File - Financial Accounting at Sias

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Objectives/Schedule
Welcome
Review
Converse about Concepts
Discussion
Income Statement
Quiz Return
Group Assignment (chapter 4 and 5)
Accounting Clip
Practice of Financial Statements
How to Account for Receivables
Review: beyond memorize…learn
How are electronics improving business?
What is a firewall?
What do you need to access an encrypted document?
What things can limit the success of internal control?
What is EFT and what does it mean?
How does a bank reconciliation help a company?
What do nearly all large companies have?
Why are accountants expected to maintain a higher
standard?
Term Adventure
Creditor
 The party/person to whom money is owed (receiver)
Debtor
 The party/person who owes money (giver)
Debt Instrument
 A receivable or a payable, usually some form of note.
Equity Security
 Stock certificate that represents the investor’s ownership in a
corporation
Do You Remember/Know?
What does maturity mean?
The date that a debt must be paid
The length of time from inception to maturity is called
what?
Term, time-period, period
Investments that a company plans to hold for one year
or less are called what?
Short-term Investments
Converse about Concepts
Trading Investments
Stock investments that are to be sold in the near future with
the intent of generating profits on the sale.
Account Example: Ford buys IBM stock
2013
Feb 13. Short-Term Investments………..100,000
Cash………………………………………………………100,000
Purchased investment
Assets
= Liabilities
+ Stockholders’ Equity
+100,000
=
0
+
0
-100,000
Trading Investments Cont…
Now, lets say that on February 28th Ford receives a cash
dividend of $3,700 from IBM.
How would Ford record the dividend revenue?
2013
February 28 Cash…………..3,700
Dividend Revenue………….3,700
Assets
=
Liabilities
+ OE
+
Revenues
+3,700
=
+3,700
Ford made a gain due to the market value of the investment
being 102,000.
Ford made an unrealized gain…they did not sell the
investment yet
Converse about Concepts
The Balance Sheet
Short-term investments are current assets
STI are almost as liquid as cash…they come right after cash
Income Statement
Investments will usually earn interest revenue and dividend
revenue
Investments create gains and losses
Read through the Mid-Chapter Summary Problem (p. 222)
When you finish, discuss with others what you learned and
what you do not know.
Then read and talk about the managers “Decision Guidelines”
Financial Statements
 Do you think you can write these fully out if given direct
information about a companies transactions?
 What are the main key parts to the Balance Sheet?
 Assets, Liabilities, and Owners’ Equity
 Make sure you know more than just these 3…
 What are the main parts to the Income Statement?
 Revenues, Expenses, and Net Income or Net Loss
 Know more than just these few
 What are the main parts to the Statement of Cash Flows?
 Investing Activities, Operating Activities, and Financing Activities
Balance Sheet Example
Income Statement Example
Statement of Cash Flows Ex.
Application and Practice
Family Adventures Inc. Financial Statement Practice
Family Adventures Inc., began operations on April 1, 20X6. During
April, the business provided travel services and ideas for families. It
is now April 30, and investors wonder how well Family Adventures
Inc. performed during its first month. They also want to know the
company’s financial position at the end of April and its cash flows
during the month.
The following data are listed in alphabetical order. Prepare the Air &
Sea Travel financial statements at the end of April 20X6.
In a group of 2 to 4 work together to help Family Adventures Inc.
With the following information on the next PPT slide, create their
Income Statement, Balance Sheet, and Statement of Cash Flows
Do we have all the information we need…do the numbers all match up?
List of Family Adventure Accounts
o Accounts Payable…$15,800
o Accounts Receivable…2,000
o Operating Activities…208,000
o Cash balance at beginning of
April…4,300
o Cash Balance at end of
April…33,300
o Sale of land…22,000
o Investing Activities…(77,000)
o Common Stock…50,000
o Inventory…28,000
o Dividends…2,100
o Notes Payable…8,000
o Sales…40,000
o Financing Activities…(102,000)
o Land…18,000
o Office Supplies…500
o Retained Earnings…3,700
o Acquisition of land…40,000
o Rent Expense…1,100
o Salary Expense…1,200
o Service Revenue…8,500
o Utilities Expense…400
o Costs of Services…3,740
o Interest Expense…12,800
o Cost of Goods Sold…13,000
o Bonus Expense…8,000
o Holiday Party
Expenses…10,000
Welcome to Day 2 of Week 8!
Objectives/Schedules
 Welcome
 Hand-Back Papers and Quizzes
 Roster Check (attendance)
 Review
 Application and Practice: time for working on




statements
Few Terms
Notes
Discussion via video clip (10 – 19)
Exam Talk
Review
What is the main focus of Chapter 5?
What is a creditor?
What does it mean to be a debtor?
If a investment is mature today, what does this mean?
What are trading investments?
Check it Out
What are receivables?
 Monetary claims against a business or individual
 Acquired mainly by selling goods or services and by lending
money.
There are 2 Types of main receivables
1. Accounts Receivable
2. Notes Receivable
Notes are more serious and the debtor may even need to
promise some security
 We call this collateral
Accounting for
Uncollectible Receivables
Important: some receivables may not be collected.
So, selling on credit creates both a benefit and a cost:
 Benefit: Customers who cannot pay cash immediately
can buy on credit, so sales and profits increase.
 Cost: The company cannot collect from some customers.
This is called uncollectible-account expense
 Other ways may mention “less allowance”
 Meaning, receivables they will do not expect to collect
Notes Receivable
What is principal?
 The amount borrowed by a debtor, and lent by who…
Creditor
What is interest?
 The borrower’s cost of renting money from a lender.
 Interest is revenue for who?
Lender (creditor)
 Interest is an expense for who?
Borrower (debtor)
VIDEO CLIP!
Try to listen and understand all that you can.
Afterwards we will discuss some of your thoughts
about the economy.
What does this mean for the accountants?
What different parts of the statements will need to
changes specifically?
Midterm Exam
This is not fully made yet…
But there will probably be the following format.
 Multiple Choice
 Fill in the Blank
 Short Response
 Essay
 Transactions
 Statements
 Journal
 Etc.
Class is Paused for the
Weekend!
Have a great weekend!
I am happy to be your teacher and I am interested in
seeing what dreams you chase in the future!
Study Hard and Enjoy the Weekend!
 Here comes Halloween and Thanksgiving right behind
it!!!!
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