Financial accounting course structure

FINANCIAL ACCOUNTING COURSE STRUCTURE

Financial statements is about 3 things :

1. Balance sheet
2. Income statement
3. Statement of cash-flows

Accounting is the process of identifying, recording, summarizing and reporting economic infomation for decision makers.

Accountants present this information in reports called financial statements

1. Balance sheet (Bilan)

The balance sheet (also called the statement of financial position) shows the financial status of a company at a particular instant n time. The left side lists the resources of the firm. The right side lists the claims against those resources. Assets = Liabillities + Owners’ equity. « 

Voir schéma + Voir PPT

Tableau 2.1

Total assets includes long term assets which are assets used for more than 1 year + current (short term assets, used for less than 1 year).

Total liabilites includes long term debts + short term debts.

Summary :

There is 4 financial statements = Etats financiers

1. Balance sheet
2. Income Statement
3. Statement of cash flows
4. Statement of shareholder’s equity

Total assets, total liabilities and shereholder’s equity form the 3 parts of the balance sheet.

What the company ows are the total assets,it’s the economic ressources

Total liabilities and shareholder’s equity are who provides funds, sources of funding, and the economic obligations

Total liabilites = outside claims, outside sources of funds

Shareholder’s equity = inside claims funds from owners

Total assets = current assets less than 12 months, LT assets more than 12 months it’s an investment.

Current assets = cash, AR, inventory

LT assets = Tangible, intangible assets

Total assets and total liabilities are an indicator of operation activity = daily acitivity

3 business activities : operating, financing, investing.

Financing : 3 sources of funding = SE, ST borrowing, LT borrowing

Investing activities : LT Assets

EX1 : Suppose you have an invested capital of €100

01/09 you buy 10 pens for 10€

You pay 5€ cash  en 5€ on account (2 months)

You sell 10 pens for 20€, the customer pays 4€ now and 16€ on account (1 month)

15/12 You received 16€ and you payed your debt

1. Starting balance sheet ?
2. Balance sheet after transaction of 01/09 ?
3. Closing Balance sheet after 15/12 ?

1.

2.

3.

Net income 10€

AA. voir feuille

The assets of Hot Phones amounted to 75000$ on December 31,2011, but increased to 105000$ by December 31, 2012. During the same period, liabilities increased by 25000$. The owner’s equity at December 31, 2011, amounted to 50000$. What was the amount of stockholders’ equity at December 31,2012 ?

Class example :

Company A privdes painting services to customers. The company was created early in 2011. During 2012, it invested an additional 30K$ in the company and the company issued common stock. During 2012, it provided 50K$ of services and collected 45K$. Its expenses were : paint 10K$, supplies 5K$, it paid dividends of 25K$. Beginning Retained Earnings was 48K$ and beginning stockholder’s equity was 68K$.

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