Accounting

 Internal users (managers)  managerial accounting

 External users (banks, investors…)  Financial accounting (GAAP)
 Tax administration (banks)  Tax accounting (TAX CODE)

Topic 1:

° Review of the accounting equation

Financial needs (assets) = resources to run the operations

Financial resources (liabilities (bank loan but not personal savings which is equity) = Financial
sources to acquire the operations

ASSETS = LIABILITIES + EQUITY

Assests = items that the business owns, provide future services or benefits (equipment,
inventory, account receivable...)

Liabilities = claims against assets (debts and obligations, account payable (obligations for
company).

Equity = gives capital (shareholders investments) + retained earnings (= revenue- expenses-

dividends).

Expanded accounting equation: assets = liabilities + share capital + revenues – expenses –

dividends).

INCOME STATEMENT:

Revenues – expenses = net profit (or income)

RETAINED EARNINGS STATEMENT:

Ret. Earning t-1 +/- Net income (revenu-expense) – dividends = ret. Earnings

BALANCE SHEET:

ASSETS

L+E(se)= SE: share capital, retained earnings / Liabilities: Property, plant, and equipment
(PPE) (Noncurrent Assets) and Cash (CurrentA) must be equal as cash flow
CASH FLOW STATEMENT:

°Cash flow operations

+
° cash flow investing
+
° cash flow financing

= Cash flow

Exercise:

Starting operations in 2020

Dividends = 7000
Revenues=?

Retain earnings 2019= no one because don’t start in 2019

Re2020= 30 406

Assets= liabilities + equity = 255 327 €