CREATING FINANCIAL STATEMENTS
Financial statements are information systems to communicate to external users. In order
to have a good communication system, financial accountants (that’s you I’m talking
about) must know and understand the meaning of the accounts and also where those
accounts belong (in which financial statement).
Below is a list of account names. Your group must now do the following:
Using your textbooks, find the definition of each of the accounts and complete the Chart
of Accounts (provided). Try to use your own words to define the account names – this
will help you later in the course.
Note that this chart also requires you to determine if the accounts are Assets, Liabilities,
Shareholders’ Equity, Revenues or Expenses. This understanding is very important to the
creation of financial statements.
Once you have completed your Chart of Accounts create, using the blank statements you
are provided with, a Balance Sheet, Statement of Retained Earnings and a Statement of
You may use your book as a resource but you should also UNDERSTAND why you are
placing the accounts in that particular statement. Always refer back to the Accounting
Framework and ask yourself – is this an asset? Why is it an asset? What characteristics
does it have that makes me think it is an asset? List of Accounts
You are being provided with a list of accounts. Using your textbook as a guide, find the
definition of each account. Then determine if that account is an Asset, Liability,
Shareholders’ Equity, Dividend, Revenue or Expense.
Accounts payable Interest payable
Accounts Receivable Inventory