Study Guides (275,258)
CA (150,760)
Ryerson (10,927)
Accounting (411)
ACC 100 (197)
Else Grech (113)
Final

ACC 100 Final: Different types of Financial Statements/Understanding Financial Statements

by OneClass2159453 , Spring 2017
7 Pages
43 Views
Spring 2017

Department
Accounting
Course Code
ACC 100
Professor
Else Grech
Study Guide
Final

This preview shows pages 1-2. Sign up to view the full 7 pages of the document.
Understanding Basic Financial Statements
During the accounting cycle, the accounting system is used to track, organize and record the financial
transactions of an organization. At the close of each period, the information is used to prepare the
financial statements, which are usually composed of a balance sheet (statement of financial position);
income statement (statement of income and expenses); statement of retained earnings (owners’
equity); and a statement of cash flow.
A sample set of financial statements) is shown below.
Financial statements prepared by a Chartered Accountant with a Review Engagement Report or
Audit Opinion attached, are prepared (unless noted otherwise) according to "Canadian generally
accepted accounting principles", or GAAP. Financial statements that are only compiled or that have a
"Notice to Reader" attached, are not necessarily prepared according to GAAP.
Balance Sheet
The balance sheet is based on the equation: assets = liabilities + owners' equity. It indicates
everything the company owns (assets), everything the company owes to creditors (liabilities) and the
value of the ownership stake in the company (shareholders' equity, or capital). The balance sheet
date is the ending date of the period or year, and is a continuation of the amounts recorded since the
inception of the company or organization. The balance sheet is a "snapshot" of the financial position
of the company at the balance sheet date and shows the accumulated balance of the accounts.
Assets and liabilities are separated between current and long-term, where current items are those
items, which will be realized or paid, within one year of the balance sheet date. Typical current assets
are cash, prepaid expenses, accounts receivable and inventory.
Income Statement
An income statement is a type of summary flow report that lists and categorizes the various revenues
and expenses that result from operations during a given period - a year, a quarter or a month. The
difference between revenues and expenses represents a company's net income or net loss. The
amounts shown in the income statement are the amounts recorded for the given period - a year, a
quarter or a month. The next period’s income statement will start over with all amounts reset to zero.
While the balance sheet shows accumulated balances since inception, the income statement only
shows the amounts earned or expensed during the period in question.
Statement of Retained Earnings
The statement of retained earnings shows the amount of accumulated earnings that have been
retained within the company since its inception. At the end of each fiscal year-end, the amount of net
income or loss is added to the opening amount of retained earnings to arrive at the closing retained
earnings. Retained earnings can be decreased by such items as dividends paid to shareholders. On
the sample financial statements shown below, the statement of retained earnings is combined with
the income statement presentation.
Statement of Cash Flow
The statement of cash flow shows all sources and uses of a company's cash during the accounting
period. Sources of cash listed on the statement include revenues, long-term financing, sales of non-
current assets, an increase in any current liability account or a decrease in any current asset account.
Uses of cash include operating losses, debt repayment, equipment purchases and increases in
current asset accounts.
XYZ COMPANY LIMITE
D
BALANCE SHEE
T
A
S A
T
JUNE 30, 2002
UNAUDITED - See "Notice to Reader
"
2002 2001
ASSET
S
CURRENT
Cash $ 11,552 $ --
Accounts receivable 42,970 50,595
Deposits and prepaid expenses 2,942 2,688
Inventory 159,144 156,657
216,608 209,940
PROPERTY, PLANT AND EQUIPMENT (Note 2) 59,890 76,318
INVESTMENTS -- 45,001
$ 276,498 $ 331,259
LIABILITIES
CURRENT
Bank overdraft $ -- $ 9,474
Bank loan -- 60,000
Accounts payable and accrued liabilities 82,053 91,343
Long-term debt - current portion 25,200 --
Income tax payable 14,387 --
121,640 160,817
DUE TO SHAREHOLDER (Note 3) 51,591 231,791
LONG-TERM DEBT (Note 4) 86,100 --
259,331 392,608
SHAREHOLDER'S EQUIT
Y
STATED CAPITAL (Note 5) 1 1
RETAINED EARNINGS (DEFICIT) 17,166 (61,350)
17,167 (61,349)
$ 276,498 $ 331,259
APPROVED
The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.

