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Financial Statements (Ch1)
Financial Statements (Ch1)
Financial Statements (Ch1)
Handout #1
Financial Statements (Ch1)
The four basic financial statements can be prepared at any point in time such as:
End of the year (for the year ended, annual reports)
Quarterly (for the quarter ended, quarterly reports)
Monthly (for the month ended, monthly reports)
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Accounting I, Fall 2021
Handout #1
Relationship between the four financial statements
Balance Sheet / Statement of Financial Position (at a point in time)
ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY
e.x. e.x.
Cash Accounts Payable
Shor-term Investment Notes Payable
Accounts Receivable Taxes Payable
Inventory
Equipment
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MAXIDRIVE CORP.
Accounting I, Fall 2021 Statement of Cash Flows
Handout #1 For the Year Ended December 31, 2009
(in thousands of dollars)
Operating activities
Example of four statements Cash collected from customers $ 33,563
Cash paid to suppliers and employees (30,854)
Cash paid for interest (450)
Cash paid for taxes (1,190)
Net cash flow from operating activities 1,069
Investing Activities
Cash used to purchase equipment (1,625)
MAXIDRIVE CORP. Net cash flow from investing activities (1,625) MAXIDRIVE CORP.
Financing Activities
Balance Sheet Cash received from bank loan 1,400 Balance Sheet
At Decem ber 31, 2008 Cash dividends paid (1,000) At Decem ber 31, 2009
(in thousands of dollars) Net cash provided by financing activities 400 (in thousands of dollars)
Net increase in cash (156)
2008 Cash at beginning of year 5,051 2009
ASSETS Cash at end of year $ 4,895 ASSETS
Cash $ 5,051 Cash $ 4,895
Accounts receivable 6,300 MAXIDRIVE CORP. Accounts receivable 5,714
Income Statement
Inventories 7,017 Inventories 8,517
For the Year Ended December 31, 2009
Plant and equipm ent 7,821 (in thousands of dollars) Plant and equipm ent 7,154
Land 1,000 Revenues Land 981
Total assets $ 27,189 Sales revenue $ 37,436 Total assets $ 27,261
Total revenues 37,436
LIABILITIES LIABILITIES
Expenses
Accounts payable $ 8,384 Accounts payable $ 7,156
Cost of goods sold expense 26,980
Notes payable 10,000 Selling, general, and administrative expense 5,606 Notes payable 9,000
Total liabilities 18,384 Interest expense 450 Total liabilities 16,156
STOCKHOLDERS' EQUITY Total expenses 33,036 STOCKHOLDERS' EQUITY
Operating income 4,400
Contributed capital 2,000 Contributed capital 2,000
Income tax expense 1,100
Retained earnings 6,805 Net income $ 3,300
Retained earnings 9,105
Total stockholders' equity 8,805 Total stockholders' equity 11,105
Total liabilities and Total liabilities and
stockholders' equity $ 27,189 MAXIDRIVE CORP. stockholders' equity $ 27,261
Statement of Retained Earnings
For the Year Ended December 31, 2009
(in thousands of dollars)
Retained earnings, January 1, 2009 $6,805
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Accounting I, Fall 2021
Handout #1
Accounting Standards
U.S.: Generally Accepted Accounting Principles (GAAP)
The Securities and Exchange Commission (SEC): has the ultimate authority for establishing
accounting rules and procedures.
Financial Accounting Standards Board (FASB): Currently formulate GAAP.
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Accounting I, Fall 2021
Handout #1
McDonald’s Financial Statement
(Source: https://corporate.mcdonalds.com/corpmcd/investors/financial-information.html)
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Accounting I, Fall 2021
Handout #1
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Accounting I, Fall 2021
Handout #1
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Accounting I, Fall 2021
Handout #1