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Lecture 11

ACCTG 101 Lecture Notes - Lecture 11: Tax Shield, Compound Interest, Cash Flow


Department
Accounting
Course Code
ACCTG 101
Professor
Glenn Rechtschaffen
Lecture
11

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Reading an Annual Report
• Maket apitalisatio: = Nue of Shaes  Shae Pie
• Book alue: = alae sheet figue
• Diffeee = itagile assets eg. opight, goodwill from sale, brand name); future vs past
• Stateet of aoutig poliies = keepig ith stadads fo comparability
Group vs Subsidiary accounts: group = parent + subsidiary
• Idepedet auditos epot epesses faiess stateets should e peseted i a true and fair
view) eg. Deloitte
Auditing resolves conflict of interest between shareholders and directors of a company
An unqualified opinion is a good thing - tue ad fai = GAAP, IF‘S oplied ith
- Does not detect fraud eg. Enron
BUDGETING Used for evaluating business performance through benchmarks.
• ONLY SHOW T‘ANSACTIONS ‘ELEVANT TO THE OPERATING PERIOD.
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Balance Sheet Basics
Assets = Liabilities + Equity
• Notio of etit / Aoutig etit
• Tasatios
• Soue douets
• Moeta uit / Moeta easueent
• Histoial ost
T-shape format Long format
Income Statement Basics
• Aoutig peiod / Peiod epotig
• Aual aoutig / Aual asis
• Eaig ad eodig eeues
• Mathig piiple
Assets = Liabilities + Equity + Net Income
Net Income = Revenues - expenses
Inventory System
PERPETUAL •Cotiuous eod •‘euies eodig tasatios
PERIODIC •Calulated COGS (Beg inventory + purchases Ending inventory) •‘euies stoktake
- For ASSETS and LIABILITIES: PAST / PRESENT / FUTURE
- For REVENUES and EXPENSES: INCREASE / DECREASE of ASSET / LIABILITY
- Revenue Recognition
- Matching Principle
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