Leah — University of Toronto

OneClass has been such a huge help in my studies at UofT especially since I am a transfer student. OneClass is the study buddy I never had before and definitely gives me the extra push to get from a B to an A!

Leah — University of Toronto
Saarim — University of Michigan

Balancing social life With academics can be difficult, that is why I'm so glad that OneClass is out there where I can find the top notes for all of my classes. Now I can be the all-star student I want to be.

Saarim — University of Michigan
Jenna — University of Wisconsin

As a college student living on a college budget, I love how easy it is to earn gift cards just by submitting my notes.

Jenna — University of Wisconsin
Anne — University of California

OneClass has allowed me to catch up with my most difficult course! #lifesaver

Anne — University of California
Description
Understanding Basic Financial StatementsDuring the accounting cycle, the accounting system is used to track, organize and record the financialtransactions of an organization. At the close of each period, the information is used to prepare thefinancial statements, which are usually composed of a balance sheet (statement of financial position);income statement (statement of income and expenses); statement of retained earnings (ownersequity); and a statement of cash flow.A sample set of financial statements) is shown below.Financial statements prepared by a Chartered Accountant with a Review Engagement Report orAudit Opinion attached, are prepared (unless noted otherwise) according to "Canadian generallyaccepted accounting principles", or GAAP. Financial statements that are only compiled or that have a"Notice to Reader" attached, are not necessarily prepared according to GAAP.Balance SheetThe balance sheet is based on the equation: assets = liabilities + owners' equity. It indicateseverything the company owns (assets), everything the company owes to creditors (liabilities) and thevalue of the ownership stake in the company (shareholders' equity, or capital). The balance sheetdate is the ending date of the period or year, and is a continuation of the amounts recorded since theinception of the company or organization. The balance sheet is a "snapshot" of the financial positionof the company at the balance sheet date and shows the accumulated balance of the accounts.Assets and liabilities are separated between current and long-term, where current items are thoseitems, which will be realized or paid, within one year of the balance sheet date. Typical current assetsare cash, prepaid expenses, accounts receivable and inventory.Income StatementAn income statement is a type of summary flow report that lists and categorizes the various revenuesand expenses that result from operations during a given period - a year, a quarter or a month. Thedifference between revenues and expenses represents a company's net income or net loss. Theamounts shown in the income statement are the amounts recorded for the given period - a year, aquarter or a month. The next periods income statement will start over with all amounts reset to zero.While the balance sheet shows accumulated balances since inception, the income statement onlyshows the amounts earned or expensed during the period in question.Statement of Retained EarningsThe statement of retained earnings shows the amount of accumulated earnings that have beenretained within the company since its inception. At the end of each fiscal year-end, the amount of netincome or loss is added to the opening amount of retained earnings to arrive at the closing retainedearnings. Retained earnings can be decreased by such items as dividends paid to shareholders. Onthe sample financial statements shown below, the statement of retained earnings is combined withthe income statement presentation.Statement of Cash FlowThe statement of cash flow shows all sources and uses of a company's cash during the accountingperiod. Sources of cash listed on the statement include revenues, long-term financing, sales of non-current assets, an increase in any current liability account or a decrease in any current asset account.Uses of cash include operating losses, debt repayment, equipment purchases and increases incurrent asset accounts.XYZ COMPANY LIMITEDBALANCE SHEETAS ATJUNE 30, 2002UNAUDITED - See "Notice to Reader"2002 2001ASSETSCURRENTCash $ 11,552 $ --Accounts receivable 42,970 50,595Deposits and prepaid expenses 2,942 2,688Inventory 159,144 156,657216,608 209,940PROPERTY, PLANT AND EQUIPMENT (Note 2) 59,890 76,318INVESTMENTS -- 45,001$ 276,498 $ 331,259LIABILITIESCURRENTBank overdraft $ -- $ 9,474Bank loan -- 60,000Accounts payable and accrued liabilities 82,0
More Less
Unlock Document

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

You've reached the limit of 4 previews this month

Create an account for unlimited previews.

Already have an account?

Log In


OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit