财务决策chapter2

©Chris Guilding 1Overview:1. The basic financial reports2. Classification of transactions3. Review of balance sheet and profit and loss statement Chapter 2: Analysing transactions and preparing year-end financial statements.©Chris Guilding 21. The basic financial reportsAs part of financial reporting (i.e., external reporting), companies prepare:•a balance sheet,•a profit and loss statement,•a statement of owner’s equity,•a statement of cash flows.The main statements we will be reviewing are the balance sheet and the profit and loss statement.©Chris Guilding 31. The basic financial reports (cont’d)Assets are “things”that are owned (most usually purchased) by the organisation. To qualify as an asset, the organisation should be able to derive some future value from ownership. Typical assets include: cash, accounts receivable, china, silver, glass,linen, stock, cars, equipment, land and buildings.Liabilities may be seen as the opposite of assets. They reflect financial obligations of the organisation. Typical liabilities include: wages & salaries payable, trade creditors and bank loan.Owner’s equity reflects the financial interest of the owner(s) in the organisation. It includes original investment plus all profits not paid out to the owner(s) (retained profits).The main sections of a balance sheet:©Chris Guilding 4Fundamental balance sheet equation:Assets -Liabilities = Owner’s Equity (A -L = OE)i.e., the owner’s equity (interest) in the company equals the surplus assets that would be left over after the company’s liabilities have been paid off.1. The basic financial reports (cont’d)Assets = Liabilities + Owner’s Equity (A = L + OE)i.e., money is raised and goes towards buying assets.Money raised but not “ploughed”into assets is held as cash (which is also an asset).Alternatively, the balance sheet equation can be stated as:©Chris Guilding 5ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss +30,000+ 30,0002. Classification of transactionsFollowing the recording of business transactions, the balance sheet equation (A = L + OE) must be maintained.The “double impact”that transactions have on the balance sheet equation will be shown using the following 10 transactions made by the Kenit hotel.Transaction 1)Geoff Kenit contributes $30,000 cash to commence his own hotel business.©Chris Guilding 6ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss+19,000+19,0002. Classification of transactions (cont’d)Transaction 2)Billed clients $19,000 for use of conference facilities.ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss+ 800+ 800Transaction 3)Purchased stock on credit for $800.©Chris Guilding 7ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss +6,000-6,0002. Classification of transactions (cont’d)Transaction 4)Received $6,000 from customers billed in transaction (2) above.ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss - 3,000+12,000+ 9,000Transaction 5)Purchased a van for $12,000, paying $3,000 in cash and obtaining a loan for the balance.©Chris Guilding 8ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss - 500- 5002. Classification of transactions (cont’d)Transaction 6)Paid $500 to trade creditors to reduce amount owing for stock purchased.ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss - 1,500- 1,500Transaction 7)Owner withdrew $1,500 from the business.©Chris Guilding 9ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss- 600- 6002. Classification of transactions (cont’d)Transaction 8)The accountant has determined that $600 of stock has been used.ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss - 250- 250Transaction 9)Paid $250 for miscellaneous expenses (telephone, electricity, etc.).©Chris Guilding 10ASSETS =LIABILITIES +OWNER’SEQUITYCash at bank Acc.Rec’ble Stock Van Acc.Payable Loan Payable Capital Profit & Loss - 5,000- 5,0002. Classification of transactions (cont’d)Transaction 10)Repaid $5,000 of the loan taken out for the van.©Chris Guilding 11ASSETS =LIABILITIES +OWNERS EQUITYCash at bank Acc.Rec’ble Stock Van Acc.P’ble Loan P’ble Capital Profit &Loss 1 + 30,000+ 30,0002+ 19,000+ 19,0003+ 800+ 8004+ 6,000- 6,0005- 3,000+ 12,000+ 9,0006- 500- 5007- 1,500- 1,5008- 600- 6009- 250- 25010- 5,000- 5,00025,75013,00020012,0003004,00028,50018,150$50,950=$4,300+$46,650The net effect of these 10 transactions can be summarised as follows. Note how columns are added, then the column totals are added to give the value for the 3 main areas of the balance sheet (i.e., assets, liabilities and owners equity).©Chris Guilding 12Geoff Kenit Hotel: Profit and Loss statement for thefirst 10 days of May$$Sales 19,000less ExpensesStock used 600Miscellaneous 250850Profit 18,150Geoff Kenit Hotel: Statement of Owner’s Equity for the 10 daysending May 10th$Owner’s equity contribution 30,000plus net profit 18,15048,150less Drawings 1,500Owner’s equity end of month 46,650Geoff Kenit Hotel: Statement of Owner’s equity for the 10 daysending May 10th$Owner’s equity contribution30,000plus net profit18,15048,150less Drawings1,500Owner’s equity end of month46,650Geoff Kenit Hotel: Balance Sheet as at 10 MayAssets$Liabilities$$Cash25,750Accounts payable 300A/R13,000Loan payable 4,000Stock2004,300Van12,000Owner’s equityCapital46,650$50,950$50,950©Chris Guilding133. Review of balance sheet and profit & loss statementa) The Balance Sheet•Shows the assets, liabilities and owner’s equity at one point in time.•Assets are “things”that are owned (most usually purchased) by the organisation.•Liabilities can be seen as the opposite of assets. They reflect financial obligations of the organisation.•Owner’s equity is a representation of the owners’financial investment in the organisation.©Chris Guilding143. Review of balance sheet and profit & loss statementb) Profit and loss statement•Shows the deduction of expenses for the year from revenues during the year to give profit (or loss)for the year.•Revenues represent inflows of economic benefits during the reporting period.•Expenses represent the consumption of economic benefits during the reporting period.©Chris Guilding15。