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Lecture 15

ACCT20100 Lecture Notes - Lecture 15: Asset, Cash Flow Statement, Asset Turnover

Course Code
O' Tousa

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Chapter 5 21:14
Annual Reports
Purpose is to provide info to any potential investors
Private companies
a.1. Four basic financial statements
a.2. Related notes (footnotes)  more info on each account
a.3. Report of independent accountants (auditor’s opinion) if the
statements are audited  saying the financial statements are
close enough to being accurate and is in accordance with GAAP
Public companies
a.1. Nonfinancial Section  includes a letter to the stockholders, a
description of management’s philosophy, products, successes
a.2. Financial Section  SEC sets minimum disclosure standards for
the financial section for public companies
a.2.1.Summarized financial data for 5- or 10-years
a.2.2.Management Discussion and Analysis (MD&A)
a.2.3.The four basic financial statements
a.2.4.Notes (footnotes)
a.2.5.Independent Accountant’s Report and the
Management Certification
a.2.6.Recent stock price information
a.2.7.Summaries of the unaudited quarterly financial data
a.2.8.Lists of directors and officers of the company and
relevant addresses
SEC REPORT: Form 10-K Annual Report
Due within 90 days of the fiscal year-end
Contains audited financial statements
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Quarterly Reports
Every 3 months
Usually begin with short letter to stockholders
Condensed unaudited income statement and balance sheet for the quarter
Often, cash flow statement and statement of stockholders’ equity are
omitted. Some notes to the financial statements also may be omitted
NOT THAT ACCURATE  no adjustments, no closing entries, no audits
SEC REPORT: Form 10-Q Quarterly Report
Due within 45 days of the end of the quarter
Financial statements can be unaudited (but auditors review)
SEC REPORT: Form 8-K Current Report
Due within 15 days of the major event date
Financial statements can be unaudited
Classified Balance Sheet
Assets most like cash when going to pay
Current Assets (order matters!)  assets used or turned into cash within
one year
Cash and cash equivalents
Accounts receivable
Non-current Assets  assets used or turn into cash beyond one year
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Property, plan and equipment
Intangible assets
Liabilities and Shareholders’ Equity
How quickly expect to pay off
Current Liabilities  Obligations paid or settled within one year
EX: Accounts Payable, Accrued Expenses
Non-current Liabilities  Obligations paid or settled after one year
Shareholders’ Equity
Common Stock  Contributed Capital
Retained Earnings
Classified Income Statement
Net Sales
- Cost of goods sold
Gross Profit
- Operating expenses
Income from Operations
+ Nonoperating revenues and gains  interest not operating in income
- Nonoperating expenses and losses statement but it is in cash flow
Income before income taxes
- Income tax expense
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