15.515 Recitation 1 Agenda
Administrative items
• TA name:
• Email:
• Office hours:
Quick Review of Basic Accounting Concepts
Problem Set # 1: New England Bicycle Security Co.
Questions
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 1
Quick Review/Must Know!
4 Financial Statements
1) Balance Sheet
• Assets = Liabilities + Equity
• Current and Long Term Accounts
• A company snapshot
2) Income Statement
• NI (Net Income) = Revenue – Expenses + (gains-losses)
• Prepared for a given period of time
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 2
Quick Review/Must Know!
3) Statement of Cash Flows
• Reflects the changes in the Cash Account on the Balance
Sheet
• 3 sections:
– Operating
– Investing
– Financing
4) Statement of Retained Earnings
• Ending RE = Beginning RE + NI – Dividends
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 3
Relationship between 4 financial statements
Figure 2-7
(Pratt 5th edition, page 51)
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 4
Problem Set # 1: New England Bicycle Security Co.
1. Record the effects of the events on the BSE worksheet
ASSETS
Event
=
Cash
LIABILITIES & STOCKHOLDERS' EQUITY
RE
RE Explanation
Totals
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 5
Problem Set # 1: New England Bicycle Security Co.
3. Balance Sheet (12/31/2002)
Assets
Liabilities and Stockholders’ Equity
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 6
Problem Set # 1: New England Bicycle Security Co.
3. Income Statement (FY 2002)
Revenue
Costs and Expenses
Net Income
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 7
Problem Set # 1: New England Bicycle Security Co.
3. Statement of Retained Earnings (FY 2002)
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 8
Problem Set # 1: New England Bicycle Security Co.
3. Direct Statement of Cash Flows (FY 2002):
Cash provided (used) by Operating Activities
Cash provided (used) by Investing Activities
Cash provided (used) by Financing Activities
Increase (decrease) in cash balance
Beginning cash balance
Ending cash balance
15.515 Recitation 1:
Review of Basic Bookkeeping Procedures
September 11, 2002
Page 9