ch05 - 5-1Intermediate Accounting14th Edition5Balance Sheet...

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Unformatted text preview: 5-1Intermediate Accounting14th Edition5Balance Sheet and Statement of Cash FlowsKieso, Weygandt, and Warfield5-21.Explain the uses and limitations of a balance sheet.2.Identify the major classifications of the balance sheet.3.Prepare a classified balance sheet using the report and account formats.4.Indicate the purpose of the statement of cash flows.5.Identify the content of the statement of cash flows.6.Prepare a statement of cash flows.7.Understand the usefulness of the statement of cash flows.8.Determine which balance sheet information requires supplemental disclosure.9.Describe the major disclosure techniques for the balance sheet.Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives5-3Balance Sheet, also referred to as the statement of financial position:1.Reports assets, liabilities, and equity at a specific date.2.Provides information about resources, obligations to creditors, and equity in net resources.3.Helps in predicting amounts, timing, and uncertainty of future cash flows.Balance SheetBalance SheetBalance SheetBalance SheetLO 1 Explain the uses and limitations of a balance sheet.5-4Computing rates of return.Evaluating the capital structure.Assess risk and future cash flows.Analyze the companys: Liquidity, Solvency, and Financial flexibility.Balance SheetBalance SheetBalance SheetBalance SheetUsefulness of the Balance SheetLO 1 Explain the uses and limitations of a balance sheet.5-5Most assets and liabilities are reported at historical cost (under US GAAP; fair value for PP&E under IFRS).Use of judgments and estimates.Many items of financial value are omitted.Limitations of the Balance SheetBalance SheetBalance SheetBalance SheetBalance SheetLO 1 Explain the uses and limitations of a balance sheet.5-6ClassificationLO 2 Identify the major classifications of the balance sheet.Balance SheetBalance SheetBalance SheetBalance Sheet5-7Illustration 5-1In practice you usually see little departure from these major subdivisions.Balance SheetBalance SheetBalance SheetBalance SheetClassificationLO 2 Identify the major classifications of the balance sheet.5-8Cash and other assets a company expects to convert into cash, sell, or consume either in one year or in the operating cycle, whichever is longer. Generally presented in order of liquidity. Current AssetsClassification in the Balance SheetClassification in the Balance SheetClassification in the Balance SheetClassification in the Balance SheetIllustration 5-2LO 2 Identify the major classifications of the balance sheet.5-9ReviewThe correct order to present current assets isa.Cash, accounts receivable, prepaid items, inventories.b.Cash, accounts receivable, inventories, prepaid items....
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This note was uploaded on 11/07/2011 for the course ACC 300 taught by Professor Lori during the Fall '10 term at Michigan State University.

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ch05 - 5-1Intermediate Accounting14th Edition5Balance Sheet...

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