chapter 1

chapter 1 - MGMT 200 Introductory Financial Accounting...

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MGMT 200 Introductory Financial Accounting Michael Robinson msrobinson@purdue.edu
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Chapter 1: Accounting as a Form of Communication The Four Basic Financial Statements The Balance Sheet Economic resources and claims against them at a point in time The Income Statement Result of operations for a period of time The Statement of Retained Earnings Change in retained earnings for a period of time The Statement of Cash Flows Change in cash for a period of time
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The Balance Sheet The Accounting Equation ALOE Assets = Liabilities + Owners equity LHS – Economic resources RHS – Claims to these resources
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A Balance Sheet Assets = Liabilities + Owners Equity Cash $1900 Accounts pay 1800 Common stock 18050 Accounts rec 2500 Loan 11000 Retained earnings 4250 Inventory 12000 PPE 18700 Total 35100 = 12800 + 22300
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Consolidated Balance Sheet (condensed) PepsiCo, Inc. and Subsidiaries (in millions except per share amounts) December 27, 2008 and December 29, 2007 2008 2007 ASSETS Cash and cash equivalents $ 2,064 $ 910 Short-term investments 213 1,571 Accounts and notes receivable, net 4,683 4,389 Inventories 2,522 2,290 Prepaid expenses and other current assets 1,324 991 Property, Plant and Equipment, net 11,663 11,228 Intangible Assets 6,984 7,213 Investments in Affiliates 3,883 4,354 Other Assets 2,658 1,682 Total Assets $35,994 $34,628
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Consolidated Balance Sheet (condensed) PepsiCo, Inc. and Subsidiaries (in millions except per share amounts) December 27, 2008 and December 29, 2007 2008 2007 LIABILITIES Short-term obligations $ 369 $ Accounts payable and other current liabilities 8,273 7,602 Income taxes payable 145 151 Long-Term Debt Obligations 7,858 4,203 Other Liabilities 7,017 4,792 Deferred Income Taxes 226 646 Total Liabilities 23,888 17,394 SHAREHOLDERS’ EQUITY Common stock 381 480 Retained earnings 30,638 28,184 Other shareholders’ equity (18,913) (11,430) Total Shareholders’ Equity 12,106 17,234 Total Liabilities and Shareholders’ Equity $35,994 $34,628
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Exercise 1-3 The Accounting Equation Ginger Enterprises began the year with total assets of $500,000 and total liabilities of $250,000. Using this information and the accounting equation, answer each of the following independent questions. 1. What was the amount of Ginger’s owners’ equity at the beginning of the year? 2. If Ginger’s total assets increased by $100,000 and its total liabilities increased by $77,000 during the year, what was the amount of Ginger’s owners’ equity at the end of the year? 3. If Ginger’s total liabilities increased by $33,000 and its owners’ equity decreased by $58,000 during the year, what was the amount of its total assets at the end of the year? 4. If Ginger’s total assets doubled to $1,000,000 and its owners’ equity
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chapter 1 - MGMT 200 Introductory Financial Accounting...

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