The Balance Sheet by jAz2ic

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									The Balance Sheet

    Chapter 2
    Questions Answered by
        Balance Sheet
•   Amount of Cash on Hand?
•   What is the Total Debt?
•   What is Funding Mix?
•   How Much is Owed to the Hotel?
    Questions Answered by
        Balance Sheet
•   What are the Tax Liabilities?
•   Can Current Debt be Paid?
•   What is the Financial Strength?
•   How Much have Stockholders
    Invested in the Assets?
        Uniform System of
            Accounts
•   Standardized Accounting System
•   Industry Driven
•   Basic Formats
•   Departmental Statement and
    Schedules
     Uniform System of
         Accounts
• Explanations and Discussions
• Allows Comparison - Other
  Operations and Self
• Can be Used by Any Size
  Operation
• Property Level Designed Use
 Balance Sheet Limitations
• Does Not Reflect Current Values
  of Assets (Booked According to
  Cost Principle)
• Does Not Include Some Things
  of Value Such as Personnel,
  Location, Customer Base,
  Goodwill
 Balance Sheet Limitations
• Becomes Quickly Outdated
  (static, not dynamic)
• Some Account Balances are
  Estimates Such as Depreciation
  and Estimates for Uncollectibles
    Balance Sheet - The
   Statement of Financial
         Position
• Assets = Liabilities + Equity
• Statement of Assets, Liabilities,
  and Owners’ Equity at a Point in
  Time
    Balance Sheet - The
   Statement of Financial
         Position
• Assets
    Current Assets
    Noncurrent Receivables
    Investments
    Property and Equipment
    Other Assets
    Balance Sheet - The
   Statement of Financial
         Position
• Liabilities
     Current Liabilities
     Long Term Debt
     Deferred Income Taxes
     Commitments / Contingencies
     Other Long-Term Liabilities
    Balance Sheet - The
   Statement of Financial
         Position
• Owners’ Equity
    Capital Stock
    Additional Paid In Capital
    Retained Earnings
    Treasury Stock
Balance Sheet Formats and
        Structure
• Account Format - Assets on Left
  and Liabilities and Equity on
  Right (page 44)
• Report Format - Assets First
  Followed by Liabilities and
  Equity (page 45)
Balance Sheet Formats and
        Structure
• Current Assets - Converted to
  Cash or Used in Operation in
  One Year or Normal Operating
  Cycle
• Listed in Order of Liquidity
Balance Sheet Formats and
        Structure
•   Cash (All Forms)
•   Marketable Securities
•   Receivables
•   Inventories
•   Prepaid Expenses
      Noncurrent Assets
• Noncurrent Receivables - not
  expected to be collected within
  one year - owners are shown
  separate
• Investments - securities, land not
  in use, and affiliate advances not
  to be collected within one year
     Noncurrent Assets
• Property and Equipment - Fixed
  Assets, Capital Leases - Less
  accumulated depreciation
• Smallwares - New USOA
  Recommends to Expense or
  Write off Over 3 Years
     Noncurrent Assets
• Other Assets - Deferred Charges,
  Security Deposits
• Preopening Expenses - New
  USOA Recommends to Expense
  in Current Period
        Other Assets
• Goodwill
• Cash Surrender Value of Life
  Insurance
• Deferred Charges
• Possibly Deferred Income Taxes
Balance Sheet Formats and
        Structure
• Current Liabilities - Obligations
  expected to be Satisfied in One
  Year or Normal Operating Cycle
       Current Liability
        Presentation
• Payables
• Advance Deposits
• Current Maturities of Long Term
  Debts
• Dividends Payable
• Income Taxes Payable
      Long Term Liabilities
•   Obligations Beyond One Year
•   Notes Payable
•   Mortgages Payable
•   Bonds Payable
•   Capitalized Lease Obligations
•   Possibly Deferred Income Taxes
          Owners’ Equity
•   Preferred Stock, Par @ $$$
•   Shares Authorized
•   Shares Issued
•   Common Stock, Par @ $$$
•   Shares Authorized
•   Shares Issued
        Owners’ Equity
• Treasury Stock
• Additional Paid in Capital
• Retained Earnings
        Owners’ Equity
• Sole Proprietorship Capital
• Partnership - Show Each
  Owner’s Capital
• Withdrawal Accounts
             Footnotes
•   Significant Accounting Policies
•   Accounts and Notes Receivable
•   Inventories
•   Investments
            Footnotes
•   Property and Equipment
•   Current Liabilities
•   Long Term Debt
•   Capital Stock
•   Employee Benefit Plans
          Footnotes
• Leases
• Segments of Business
• Supplemental Financial
  Information
• Commitment/Contingent Liability
• Income Taxes
      Balance Sheet Analysis
• Comparative Statements or Horizontal
  Analysis
• Compute Absolute Change (dollar difference)
• Compute Relative Change (percentage difference)
• Investigate Significant Differences
• Internal Analysis
          Assets                 2000      1999          $         %
                                  A         B           C          D
Current Assets                                        (A - B)    (C / B)
 Cash                            27,000     21,000      6,000     28.57%
 Marketable Securities (net)    100,000     81,000     19,000     23.46%
 Accounts Receivable            120,000     90,000     30,000     33.33%
 Inventories                     12,000     17,000     (5,000)   -29.41%
 Prepaid Expenses                10,000     12,000     (2,000)   -16.67%
     Total Current Assets       269,000    221,000    48,000     21.72%

Investments                      40,000     35,000     5,000     14.29%

Property Plant Equipment
  Land                           75,000     68,500     6,500      9.49%
  Buildings                     880,000    850,000    30,000      3.53%
  Furniture & Equipment         200,000    190,000    10,000      5.26%
                               1,155,000 1,108,500     46,500     4.19%
 Less Accum Depr                (381,000) (320,000)   (61,000)   19.06%
 Smallwares                       20,500    20,500        -       0.00%
   Balance Sheet Analysis
• Common Size Statements or Vertical
  Analysis
• Total Assets Equal 100%
• Total Liabilities and Equity Equals
  100%
• Each Individual Account is Shown as a
  Percentage of the Total Assets
• Compare to Industry, Like Businesses
  or Self
          Assets                2000         1999        2000%       1999%

Current Assets
 Cash                            27,000       21,000      2.45%    1.97%
 Marketable Securities (net)    100,000       81,000      9.06%    7.61%
 Accounts Receivable            120,000       90,000     10.87%    8.45%
 Inventories                     12,000       17,000      1.09%    1.60%
 Prepaid Expenses                10,000       12,000      0.91%    1.13%
     Total Current Assets       269,000      221,000     24.38%    20.75%

Investments                      40,000       35,000     3.62%     3.29%

Property Plant Equipment
  Land                           75,000       68,500      6.80%    6.43%
  Buildings                     880,000      850,000     79.75%    79.81%
  Furniture & Equipment         200,000      190,000     18.12%    17.84%
                               1,155,000    1,108,500    104.67%   104.08%
 Less Accum Depr                (381,000)    (320,000)   -34.53%   -30.05%
 Smallwares                       20,500       20,500     1.86%     1.92%
     Total PPE                  794,500      809,000     72.00%    75.96%

Total Assets (A)               1,103,500    1,065,000    100.00%   100.00%
   Balance Sheet Analysis
• Base Year Comparisons
• Series of Years
• Compared to a Base Year

								
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