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Analyzing Changes in Financial Position

Learn definitions, steps, and principles essential for analyzing financial position changes in business transactions. Explore examples with Metropolitan Movers balance sheet and transaction analysis. Personalize assignments for practical application.

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Analyzing Changes in Financial Position

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  1. 3 Analyzing Changes in Financial Position 1

  2. Definitions • Business Transaction: a financial event that causes a change in financial position • An exchange of things of value • Source Documents: provides information needed to process a transaction and proof a transaction occurred • Objectivity Principle: a business’s accounting must be recorded on the basis of clear, verifiable evidence e.g. source document • Page 59-61 ex. 1-5—1 and 3 together, 2, 4 and 5 individually

  3. Steps in Analyzing a Transaction • Identify all asset and liability and owner’s equity items that must be changed and make all necessary changes • All transactions will affect at least two individual items • Make sure that the equation is still in balance

  4. PowerPoint 3–1 Chapter 3 Figure 3.1: Metropolitan Movers Balance Sheet 4

  5. PowerPoint 3–2 (part 1) Chapter 3 Transactions for Metropolitan Movers 5

  6. PowerPoint 3–2 (part 2) Chapter 3 Transactions for Metropolitan Movers 6

  7. PowerPoint 3–3 Chapter 3 Figure 3.9: Completed Equation Analysis Sheet forMetropolitan Movers 7

  8. Assignment • Page 59-61—1, 2, 3, 4, 5 • Page 69-71—1, 2, 3 • Page 71-77—load spreadsheet file and follow steps in textbook, Page 74 Section 3.3 #1, 2 • Page 78-83--#1 (tog), 2, 3, 6, 7, Personalize It

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