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Purchasing managers use suppliers financial

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Unformatted text preview: edit. Purchasing managers use suppliers’ financial statements to decide whether suppliers have the resources to meet our demand for products. Employees’ union and human resource managers use the company’s financial statements as a basis for contract negotiations over pay rates. Chapter One Slide 8 Financial and Information Flows in a Capital Market Economy Flow of capital Household savings Investors Financial Intermediaries Flow Flow of information Information Intermediaries Regulators of capital markets and financial institutions Auditors and Accounting regulators Firms Management Chapter One Slide 9 The Four Basic Financial Statements Companies can prepare financial statements at the end of the year, quarter or month. 2011 X Financial statements prepared at the end of the fiscal year are called annual reports. Chapter One Slide 10 An Overview – the Four Basic Financial Statements The financial position of an entity at a given point in time Balance Sheet (Statement of (Statement of Financial Position The performance (change in the financial position) of an entity during a given period Income Statement Statement of Statement of Cash Flow Statement of Retain Earnings Chapter One 1. Name of entity 2. Title of statement 3. Specific date 4. Unit of measure The Balance Sheet reports the financial position of an entity at a particular point in time. Slide 11 MAX IDRIVE CORP. Balance Sheet At December 31, 2009 (in thousands of dollars) Assets Cash Accounts receiv able Inv entories Plant and equipment Land Total assets Liabilities and Stockholders' Equity Liabilities Accounts payable Notes payable Total liabilities li Stockholders' Equity Contributed capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Chapter One $ 4,895 5,714 8,517 7,154 981 $ 27,261 $ 7,156 9,000 $ 16,156 $ 2,000 9,105 11,105 $ 27,261 Slide 12 Balance sheet equation Basic Accounting Equation Assets = Liabilities + Stockholders’ Equity A = L + SE Golden rule! Must always balance!...
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This note was uploaded on 12/20/2011 for the course ACCT/MGMT 2010 taught by Professor A during the Spring '11 term at HKUST.

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