Transcript BMGT Principles of Accounting I Dr. Progyan Basu R.H

BMGT 220, Discussion #2
Kristian Sooklal
[email protected]
443-797-4588 (cell) | 410-575-4719 (text)
Important News
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Wizards vs. Grizzlies tonight at 8
Request tickets to Duke basketball game today
Wake Forest game tomorrow at 2:00 pm
Ravens Super Bowl in 55 hours
Topics in Chapter 1
• What is Accounting?
• Three Activities: identification, recording,
communication
• Who uses accounting? (External vs. Internal)
• GAAP
• Assets = Stockholder’s Equity + Liabilities
• Transactions
• Financial Statements
Plan for today
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Quiz 0 back
Financial Statements
Knowledge Check Questions
Review of class notes + homework
Any questions?
Quiz 1
Income Statement
Income Statement
For Month Ended December 31, 2011
Revenues:
Consulting revenue
$
3,500
Expenses:
Salary Expense
(1,200)
Rent Expense
(800)
Utilities Expense
(300)
Net income
Net income
is the
difference
between
Revenues
and
Expenses.
1,200
The income statement describes a company’s revenues
and expenses along with the resulting net income or loss
over a period of time due to earnings activities.
Statement of Retained Earnings
Income Statement
For Month Ended December 31, 2011
Revenues:
Consulting revenue
$
3,500
Expenses:
Salary Expense
(1,200)
Rent Expense
(800)
Utilities Expense
(300)
Net income
1,200
The net income of
$1,200 increases
Retained Earnings,
but the dividend
reduces Retained
Earnings by $500.
Scott Company
Statement of Retained Earnings
For Month Ended December 31, 2011
Retained Earnings, Dec. 1, 2011
$
Plus: Net income
Less: Dividends
Retained Earnings, Dec. 31, 2011 $
1,200
(500)
700
Balance Sheet
The Balance Sheet describes a
company’s financial position at a
point in time.
Scott Company
Statement of Retained Earnings
For Month Ended December 31, 2011
Retained Earnings,Dec. 1, 2011
Plus: Net income
Less: Dividends
Retained Earnings, Dec. 31, 2011
$
$
1,200
(500)
700
Scott Company
Balance Sheet
December 31, 2011
Assets
Cash
Accounts Receivable
Supplies
Equipment
$
10,500
1,000
1,600
3,000
Total assets
$
16,100
Liabilities & Equity
Accounts payable
$
Notes payable
Total liabilities
Common stock
Retained earnings
Total liabilities and equity $
1,400
4,000
5,400
10,000
700
16,100
Statement of Cash Flows
Statement of Cash Flows
For Month Ended December 31,
Cash flows from operating activities:
Cash received from clients
$
Purchase of supplies
Cash paid for Rent
Cash paid for Salaries
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of equipment
Net cash used in investing activities
Cash flows from financing activities:
Investment by owner
Borrowed at bank
Dividends Paid
Net cash provided by financing activities
Net increase in cash
Cash balance, December 1, 2011
Cash balance, December 31, 2011
2011
2,500
(1,000)
(800)
(1,200)
$
(500)
(2,500)
(2,500)
10,000
4,000
(500)
$
$
13,500
10,500
10,500
Knowledge Check # 5:
A corporation purchased a $40,000 delivery truck by paying 4,000
cash and signing a $36,000 note payable. Immediately prior to this
transaction the corporation had liabilities of $52,000, and owners’
equity $23,000. What is the total amount of the corporation’s assets
after this transaction has been recorded?
1.
2.
3.
4.
$115,000
$111,000
$ 79,000
$ 71,000
Knowledge Check # 6:
On January 1, 2012, Kroger company’s Stockholder’s Equity
account had a balance of $23,500. During the year 2012, the
company issued additional stock for $6,000, generated revenues of
$92,200, and recorded expenses of $64,100. They also paid dividends
to their shareholders. If the Stockholders’ Equity had a balance of
$55,600 on December 31, 2012, determine the amount of dividends
paid by Kroger Company during 2012.
1.
2.
3.
4.
$4,000
$3,000
$2,000
$1,000
Any Questions?
Practice Quiz
• Which of the following events will not be
recorded as a transaction?
– Appointment of new CEO
• Linda’s Corporation receives payment of
$200,000 from customers who owed Linda
money. This results in a:
– $0 net effect on assets
Practice Quiz
• Beginning Equity: $145,000; Revenues: $210,000;
Expenses: $165,000; Ending Liabilities: $72,000.
What are ending assets?
– Equity [$145000 + ($210000-$165000)] + Liabilities
[$72,000] = $262,000
• Beginning Assets: $100,000; Beginning Liabilities:
$50,000; Ending Assets: $500,000; Ending
Liabilities: $350,000, $50,000 stock issued,
$25,000 dividends
– $75,000
Practice Quiz
• Beginning retained earnings: $25,000;
Expenses: $30,000; Dividends: $5,000; Ending
Retained Earnings: $80,000
– Revenues: $90,000