs to be obtain to support the decision of which company will provide a better rates of return. Finacial Statements which include balance sheet, income statement, statement of cash flow, and other information about the business itself such as the Business plan, EPS, and Dividend cash. To estimate the time we expect to receive income from investing in a company, we must have knowledge of the market forecast and the character of management E 1-25 1. GM has over $218 billion listed in loan receivable on top of its assets, the loans which is made represent the amount expects to collect in the future. This type of asset report is exactly like the assets bank's uses, therefore we see here, even though GM is a manufacturing and car sale business they also work like a bank. In my opinion, GM's have utilised this approach to cover for the lost that they've made in the main operating field, manufacturing and car sales. Recent reports have proven that GM has been losing its share in the US as well as all over the world. 2. The difference ($476.078 - $460.442 = $15.636) represent the owners equity of General Motor. Its the residual amount which represent the net assets available after all obligations have been satisfied. (Assets = Liabilities + Owners Equity). E-2 20 Classifications of Financial Statement Elements 1. Accounts payable L 2. Sales Revenue IS 3.Accounts Receivable A 4.Advertising Expense IS 5. Cash A 6. Supplies A 7. Consulting Revenue IS 8.Land A 9. Capital Stock O 10.Rent expense IS 11. Equipment A 12.Interest Receivable A 13. Mortgage Payable L 14 Notes Payable L 15. Buildings A 16. Salaries$ Wages Expense IS 17. Retained Earnings OE 18. Utilities Expense IS E 2-25 Balance sheet Assets Current Asset Cash 153,600 Account Receivable 113,500 Supply 4,250 Long-term Asset Building 512,000 Land 90,000 Total Asset $873,350 Liabilities and Owners' Equity Current Liabilities Account payable 74,300 Mortgage payable 423,400 Total Liabilities $497,700 Owners' Equity $375,650 Total liabilities & Owners 873,350 Equipty E 2-26 1. Expense = supplies expense + salaries expense + rent expense + administrative expense = 45,000 + 70,000 + 1,500 + 6,000 = $122,500 Income before taxes = revenue expense = 175,000- 122,500 = $52,500 2. Income taxes = income before taxes x 30% = $15,750 3. Net income = income before taxes - income taxes = 52,500- 15,75 = $36,750 4. Earnings Per Share = net income / the number of shares of stock outstanding = 36,750/ 15,0 = $2.45= 36,750/ 15,0 = $2....
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accrr111 - Do Thi Thuy Phuong Accounting I Chap...

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