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BE II Booklet Part 1
BE II Booklet Part 1
BE II Booklet Part 1
Introduction
session
Around Accounting and
Business
M.B.
”
Users of accounting informations M.B.
01
Top, middle
and lower 04 Investors and
prospective
managers owners
02 Owners 05 Creditors
and lenders
06
Government
transaction?
Title
Left side Right side
Debit Credit
The alignment of these parts resembles the letter T and therefore, the
account form is called a T account
Double entry system M.B.
(general ledger)
=
Example: Your company writes monthly a check of $1000 to a house
owner in order to pay its rent.
The cash account is reduced by $1000
- On January 4, the company purchases office supplies costing 17,600 dhs on credit.
- On January 18, the company provided 54 100 dhs worth of services to its
customers.
Long term assets Short term Tangible assets Assets which The assets which
such as lands assets which can are assets which cannot be seen, are valueless but
and buildings . be converted we can touch, touched and are shown in the
Their value easily into cash. see and feel. All have no physical financial
reduces over a Inventories, fixed assets are existence. statements until
period of time government tangible. Goodwiil, they are written
considering the bonds, trade Machinery, Cash patents and off. Preliminary
depreciation. receivables etc at bank, Stocks. trademarks expenses
M.B.
Classification of liabilities
Balance sheet sample in
M.B.
thousands
M.B.
Income statement
Chapter
4-16
Ex 1: Prepare an income Single-Step Format M.B.
Chapter
4-17
M.B.
Multiple-Step Income Statement
Income Statement (in thousands)
The presentation Sales $ 285 000
divides information into Cost of goods sold 149 000
Gross profit 136 000
major sections.
Operating expenses:
Advertising expense 10 000
1. Operating Section Depreciation expense 43 000
Total operating expense 53 000
Income from operations 83 000
Other revenue (expense):
2. Non-operating Interest revenue 17 000
Section Interest expense (21 000)
Total other (4 000)
Income before taxes 79 000
Income tax expense 24 000
Net income $ 55 000
Chapter
4-18
M.B.
Multiple-Step Income Statement
Sales
– Cost of goods sold
= Gross profit
Operating expenses:
– Selling expenses
– General and Four
administrative expenses important
= Income from operations subtotals
+/– Other revenues and expenses
= Income before taxes
– Income tax expense
= Net income
Chapter
4-19
M.B.
Ex 2: Prepare an income Multiple-Step Format
statement from the data
below. Income Statement
For the year ended Dec. 31, 2019
Administrative expense: Sales $ 96 500
Officers' salaries $ 4 900 Cost of goods sold 63 750
Depreciation 3 960 Gross profit 32 750
Cost of goods sold 63 750 Operating Expenses:
Rental revenue 17 230 Selling expense 17 150
Selling expense: Administrative expense 8 860
Transportation-out 2 690 Total operating expenses 26 010
Sales commissions 7 980 Income from operations 6 740
Depreciation 6 480 Other revenue (expense):
Sales 96 500 Rental revenue 17 230
Income tax expense 7 580 Interest expense (1 860)
Interest expense 1 860 Total other 15 370
Income before tax 22 110
Income tax expense 7 580
Chapter Net income $ 14 530
4-20
Income statement: Cost of goods sold M.B.
" The Statement of Cash Flows (also referred to as the cash flow
statement) is one of the three key financial statements that report
the cash generated and spent during a specific period of time. The
statement of cash flows acts as a bridge between the income
statement and balance sheet by showing how money moved in and
out of the business."
Inflows Outflows
Cash collected from Cash paid to employees
customers and suppliers
Sale proceeds from
trading securities Cash paid to creditors
(Short period)
Taxes, Royalties, VAT Fees and interests paid
and dividends received
M.B.
Cash flows from investing activities
• Cash Flow from financing activities result from changes in the size and
composition of the equity capital or borrowings of the entity. It includes
the sources of cash from investors or banks, as well as the uses of cash
paid to shareholders.
Inflows Outflows
Proceeds from issuing Principal paid on debt
stocks
Assignment: Establish the cash flow statement of B & F Company by reporting cash flows
from operating, investing and financing activities.
Cash at the beginning of the year was 100 000 $