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ACTG 1P91 (27)

Lecture 2- additional notes.docx

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Brock University
Norman Chasse

1) Accounting Equation Assets = Claims to assets - Things of value – By whom? Creditors - Future economic benefits - Owners - Measurable Assets = Liabilities + Shareholder’s Equity Assets = Liab. + (Capital + R/E) owners investment profits re-invest (Dr) (Cr.) (Cr.) (Cr.) (Dr.) Assets = Liab. + [Capital+ (Rev. - Exp.)] - B/S reflects Accts equation -> point in time o Cash is a key asset  Investors want to evaluate how well the company manages cash  Where did it come from?  What was it used for? - I/S shows net income -> period of time - F/S shows comparative figures o Current year + previous year o Why? To evaluate performance over time  Change in net income?  Change in total assets?  Change in equity? - S/CF presents information questioned in B/S o Reconciles beginning + end cash balance +/- Operating activities (buying and selling, as well as other operating expenses) +/- Investing activities (buying or selling long lived assets) +/- Financing activities (cash in-flows or out-flows regarding creditors and owners) Order of F/S preparation - Income Statement -> Revenue – Expenses = Net income - State of Retained Earnings Beginning retained earnings + Net income - Dividends ________________ End retained earnings - Balance sheet o A = L +S/E - Statement of Cash Flows o Cash, end of the year xx OSI Restaurant Partners, Inc. Income Statement For the year ended December 31, 2012 (in millions) Revenues Restaurant sales $3,920 Other revenues 21 $3,941 Expenses Food supplies 1415 Utilities and other expenses 1104 Wages 1087 General Selling & Administrative 235 Total Expenses 3841 Net Income $100 OSI Restaurant Partners, Inc. Statement of Retained Earnings For the year ended December 31, 2012 (in millions) Retained earnings, beginning of the year 1074 Add: Net Income 100 Less: Dividends -39 Retained Earnings, end of the year 1,135 OSI Restaurant Partners, Inc. Balance Sheet At December 31, 2012 Assets Cash $94 Food & Supply Inventory 87 Property,
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