Accounting 211 Financial and Managerial Accounting

1. Accounting 211Financial and Managerial Accounting Teaching Assistant Hyun Jung (JoAnn) Lee

2. Contents 1. Introduction 2. Review of Chapter 12 3. Practice

3. 1 Introduction

4. Personal Blog : www.personal.psu.edu/hul152 Click on “ACCTG 211 Spring 2008” Office : 381A Business Building, 814-863-3796 Office Hour : 8 AM. ~ 10:00 AM on Tuesday Email : hul152@psu.edu Recitation Materials

5. NO MORE WILEY!!~ Grading components Professor Ketz : Financial Accounting Professor Huddart : Managerial Accounting Number Grade = 2/3 * Financial Acc. +1/3*Managerial Acc. Financial Accounting MAX(A, B) A : ( Homework + Exam1+ Exam2 )/3 B : ( Exam1+ Exam2 )/2 Exam 2 : Mar 26, 8:15 to 10:00 PM. Exam Information will be announced Evaluation

6. Ask “W.G. Deng” for “PERMISSION” Contact Information Office : 350A Business Building Phone : 863-5467 Email : wxd139@psu.edu Office Hours : Mon & Thrs from 1pm until 3pm and by appointment. Only one chance to take it Makeup for the Second Exam : April 5th on Saturday Make-up Exam Assignments

7. 2 Review of Chapter 12

8. Direct Method : not covered Shows net cash inflow (outflow) from operations by converting accrual numbers (i.e. sales & expenses) to cash numbers. Recommended by the FASB, but rarely used. Requires “reconciliation” (which is actually the Indirect Method so you have to do both Direct & Indirect; easy to see why so many use the Indirect Method Indirect Method : Covered this course Shows net cash inflow (outflow) from operations as an adjustment of net income. Used by 97% of companies. Two Alternative Approaches

9. The direct method provides more detail about cash from operating activities. Shows individual operating cash flows. Shows reconciliation of operating cash flows to net income in a supplemental schedule. The investing and financing sections for the two methods are identical. Net cash flow is the same for both methods. Summary of Differences Between DM and IM

10. Cash Inflow!~ Receipts from customers. Interest on receivables. Dividends received. Cash Outflow!~ Payments to suppliers. Interest paid on liabilities. Income taxes paid. Salary and wages payments. Cash Flow from Operating

11. Cash Collect from Customer Cash Paid to Counter party!~ Cash Flow from Operating, conti.

12. Cash Flow from Investing • Capital Expenditure : Long-term Invest!~ • Cash Inflows include proceeds from: • Sales of property, plant, and equipment. • Sales of investments in securities. • Collection of principal on loans made to others. • Outflows include payments for: • The purchase of property, plant and equipment. • The purchase of long-term investments. • Loans to others.

13. Cash Flow from Financing • Dividends paid ; Debt or Equity Issuance; Repayment • Inflows include: • Proceeds from sale of stock. • Proceeds from sale of bonds and from borrowings. • Outflows include: • Payments to purchase treasury stock. • Principal payments to retire bonds and loans. • Dividends paid to owners.

14. Indirect Method template

15. 3 Practice!!!

16. Problem 12-9 Professor has opened up a number of problems (including the solutions) on WileyPLUS should YOU wish to work more problems. Chapter 9: Practice A

17. Do you have any questions? 381A Business Building 814-863-3796, hul152@psu.edu Welcome to Accounting World!!~