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Department
Business
Course
BU227
Professor
David Scallen
Semester
Fall

Description
BU227 – Introduction to FinancialAccounting – Master Note Sheet Lecture 1/24 – 11:30 – 12:50 September 10, 2013 David Scallen’s Office: Peters 2072 – dscallen @ wlu.ca – extension 2880 Office hours: Monday, Wednesday 11:00 – 13:00 Cash Flow Statement – Profit is not the same as cash. (Pay attention to this especially withA/R andA/P!) - Operating Activities - Financing - Investing - Totals net cash change for the period (From BU121: seems to have opposing effects of a balance sheet) Statement of Retained Earnings: Beginning retained earnings – Dividends + Net Income = Ending retained earnings FinancialAccounting: External use (by outsiders from the company) ManagerialAccounting (BU247): Within the company IFRS – Standards IPO: Initial Public Offering ManagerialAccounting: Internal accounting for the company. - Standards are cost vs benefit - Do what you want, nobody else is going to see it - No formal standards Reporting periods: Quarterly – every 3 months - On track? o If not, give an explanation as to why - Give key indicators to financial statements o A, L, OE changes o Cash flow from one period to the next - While quarterly is most popular, never report less often than annually Managerial accounting: - At least every year - Shortest: Real-time reporting - Weekly: Key report (had to have results of the previous week by a certain day of the current week) - Scallen: Worked in the food industry - Keeps inventory (Those who were saying that Scallen was an expert in the poultry industry weren’t lying.) IFRS: International Financial Reporting Standards ASPE:Accounting Standards for Private Enterprises Financial Presentations: Presentation/Chapter 1 Understanding the Business – Slide 1-4 Investors/Shareholders: Why are they investing in the company? Slide 1-5 Basic creditors: Bank, leasing etc. Loans go out, interest comes in Slide 1-6 Products are either made or bought/sold to/from retailers CARS: Collection of data from business transactions. - 3-4 months total - THIS is bookkeeping CARSA: CARS, with analysis - Approximately 1 week - Analysis: Includes CARS, and how well you did - The job was shared by 30+ computers, worked down to 1 TheAccounting System – Slide 1-8 Determine which accounts are going to be impacted in a financial statement Know COGS, Merchandise Inventory, and Cash orA/R Info conveyed in financial statements – Slide 1-9 - Focus on the categories/line elements o Current/Long term assets/liabilities o Line items: What is impacted by a particular transaction? - Pay attention to the time period - How are elements related? o Ratios (BU121!) o Different lines from different statements - Why each element is important to decisions o From a managerial standpoint External reporting – Slide 1-10 - Trading securities? Must use IFRS - If not, use either one o ASPE is more popular Financial Statements 1-12 (ASPE), 1-11 (IFRS) - Balance Sheet:AKAStatement of Financial Position o Same contents - Statement of Cash Flows / Cash Flow Statements o Same contents Statements of Financial Position – Slide 1-13 Typical account titles: Assets: - Cash - Receivables - Equipment - Land - Building Format of lectures: - Discussing content in the first class (Tuesdays) - Thursdays:Applications of problems assigned Quizzes: On average, one every six lectures Connect: http://connect.mcgraw-hill.com/class/d_scallen_a5 Sit in the back row if you plan to use a laptop Questions, ExercisesAND problems? They are usually the same thing… Lecture 2/24 – 11:30 – 12:50 September 12, 2013 Sales credit terms:Are usually 60 days Purchase terms: 30 days Cash Flow statement: Receipts – Payments = net cash change for the month (or accounting period) The Four Basic Financial Statements – Slide 1-12 Statement of Comprehensive Income: Reports the same items as the income statements, except it also gives projections in income based on changes in assets, liabilities and owners equity. Statement of Financial Position – Slide 1-14 Assets: - Notes Receivable o Various banknotes given by debtors, explaining their debt - Supplies o (usually supplies inventory) o Don’t confuse with Supplies Expense - Prepaid Expenses o An expense that you pay in advance, either to save time or as a requirement o Insurance o Rent - Long-Term Investments o Will take longer than a year to mature o Subsidiary companies o Could be:  Bonds  (Hopefully not) Shares - Equipment - Building - Land - Vehicles o All three of these fall under “capital assets” - Intangibles: o Assets you can’t touch o Patents o Copyrights o Can’t be measured o Has values but very hard to liquidate Liabilities: - Trade Payables o Usually first o Will only be superseded by bank overdraft - Accrued Expenses o Trade payables, except longer term - Notes Payable o If your company is behind in payments, you can have this agreement that allows you to pay at a certain time o Usually done with banks/financial institutions o Usually short term - Unearned Revenue o Similar to prepaid expenses, but on the other side o Is a liability until you actually collect the revenue - Bonds Payable – Short or Long Term TheAccounting Equation – Slide 1-15 Any journal transaction involves changing this equation – must always be balanced Transactions can have mistakes (divide by 2, 9, 10) Statement of Financial Position – Slide 1-16 Privately held companies: You likely will not get an accurate statement of financial position Abalance sheet is essentially a “snapshot” of a given entity’s financial position, at the time of the sheet. Pay attention to the magnitude you’re dealing with The Statement of Comprehensive Income – Slide 1-17 Can be single-step or multiple-step - Single step: Revenues/expenses are added together - Multiple step: More detailed Slide 1-18 Statement of Comprehensive Income: Is periodic, ending at a certain time Revenues – Slide 1-19, 1-20, 1-21, 1-22 Revenue/expenses are recognized in the period in which they happen, not the time cash flows in or out. Statement of Changes in Equity – Slide 1-23 Beginning Equity + Profit for the period + Other comprehensive income – Dividends +/- other changes = Ending Equity Statement of Changes in Equity – Slide 1-24, 1-25 You would normally not find these in anASPE statement Slide 1-26 – Profit is not cash Statement of Cash Flows – Slide 1-27 Direct method – preferred by IFRS - Cash collected by customers - ReceivedA/R - Cash paid to suppliers and employees - Indirect method: o Includes the income on the income statements, and converts it into cash by the changes in working capital o Working capital: Current liabilities and assets - Financing Activities o You’d expect lots of activities to happen - Shows how an entity is able to pay back their shareholders Relationships among the statements – Slide 1-28 Profit from Income Statement  Statement of Changes in Equity Slide 1-29 Retained Earning Statement: Retained Earnings  Statement of Financial Position Slide 1-30 Statement of Cash Flows: Ending Cash Balance  Statement of Financial Position Notes – Slide 1-31 All financial statements must have notes which give the reader extra information Types of notes: - Assumptions made - FIFO or Weighted Average (LIFO is now gone) - After each line item, a reference number is given - Additional info not given on financial statements Slide 1-34 Double entry bookkeeping – Has been around for a very long time GenerallyAccepted Accounting Principles – Slide 1-36 GAAP: implements ASPE and IFRS Slide 1-37 Companies incur the cost of financial statements This effects: - Shares - Bonuses received - Competitive information - This means numbers might be skewed Management Responsibility and the Demand forAuditing - Slide 1-39 - Sign off on annual reports - We don’t want anoth
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