1、Terms and concepts,Chapter 3,1. Another name for the balance sheet is Statement of Operations Statement of Financial Position Statement of Financial Condition 2. The balance sheet heading will specify a Period of time Point in time 3. The length of time between financial reports is a fiscal period o
2、r fiscal year.,1. The balance sheet presents a flowing picture of the companys financial position at a specific time. 2. Tangible assets have no physical existence, but they do have value that may bring the business huge profits. 3. A company that borrows money from an external party is called a cre
3、ditor.4. Long-term liabilities are obligations that a business does not expect to liquidate within the normal operating cycle or one year. 5. Retained earnings refers to the businesss cumulative net incomes.,True or false?,Fill in the blanks with the proper words.1. Cash includes bank deposits, curr
4、ency, coin, checks, bank _, and money _, etc.2. Accounts receivable are owed by a customer for sales of services or merchandise _ and are _ by customers to pay in the future.3. When a sum of money is borrowed by the firm, a _ is incurred.4. Owners equity is a _ claim because the claims of the _ lega
5、lly come first.5. Decreases of the owners equity are caused in two ways: _ of cash and _ from unprofitable operation.6. A balance sheet sets forth two major parts in its format: _ and _ of the statement.,Self study,Study this Sound and Light balance sheet and answer the following questions about the
6、 companys financial condition. 1. Is the enterprise soundly financed? 2. Can the enterprise pay its bills on time? 3. Should the owners declare themselves a dividend? If so, how large should it be?,Oral Task,5,Sound and Light Pty Ltd Balance sheet as at June 30 1997 (in thousands of dollars),Assets
7、$ $ Current asset Cash 50 Accounts receivable 75 Inventory 120 245 Non-current assets Land 100 Factory 272 Accumulated depreciation (122) 250 Total 495Liabilities and equity $ $ Current liabilities Bank overdraft 30 Accounts payable 73 103 Non-current liablilities Land mortgage 87 Shareholders equit
8、y Share capital 130 Retained profits 175 305 Total 495,P51-3.2.3 business enterprises,subdivisions of owners equity,The owner withdraws business assets for personal use.,Supplementary exercises for week 8,Softbyte Statement of Owners Equity for the month ended September 30,2002M.Doucet, Capital, Sep
9、tember 1 $ Add: Investments $ 15,000Net income 2,750 17,750$ 17,750 Less: Drawings 1,300 M Doucet, Capital September 30 $ 16,450,Flashy Fashions Pty Ltd is a small company in a coastal town. It rents its premises and its sales are all on credit. It has only three expenses: cost of goods sold, rent,
10、and income tax. At the end of its previous finanical year, 30 September 2006, Flashys balance sheet was as follows.,practice- Flashy Fashions Pty Ltd,During the year ended 30 September 2007, the following information was recorded in the companys accounts: revenue from credit sales $ 10 000 collectio
11、ns from customers $9600 purchases of inventory for sale $6100 payments to suppliers $6300 cost of goods sold $6400 rent charged by the landlord $2400 rent paid to the landlord $2900 income tax payable for the year $350 cash dividends declared and paid to the shareholders $450,practice-transactions i
12、n May,Credit sales of $xxx. The cost of the goods sold was $xxx. Paid accounts payable of $xxx. Purchased additional inventory for $xxx. Five staff attended a seminar on understanding financial statements. The total bill received was for $xxx. Received $xxx for an account receivable. Of the goods pu
13、rchased on 6 May, goods which cost $xxx were returned to the supplier as they were damaged.,7. A local electrician carried out repairs. A cheque for $xxx was paid to the electrician. 8. Cash sales of $xxx . cost of goods sold $xxx. 9. Purchased land for $xxx cash and obtained a bank loan of $yyy. The bank holds a first mortgage over the land. 10. Paid the monthly wages bill of $xxx. 11. Purchased equiptment for $xxx cash and agreeing to pay the remainder in two years time. 12. Received the electricity bill of $xxx which covered the month of May. It will not be paid for another week.,
