Work Sheet and Financial Statements
Published on Dec 13, 2015
No Description
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PRESENTATION OUTLINE
Things to get done for the rest of the semester
- review/finish chapter 8
- quiz on chapter 8
- chapter 9 next week/week after
- review for mid-term
Prepared from information provided by ledger account
At the end of a fiscal period
preparation requires extra care - normally senior accountants do this
Photo by kenteegardin
Work Sheet
informal business paper used to organzie and plan
No more debtors' names with A/R
same with A/P
Accounts Receivable Control Account
Accounts Payable Control Account
Step 3
Extend each account into the four new columns - Drawings not a net income!
Photo by kevin dooley
Revenue and expenses go to income statement column. Assets, liabilities, capital, and drawings go to balance sheet.
Photo by mag3737
Step 4
Balance work sheet - 4 parts
Balancing work sheet
- total each of the four right hand columns
- calculate difference of both columns
- record balancing figure in two places
- rule/show final column totals
Net Loss
total expenses (debit column) greater than total revenue (credit column)
Photo by kevin dooley
How Accounants use income statements
Photo by instragram.com/amirkuckovic
Performing well?
- Dollar amount increase
- Percentage amount of increase or decrease
Accountability
company officers' obligation to show how well they're performing
Investors and brokers
have to disclose info to brokers to list companies for trade
Photo by OptionsHouse
Quality of financial statements
Photo by angela7dreams
Consistency Principle
business must use the same accounting methods and procedures consistently
Photo by Editor B
If there is a change in method from one period to another, the financial statements must clearly indicate that change. Readers of statements an assume that this takes place all the time unless notified otherwise. This prevents people from manipulating figures by changing accounting methods.
Photo by Buzz Hoffman
Materiality Principle
Must include a firm's financial statement and any important information
Photo by new 1lluminati
If you're excluding something form the financial statement, it shouldn't affect the net income/loss of the company. Eg. there was a $10 invoice error, but the company earned $500,000 net income. Not a big deal because $10 isn't a big deal.
Photo by stevendepolo
Full Disclosure Principle
All info is needed for a full understanding of company's financial position
Photo by Joint Base Lewis McChord
Information that isn't directly related to the numbers should be disclosed - tend to be way more significant of a change to the company's future.
Photo by poppet with a camera
