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BAT4m Unit 1: Chapter 1

BAT4m Unit 1: Chapter 1. September 9 2014 Quiz on Friday September 12, 2014. Financial Statements. There are 4 types of financial statements. Income Statement : presents revenues and expenses. It shows net income or net loss for a specific period of time.

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BAT4m Unit 1: Chapter 1

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  1. BAT4mUnit 1: Chapter 1 September 9 2014 Quiz on Friday September 12, 2014

  2. Financial Statements • There are 4 types of financial statements. • Income Statement: presents revenues and expenses. It shows net income or net loss for a specific period of time. • Balance Sheet: reports the assets, liabilities and owner’s equity at a specific time. • Statement of owner’s equity • Cash flow statement

  3. Income Statement • It presents revenues and expenses. • It shows net income or net loss for a specific period of time. • 3 titles: • When: It shows a time period rather than a specific date. For example, “Month ended September 30, 2008” What kind of time period does this income statement cover?

  4. Income Statement • The main purpose : to show profitability of the company’s operation over a specific period of time. • Net Income = Revenue – Expense • What are the most popular IS time period for public corporation? Quarterly

  5. Income Statement • What is the most popular IS time period for small business? Annually (once a year) • Do some corporations produce their IS every month? Yes

  6. Balance Sheet • It reports assets, liabilities and owner’s equity at a specific time. For example, “September 30, 2008” • 3 headings: • BS is like a “snapshot of the company’s financial condition.” What does this mean?

  7. Balance Sheet • What is the order of ALO in BS? Assets first, liabilities next and OE • How do asset accounts listed in BS? • In the order of liquidity: Cash, AR, Inventory, Supplies, Long term assets • How do liability accounts listed in BS?N • AP first, NR, Bank Loan, Mortgage

  8. Statement of Owner’s Equity • SOE reports the changes in OE for a specific period of time. “Month ended September 30, 2008” • 3 titles: • First line: beginning balance of the capital account. How would you get this number? • Ending balance of last period SOE

  9. Statement of Owner’s Equity • Next lines: + Owner’s investments + the net income and - drawings • How would you get these numbers? • SOE indicates why OE has increased or decreased during the period. • Why would CRA mandate businesses to make SOE? So they can accurately calculate corporate income tax and personal income tax.

  10. Cash Flow Statement • It gives information about the cash receipts and cash payments for a specific period of time. • It reports the following: • The cash inflows and outflows from investing transactions (e.g purchasing machine) • The cash inflows and outflows from financing transactions (e.g. borrowing and repayment of debt and withdrawls of owner

  11. Cash Flow Statement • It reports the following: • The net increase or decrease in cash during the period. • The ending balance of cash amount at the end of the period

  12. Cash Flow Statement • It answers the following questions: • Where did the cash come from during the period? • What was the cash used for during the period? • What was the change in the cash balance during the period?

  13. Class work / Homework P20 Transaction Analysis (students will show their works on the board) P35 E1-13 P37 P1-5A

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