chap003 Balance Sheet and Financial Disclosures.pptVIP

The Balance Sheet and Financial Disclosures 3 Learning Objectives The Balance Sheet Limitations: The balance sheet does not portray the market value of the entity as a going concern nor its liquidation value. Resources such as employee skills and reputation are not recorded in the balance sheet. Usefulness: The balance sheet describes many of the resources a company has available for generating future cash flows. It provides liquidity information useful in assessing a company’s ability to pay its current obligations. It provides long-term solvency information relating to the riskiness of a company with regard to the amount of liabilities in its capital structure. Balance Sheet Learning Objectives Current Assets Current Assets Operating Cycle of a Typical Manufacturing Company Noncurrent Assets Noncurrent Assets Learning Objectives Current Liabilities Long-term Liabilities Shareholders’ Equity Learning Objectives Disclosure Notes Learning Objectives Management Discussion and Analysis Management’s Responsibilities Preparing the financial statements and other information in the annual report. Maintaining and assessing the company’s internal control procedures. Learning Objectives Auditors’ Report Auditors’ Opinions Compensation of Directors Top Executives Learning Objectives Using Financial Statement Information Learning Objectives Liquidity Ratios Liquidity Ratios—Federal Express Financing Ratios Financing Ratios—Federal Express Reporting by Operating Segment What Amounts Are Reported By An Operating Segment Segment Reporting End of Chapter 3 Part I There are four types of audit opinions. An unqualified opinion is issued when the financial statements present fairly the financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Part II A qualified opinion is issued when there is an exception that is not of sufficient seriousness to invalidate the financial statements as a whole. Examples of exceptions are