acct280_week4_0953

Views:
 
Category: Entertainment
     
 

Presentation Description

No description available.

Comments

Presentation Transcript

Slide 1: 

ACCT 280 Dropbox 2 Preparing Financial Statements from a Trial Balance Click your mouse to advance slides

Slide 2: 

Financial Statements Income Statement profit or loss for the year Retained Earnings Statement changes in retained earnings Balance Sheet financial position as of a certain date

Slide 3: 

Dropbox 2 Prepare Financial Statements Start with a Trial Balance Use all accounts once, and only once. Prepare an Income Statement Profit or Loss flows to Retained Earnings Statement Prepare a Retained Earnings Statement Ending Retained Earnings balance flows to the Balance Sheet Prepare a Balance Sheet Review the PowerPoint for week 1 Follow instructions given in the assignment

Slide 4: 

Users of Financial Information Financial Statements are prepared for use by the Public – a term meaning any interested party outside the Management of the company. The primary users includes Investors of all types. Secondary users include creditors, labor unions, government agencies, insurance companies , underwriters and bond fund managers, to name but a few.

Slide 5: 

GAAP GAAP is the system we use to ensure fair and unbiased presentation of financial information. GAAP also requires adequate disclosure of important information, and prohibits omissions of necessary information. The Notes to the Financial Statements includes much of the additional information required to comply with GAAP. We will not be preparing Notes in this assignment.

Slide 6: 

Users of Financial Information The Securities and Exchange Commission (SEC) requires audited annual financial statements for all companies trading their stock on a public stock exchange. Financial statements should always be prepared with the understanding that they are going to be used by a third party. In the case of your written assignment, the third party is the Instructor grading your assignment. I will be looking for evidence of your overall understanding, as well as specific details in form and format.

Slide 7: 

Articulation Information flows from one financial statement to another financial statement. We call this articulation. We can see articulation at work in several ways. The most obvious is on the financial statements themselves. Notice how the financial statements are linked in a specific order and way. They should be prepared and presented in this order.

Slide 8: 

Start with a Trial Balance Trial Balance We start with a Trial Balance. This is an adjusted Trial Balance with all accounts for all three financial statements. All adjusting journal entries have been made. Use all accounts. Accounts are grouped together and in the correct order. You just need to add headings, subtotals, totals and the correct form and formatting to prepare financial statements.

Slide 9: 

Income Statement Income Statement Accounts Revenue Expenses Income Statement The Income Statement is prepared first. Start with the first Revenue account on the Trial Balance. Deduct all Expenses. Use good form and format, including a correct date.

Slide 10: 

Income Statement For the Year Ended Income statements cover a period of time. In this case the statement covers the entire year. Some companies prepare quarterly, monthly or even weekly financial reports, but they are usually prepared for Management. To comply with GAAP a subtotal for Operating Income from Continuing Operations must be shown. Net Income or Loss must also be shown. In this example they are one and the same Additional rules are covered in Chapter 12, ACCT 281. Double underline is used to indicate the final calculation of a financial report, or part of a report.

Slide 11: 

Income Statement Net Income For the Year flows to the Retained Earnings Statement Net Loss --If Revenues are less than Expenses the Income Statement will show Net Loss instead of Net Income.

Slide 12: 

Retained Earnings Statement Retained Earnings Statement Beginning RE Dividends +/- Net Income/Loss from Income Statement

Slide 13: 

Retained Earnings Statement Retained Earnings Statement Updates Retained Earnings for the year Covers the entire year Includes Net Income and deducts Dividends Include a correct date in the heading For the Year Ended GAAP does not require the Retained Earnings Statement. Retained Earnings can be recapped at the end of the Income Statement or as part of the Balance Sheet, at the option of the company preparing the statement. Most companies present a separate Retained Earnings Statement, as we have done here.

Slide 14: 

Articulation Net Income from the Income Statement Ending Retained Earnings to the Balance Sheet Articulation refers to the flow of information from one financial statement to another. In this case Net Income flows from the Income Statement to the Retained Earnings Statement. The year-end balance for Retained Earnings flows from the Retained Earnings Statement to the Balance Sheet.

Slide 15: 

Finish with the Balance Sheet Balance Sheet Accounts Assets Liabilities Stockholders’ Equity Refer to week 1 PowerPoint and assignment for correct Balance Sheet presentation.

Slide 16: 

Completed Balance Sheet Balance Sheet Should be in balance Reflects the accounting equation Use good form and format This is one simple and acceptable format for the Balance Sheet. It’s a good format for this particular assignment. Ending Retained Earnings flows from the Retained Earnings Statement

Slide 17: 

Submitting Dropbox Be sure to submit your completed Dropbox assignment by the due date. All assignments are due by midnight Sunday of each week. Upload your completed assignment to Dropbox 1. I recommend you use a spreadsheet program such as Excel. You will find Excel tutorials on the Content page. Excel will do some of the math for you and is easy to format. If you don’t have Excel you can download a free spreadsheet program from OpenOffice.org. Be sure to save your files in Excel spreadsheet format with an XLS file extension. Good luck with the assignment.

authorStream Live Help