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					    Financial
   Statements
222101 Principles of Accounting I


                        อ.กมลเนตร สุภาพ
                                    1
              Study Objectives

1. The accounting equation.     --> Chapter 1

2. Financial statements.--> Chapter 1
3. Income statement.     --> Chapter 5

4. Balance sheet.   --> Chapter 4

5. Effects of transactions on the
   accounting equation. --> Chapter 1


                                                2
             The Basic Accounting Equation

                                                             Owners’
          Assets           =        Liabilities      +
                                                             Equity

     Provides the underlying framework for recording and
     summarizing economic events.

     Assets are claimed by either creditors or owners.

     Claims of creditors must be paid before ownership
     claims.



                                                                            3
Jerry J.Weygandt and etc. chapter 1 (P.11). Accounting Principles. 9 ed., 2008.
 The Basic Accounting Equation

                                          Owners’
 Assets       =     Liabilities      +
                                          Equity




Assets
   Resources a business owns.
   Provide future services or benefits.
   Cash, Supplies, Equipment, etc.

                                                    4
  The Basic Accounting Equation

                                          Owners’
 Assets        =      Liabilities   +
                                          Equity




Liabilities
    Claims against assets (debts and obligations).
    Creditors - party to whom money is owed.
    Accounts payable, Notes payable, etc.

                                                     5
 The Basic Accounting Equation

                                         Owners’
 Assets        =     Liabilities     +
                                         Equity




Owners’ Equity
   Ownership claim on total assets.
   Referred to as residual equity.
   Capital, Drawings , etc.

                                                   6
Owners’ Equity




Increases in Owner’s Equity.
  Investments by Owner
  Revenues result from business activities entered into
  for the purpose of earning income.
      Common sources of revenue are: sales, fees,
      services, commissions, interest, dividends, royalties,
      and rent.
                                                          7
Owners’ Equity




Decreases in Owner’s Equity.
  Drawings are owner may withdraw cash or other assets
  for personal use.
  Expenses are the cost of assets consumed or services
  used in the process of earning revenue.
     Common expenses are: salaries expense, rent
     expense, utilities expense, tax expense, etc.
                                                     8
                      Financial Statements

      Companies prepare four financial statements from
      the summarized accounting data:




                          Owners’                            Statement
        Income                               Balance
                           Equity                             of Cash
       Statement                              Sheet
                         Statement                             Flows


                                                       B/S
             Profit and Loss
          statement : P/L , I/S

                                                                            9
Jerry J.Weygandt and etc. chapter 1 (P.20). Accounting Principles. 9 ed., 2008.
    1.Income Statement


Reports the revenues and expenses for
a specific period of time.

Net income – revenues exceed expenses.

Net loss – expenses exceed revenues.




                                         10
2.Owners’ Equity Statement




   Statement indicates the reasons
   why owner’s equity has increased
   or decreased during the period.
                                      11
                 3.Balance Sheet




Reports the assets, liabilities, and owner’s equity at a specific date.

Assets listed at the top, followed by liabilities and owner’s equity.

Total assets must equal total liabilities and owner’s equity.             12
    4.Statement of Cash Flows

Information about the cash inflows (receipts) and
outflows (payments) for a specific period of time.

Cash flow provided from :

     1.   Operating activities.
     2. Investing activities.

     3. Financing activities.




                                                     13
Ex. Statement of Cash Flows




                              14
        Financial Statements



             Owners’              Statement
 Income                 Balance
              Equity               of Cash
Statement                Sheet
            Statement               Flows




                                              15
    Income Statement :I/S
                       งบกาไรขาดทุน

                                                                           16
Jerry J.Weygandt and etc. chapter 5 (P.214). Accounting Principles. 9 ed., 2008.
          Forms of Income Statement



         Multiple-Step Income Statement


         Single-Step Income Statement




P.214 Chapter 5                            17
Multiple-Step Income Statement


Shows several steps in determining net income.
Two steps relate to principal operating
activities.
Distinguishes between operating and non-
operating activities.




