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1、Chapter3UnderstandingtheBalanceSheetandStatementofOwners Equity UWYOCOBACCT2000 Chapter3 2 LearningObjectives UnderstandthearticulationoffinancialstatementsUnderstandcomponentsoftheBalanceSheetEvaluatethebalancesheetwithcaution UWYOCOBACCT2000 Chapter3 3 Assets ClaimsTheAccountingEquation AssetsReso
2、urcescontrolledbytheentitytoprovidefuturebenefitsCashPropertyOtherresourcesClaimsContractualandotherobligationsheldagainstassetsLiabilities creditors claimsOwners equity residualclaimofshareholders UWYOCOBACCT2000 Chapter3 4 ArticulationofFinancialStatements IncomeStatementRevenue ExpensesNetIncome
3、BalanceSheetAssets Liabilities Equity CashFlowsBeginningcash Operating Investing FinancingEndingcash EquityStatementBeginningEquity NetIncome DividendsEndingEquity BalanceSheetAssets Liabilities Equity UWYOCOBACCT2000 Chapter3 5 BasicFinancialStatements BalancesheetAssets Liabilities Owners EquityAs
4、napshotataparticularmomentoftimeIncomestatementRevenue ExpensesCoversaperiodoftimeCashflowstatementChangesincashduringtheperiodEquitystatementChangesinequityduringtheperiodP3 1 P3 2 P3 3 UWYOCOBACCT2000 Chapter3 6 Differentiatebetweencurrentandlong termassets BasedonliquidityHowlong howdifficult and
5、howcostlydoesittaketoturnanassetintocashOneyearorthelengthofoperatingcycleWhyneedsuchadifferentiationCurrentratio Currentassets CurrentliabilitiesQuickratio Quickassets Currentliabilities UWYOCOBACCT2000 Chapter3 7 CurrentAssets CashandcashequivalentsMarketablesecuritiesAtmarketvalueAccountsreceivab
6、leRevenuerecognitionEstimationofbaddebtsInventoryLIFO FIFO Weightedaverage SpecificidentificationresultindifferentestimationsofinventoryInhi techindustry thepriceofinventoryusuallydeflatesLowercostormarketPrepaidordeferredexpensesFutureexpenses caution reallyfutureexpenses UWYOCOBACCT2000 Chapter3 8
7、 CurrentAssets Example UWYOCOBACCT2000 Chapter3 9 NoncurrentAssets Property plantandequipmentHistoricalcostlessaccumulateddepreciationIntangibleassetsCopyrights trademarks historicalcostlessaccumulatedamortization Goodwill excessacquisitioncostbeyondcurrentmarketvalueofnetassetsacquiredlessimpairmen
8、t HistoricalcosttendstobemuchlowerthanitsvalueManyintangibleresourcesarenotrecordedasassets UWYOCOBACCT2000 Chapter3 10 NoncurrentAssets Example P3 4 P3 6 P3 15 UWYOCOBACCT2000 Chapter3 11 Liabilities CurrentLiabilitiesAccountspayabletosuppliers Purchasematerialwithoutpayingcash Accruedexpenses Inte
9、rest taxes wages Currentportionofdebt principaltobepaidwithinthenextyear Non currentLiabilitiesPrincipalassociatedwithLong termportionofLoans Notes Mortgages Bonds dueinmorethanoneyear Adjustfordiscountorpremium UWYOCOBACCT2000 Chapter3 12 Liabilities Example P3 7 UWYOCOBACCT2000 Chapter3 13 Owners
10、Equity Paid incapitalReflectswhatwaspaidforstockatoriginalissuance owners originalinvestment PreferredstockandcommonstockRetainedearningsCumulativeearningsthatbelongstoownersbuthasnotyetbeendistributedChangeofretainedearnings netincome dividendsOthercomprehensiveincome UWYOCOBACCT2000 Chapter3 14 Ow
11、ners Equity Example P3 9 P3 11 UWYOCOBACCT2000 Chapter3 15 StatementofShareholders Equity Changeofpaid incapitalIssuance repurchase conversion andstockdividendChangeofretainedearningsnetincome cashdividends andstockdividendChangeofothercomprehensiveincome UWYOCOBACCT2000 Chapter3 16 StatementofShare
12、holders Equity Example UWYOCOBACCT2000 Chapter3 17 Summary ThearticulationoffinancialstatementsBalanceSheetIncomeStatement CashFlowStatement andStatementofChangeofOwners EquityComponentsoftheBalanceSheetAssetsLiabilitiesOwners EquityCautionsP3 10 P3 12 P3 14 P3 16 UWYOCOBACCT2000 Chapter3 18 Problem
13、sandCases FinancialstatementsP3 1 C P3 2 B P3 3 B BalancesheetAssets P3 4 B P3 6 D P3 15 B Liabilities P3 7 C Owners Equity P3 9 6 682 000 P3 11 C UWYOCOBACCT2000 Chapter3 19 ProblemsandCases Case3 1Anassetoranexpense Theeffectofaccountingestimates ofamortizationyears onreportednumbersExcludeone timechargesbeforewepredictfutureearnings
