Day 2-Ch 2-Part 1-8.31.11 - Day2 Chapter2: August31,2011...

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Business Management 201 Day 2 Chapter 2: Part 1—Financial Statements August 31, 2011
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Day 2 Agenda 1) Blackboard Email Group 2) Packets/Reading Quiz Ch 2—Due Friday at 8:00AM 3) Book Assignment List/Google Doc—Due Friday,  September 9 at 11:59 PM 4) TA Hours/Review Sessions (Location TBD) 5) TAs Nicole Clement & Devin Dickson  Class Email:  [email protected] 6) Chapter 2: Part 1 Discussion—Financial Statements Day Time Purpose Tuesday 9:00 AM-10:00 AM  or  10:00 AM-11:00 AM Open ?s Tuesday 7:00 PM-8:00 PM POW Thursday 10:00 AM-11:00 AM  or  11:00 AM-12:00 PM Open ?s Thursday 5:00 PM-6:00 PM POW
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Chapter 2 Mind Map Learning Objective: Develop an understanding of how to read  simple financial statements Identify the fiction inherent in financial  statements Demonstrate an ability to use standard  form to create financial statements Analyze financial statements using ratios   
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Chapter 2 Mind Map Key Words/Concepts: Income Statement, Balance Sheet, Cash Flow  Statement Accrual Accounting, Historical Cost, Matching  Principle Earnings Management Free Cash Flow (FCF) Retained Earnings Evolution Ratio Definitions/Interpretation  (many)  
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Role of Accounting in Finance Understanding accounting is  essential  to  understanding finance. Unfortunately, accounting has its own vocabulary  and rules which  must  be followed. Two Standardization Benefits : 1) Facilitates Analysis 2) Clarifies Communication
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Accrual vs. Cash Accounting Why Use Accrual Accounting? Accrual accounting is a better construct for  understanding the true operations of an enterprise.   However, the standard accounting principles create  an environment where a  simplistic reading  of the  standard financial statements is almost always  misleading.
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Misleading Financial  Statements?
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