                                            18
 Forms Multiple-Step Income Statement


Key Items:


  Net sales
  Gross profit


  Operating
  expenses

    Selling +
  Administrative
    expenses
                                        19
 Forms Multiple-Step Income Statement


Key Items:
  Net sales
  Gross profit
  Operating
  expenses
  Non operating
  activities
  Net income



                                        20
   Single-Step Income Statement


Subtract total expenses from total revenues
Two reasons for using the single-step format:
1) Company does not realize any type of profit
   until total revenues exceed total expenses.
2) Format is simpler and easier to read.




                                                 21
Forms Single-Step Income Statement




                                     22
       Balance Sheet :B/S
                                 งบดุล

                                                                           23
Jerry J.Weygandt and etc. chapter 4 (P.162). Accounting Principles. 9 ed., 2008.
   Balance Sheet
          Presents a snapshot at a point in time.
          To improve understanding, companies group
          similar assets and similar liabilities together.
                                                     Non Current
  Standard Classifications                            liabilities

                  Assets           Liabilities and Owner’s Equity
  Current assets                   Current liabilities
  Long-term investments            Long-term liabilities
  Property, plant, and equipment   Owner’s (Stockholders’) equity
  Intangible assets
                               Non Current
P.162 Chapter 4                  assets                       24
                                        เงินสด

Current Assets                                   ผลิต
                             เก็บเงิน

                                        ขาย
  Assets that a company expects to convert to
  cash or use up within one year or the
  operating cycle.
  Operating cycle is the average time it takes
  from the purchase of inventory, sell it on
  account, and then collection of cash from
  customers.
                                                  25
Ex. Current Assets




                     Accrued Revenue
                      (รายได้......ค้างรับ)
                                              26
                                          Non Current
Long-Term Investments                       assets


  Investments in stocks and bonds of other companies.
  Investments in long-term assets such as land or
  buildings that a company is not currently using in its
  operating activities.




                                                     27
Property, Plant, and Equipment : PPE
                                        Non Current
   Long useful lives.                     assets

   Currently used in operations.
   Depreciation - allocating the cost of assets to a
   number of years.
   Accumulated depreciation - total amount of
   depreciation expensed thus far in the asset’s
   life.

                                                   28
      Ex.
            กิจการซื้อรถยนต์ราคา 500,000 บาท มีอายุการใช้งาน 5 ปี
                 Depreciation = 500,000 / 5 ปี = 100,000 บาทต่อปี


                      ปี 1        ปี 2       ปี 3       ปี 4         ปี 5
  Depreciation      100,000    100,000    100,000     100,000       100,000



  Accumulated       100,000   200,000     300,000
  depreciation


                                                                              29
Add
Ex. Property, Plant, and Equipment




                                     30
                                        Non Current
Intangible Assets                         assets



  Assets that do not have physical substance.




                                                  31
Current Liabilities

   Obligations the company is to pay within the
   coming year.
   Usually list notes payable first, followed by
   accounts payable. Other items follow in order
   of magnitude.
   Liquidity - ability to pay obligations expected
   to be due within the next year.


                                                  32
Ex. Current Liabilities




                     Deferred Revenue
                     (รายได้.....รับล่วงหน้า)
                                                33
                                          Non Current
Long-Term Liabilities                      liabilities


   Obligations a company expects to pay after one year.




                                                    34
Owner’s Equity

            Assets         -      Liabilities



  Proprietorship - one capital account.
  Partnership - capital account for each partner.
  Corporation - Capital Stock and Retained Earnings.




                                                    35
  Proprietorship       (เจ้าของคนเดียว)

  ส่วนของเจ้าของ ประกอบด้วย :
         ทุน                              XX
         กาไรสุทธิ (ขาดทุนสุทธิ)          XX   XX

         หัก ถอนใช้ส่วนตัว (ถ้ามี)             (XX)
                รวมส่วนของเจ้าของ               XX


                                                      36
Add
  Partnership       (ห้างหุ้นส่วน)

  ส่วนของผู้เป็นหุ้นส่วน ประกอบด้วย :
         ทุน – นาย ก.                          XX
         ทุน – นาย ข.                          XX   XX
         กระแสทุน – ก                          XX
         กระแสทุน – ข                          XX   XX
                   รวมส่วนของผู้เป็นหุ้นส่วน        XX


