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Introduction to Financials Goal: Explain to Roommate

Introduction to Financials Goal: Explain to Roommate. Corporate Annual Reports 4 Key Financial Accounting Statements Artificial Info System: Assumptions. Annual Corporate Reports. To Owners/Investors – Annual Report To Securities Regulators- 10-K To Tax Authorities – Form 1120

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Introduction to Financials Goal: Explain to Roommate

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  1. Introduction to FinancialsGoal: Explain to Roommate Corporate Annual Reports 4 Key Financial Accounting Statements Artificial Info System: Assumptions

  2. Annual Corporate Reports • To Owners/Investors – Annual Report • To Securities Regulators- 10-K • To Tax Authorities – Form 1120 • Other

  3. ELEMENTS OF AN ANNUAL REPORT • Financial Statements • Management Discussion and Analysis • Notes to Financial Statements • Auditor's Report

  4. Management Discussion and Analysis • Covers three aspects of a company: • liquidity, • capital resources, and • results of operation.

  5. Auditor's Report • Independent exam under GAAS of financial data presented by organization • Auditor opines on whether fairly present the financial position accordance with generally accepted accounting principles (GAAP) consistently applied • Qualified

  6. FINANCIAL STATEMENTS • Income Statement • Balance Sheet • Statement of Cash Flows • Statement of Retained Earnings

  7. Notes to Financial Statements • Provide additional information not included in body of statements. • Describe accounting policies or explain uncertainties and contingencies.

  8. Disney’s Annual Report • Letter to Shareholders and Cast Members • Form 10-K • Independent CPA Auditors’ Reports • Financial Statements and Schedules

  9. Disney’s Form 10-K Report Part 1: Business & Risk Part 2: Financial Data Part 3: Corporate Governance Part 4: Exhibits & Financial Statement Schedules

  10. “Financials” Statements • Management’s Report on Internal Control Over Financial Reporting … 59 • Reports of Independent Registered Public Accounting Firm . . 60 • Consolidated Financial Statements of The Walt Disney Company & Subsidiaries ..61 • Notes to Consolidated Financial Statements . 65 • Quarterly Financial Summary (unaudited) . . 106

  11. Disney’s Financial Statements • Consolidated Financial Statements of The Walt Disney Company and Subsidiaries • Consolidated Statements of Income for the Years Ended October 1, 2011, October 2, 2010, and October 3, 2009 • Consolidated Balance Sheets as of October 1, 2011 and October 2, 2010 • Consolidated Statements of Cash Flows for the Years Ended • Consolidated Statements of Shareholders’ Equity for the Years Ended

  12. Income Statement • Success/failure of operations during the period • Summarizes revenue/expenses: net income/loss • Flow versus stock: video/stream

  13. Balance Sheet • Resources (Assets) and Sources --Liabilities and Owners’ Equity-- must balance

  14. Statement of Cash Flows • Cash effects of operations for period • Cash increases/decreases from investing and financing activities • Indicates increase or decrease in cash as well as ending cash balance.

  15. Statement of Retained Earnings • Amounts invested by owners, net of dividend payments +/- income (loss) • Shows changes in balance • Stock versus flow: JPEG/Dam

  16. BASIC ASSUMPTIONS AND PRINCIPLES UNDERLYING FINANCIAL STATEMENTS • Monetary unit assumption • Economic entity assumption • Cost principle • Time period assumption • Going concern assumption

  17. Monetary Unit Assumption • Only transactions expressed in terms of money be included in accounting records. • Assumes that unit of measure remains constant over time.

  18. Economic Entity Assumption • Assumes economic events can be identified with a particular unit of accountability. • Requires economic activities of an entity be kept separate from those of owner and separate from all other economic entities.

  19. Cost Principle • Requires assets to be recorded at original (historical) cost as it is verifiable.

  20. Time Period Assumption • Allows the business to be divided into artificial time periods.

  21. Going Concern Assumption • Assumes business will be in existence long enough to carry out goals. • Assumption allows use of cost when recording assets.

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