ACC 113 Lecture Notes - Lecture 2: Deferral, Current Liability, Share Capital

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amaranthjellyfish619

19 Dec 2020

School

Tunxis Community College

Department

Accounting

Course

ACC 113

Professor

Lardie

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Document Summary

Income statement: reports revenues and expenses for a specific period of time, revenues expenses= profit(loss) Statement of changes in equity: reports the changes in each component of shareholders" equity during a period of time, share capital is amounts contributed by shareholders, common shares, retained earning, and total equity. Statement of financial position (balance sheet: shows the assets, liabilities, and shareholders" equity at a specific point in time, assets= liabilities + shareholders equity. Statement of cash flows: shows for a specific period of time, how company obtained cash and how that cash was used, reports the effect on cash of the company"s operating, investing and financing activities. Assets expected to be converted to cash or used in the business within one year or one operating cycle. Example: cash, accounts receivable, investments, prepaid expenses. Not expected to be converted to cash or used in the business within one year or one operating cycle. Examples: property, plant, and equipment, intangible assets, and goodwill.

Related Questions

Which of the following statements are correct (Select all that apply):

A. A balance sheet reports on investing and financing activities.

B. An income statement reports on financing activities.

C. The statement of equity reports on changes in the accounts that make up equity.

D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.

E. A balance sheet reports on a company's assets and liabilities over a period of time

orchidhorse286

7. Consider theeffects of the independent transactions, a through i, on acompanyâs balance sheet, income statement, statement of cash flows,and statement of stockholdersâ equity.

a. The company purchasedinventory on credit.

b. The company sold allinventory purchased in transaction a) on credit (and formore than its cost).

c. The company collectedcash from customers from transaction b).

d. The company purchasedequipment with cash.

e. The company paid cash fora note payable that came due.

f. The company paidcash for interest on borrowings.

g. Wages were earned bycompany employees but not yet paid.

h. The company paid cash individends.

i. The companyreceived cash for the issuance of stock.

Complete the table below to explainthe effects and financial statement linkages. Use â+â to indicatethe account increases and âââ to indicate the account decreases (15pts).

Balance sheet

Cash

Noncash assets

Total liabilities

Contributed capital

Retained earnings

Statement of cash flows

Operating cash flow

Investing cash flow

Financing cash flow

Income statement

Revenues

Expenses

Net earnings

Statement of stockholdersâ equity

Contributed capital

Retained earnings

skydog210

Based on the financial information provided, calculate thefollowing ratios and explain their purpose:

Current Ratio
Inventory Turnover Ratio
Accounts Receivable Turnover Ratio Debt to Equity Ratio
Return on Assets Ratio
Asset Turnover Ratio
Return on Equity Ratio
Profit Margin Ratio
Price-Earnings Ratio
Dividend Yield Ratio

Note: When a balance sheet amount is related toan income statement amount in computing a ratio, the balance sheetamount should be an average of that period. The average iscalculated by adding the ending balances of this year and last yearand dividing the result by 2. Describe how a bank lending officermight use ratio analysis. Select five ratios that would be mostuseful for the purpose and explain the rationale for yourselection.

	12/31/10	12/31/09
	Amount in Dollars	Amount in Dollars
Cash	200.00	150.00
Receivables	500.00	350.00
Inventories	750.00	755.00
Other Current Assets	100.00	75.00
Total Current Assets	1,550.00	1,330.00
Plant and Equipment	1,100.00	1,170.00
Other Long - Term Assets	150.00	100.00
Total Assets	2,800.00	2,600.00
Accounts Payable	510.00	400.00
Other Current Liabilities	25.00	25.00
Total Current Liabilities	535.00	425.00
Long Term Debt	375.00	400.00
Other Long Term Liabilities	225.00	175.00
Preferred Stock	250.00	250.00
Shareholders' Equity	1,415.00	1,350.00
Total Liabilities and Shareholders' Equity	2,800.00	2,600.00

	Year-2010	Year-2009
	Amount in Dollars
Net Sales	3500.00	3200.00
Cost of Goods Sold	2200.00	2100.00
Other Expenses	300.00	250.00
Depreciation	77.00	62.00
Interest Expenses	40.00	46.00
Tax	200.00	150.00
Net Income	683.00	592.00
Preferred Stock Dividend	25.00
Common Stock Dividends	260.00
Market Value of Equity	4000.00
Average Number of Shares	100.00
Share Price	40.00
Dividends per Share	2.60
Earnings per Share	6.58

peachpanda117

ACC 113 Lecture Notes - Lecture 2: Deferral, Current Liability, Share Capital

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