                                                         37
Add
Corporation (บริษัทจากัด)
ส่วนของผู้ถือหุ้น ประกอบด้วย :
       ทุนเรือนหุ้น                     XX
       กาไรสะสม (ขาดทุนสะสม)            XX
                 รวมส่วนของผู้ถือหุ้น   XX




                                             38
      Forms of Balance Sheet



         Report Form

         Account Form


                               39
Add
 Ex.
 Report
  Form




          40
Add
  Ex. Account Form




                     41
Add
           Financial statement
                                   and
     their interrelationships

                                                                           42
Jerry J.Weygandt and etc. chapter 1 (P.21). Accounting Principles. 9 ed., 2008.
                  Net income is needed to determine
P.21 Chapter 1   the ending balance in owner’s equity.
                                                  43
  The ending
  balance in
owner’s equity
 is needed in
preparing the
balance sheet




         44
The cash shown
on balance sheet
   is needed in
 preparing the
  statement of
    cash flows.




                   45
                      EXERCISE
                      : BE 4-10
                               (P.178)

Instructions
      Match each of the following accounts to its proper
balance sheet classification. (CA, LTI, PPE, IA,CL,LTL,OE)

                                                       46
            Home Work 2
             : E 4-17
           (P.184) B.Snyder Company

              งานกลุ่ม กลุ่มละ 3 คน
กาหนดส่ง             MIS 2307
                ศุกร์ที่ 18 มิ.ย. 53
                                       47
        Using The Basic Accounting Equation

      Transactions are a business’s economic events
      recorded by accountants.
            May be external or internal.

            Not all activities represent transactions.

            Each transaction has a dual effect on the
            accounting equation.




                                                                           48
Jerry J.Weygandt and etc. chapter 1 (P.14). Accounting Principles. 9 ed., 2008.
                     Transactions
            Transaction – identification process.
                                    Discuss
                                 product design
                 Purchase                                Pay rent
Event                            with potential
                 computer          customer



Criterion         Is the financial position (assets, liabilities, or
                    owner’s equity) of the company changed?


Record/
Don’t Record


                                                                       49
              Transactions Analysis
Transaction (1). Investment By Owner. Ray Neal decides
to open a computer programming service which he names
Softbyte. On September 1, 2010, he invests $15,000 cash in
the. The effect of this transaction on the basic equation is:




                                                           50
Transaction (2). Purchase of Equipment for Cash.
Softbyte purchases computer equipment for $7,000 cash.




                                                         51
Transaction (3). Purchase of Supplies on Credit. Softbyte
purchases for $1,600 from Acme Supply Company computer
paper and other supplies expected to last several months.




                                                        52
Transaction (4). Services Provided for Cash. Softbyte
receives $1,200 cash from customers for programming
services it has provided.




                                                        53
Transaction (5). Purchase of Advertising on Credit.
Softbyte receives a bill for $250 from the Daily News for
advertising but postpones payment until a later date.




                                                            54
Transaction (6). Services Provided for Cash and Credit.
Softbyte provides $3,500 of programming services for
customers. The company receives cash of $1,500 from
customers, and it bills the balance of $2,000 on account.




                                                            55
Transaction (7). Payment of Expenses. Softbyte pays the
following Expenses in cash for September: store rent $600,
salaries of employees $900, and utilities $200.




                                                         56
Transaction (8). Payment of Accounts Payable. Softbyte
pays its $250 Daily News bill in cash.




                                                         57
Transaction (9). Receipt of Cash on Account. Softbyte
receives $600 in cash from customers who had been billed
for services [in Transaction (6)].




                                                           58
Transaction (10). Withdrawal of Cash by Owner. Ray Neal
withdraws $1,300 in cash from the business for his personal
use.




                                                         59
Summary of Transactions




                          60
                    EXERCISE
                       : E 1-6
                             (P.36)
Instructions
      Alma’s Payroll Services Company.


                                         61
           Home Work 3
            : P 1-1B
    (P.41) Vinnie’s Travel Agency

            งานกลุ่ม กลุ่มละ 3 คน
กาหนดส่ง          MIS 2307
             พฤหัสบดีที่ 24 มิ.ย. 53
                                       62

				
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