财务基础知识3.pptVIP

Financial Reporting: EWMBA 202A Discussion Section#3 (11/02/2002) Financial Statement Preparation Learning Objectives : Understand the closing process and develop an ability to prepare a statement of cash flows from a comparative balance sheet and income statement. Adjusting Accounts at the end of the Accounting Period COGS : Cost of Goods Sold The Closing Process Assets, Liabilities and OE are permanent accounts not closed to a zero balance at the end of the accounting period. These accounts are carried forward to the next period. Revenues and Expenses are temporary accounts that are closed to a zero balance at the end of each accounting period. Closing entries reduce all temporary accounts to a zero balance. Importance of Cash Flows Statement Components of the Statement of Cash Flows Analyzing Noncash Accounts Investing ActivitiesCash Flow from Investing Transactions that involve acquisition or disposal of non-current assets Financing ActivitiesCash Flow from Financing Transactions involving receipts from or payments to creditors and shareholders Indirect Method Reconciles accrual net income with cash flows from operations Adjustments to net income include: Amortization expense Gains and losses Changes in current assets Changes in current liabilities MEASURING CASH ADEQUACYFREE CASH FLOW Free cash flow is the amount of cash available from operations after paying for planned investments in plant, equipment, and other long-term assets (no finance activities). * Discussion Section # 3 Financial Reporting - E202 Lopo Martinez An adjusting entry is recorded to bring an asset or liability account balance to its proper amount. Transactions where cash is paid or received before a related expense or revenue is recognized. Transactions where cash is paid or received after a related expense or revenue is recognized. Beginning Inventory Merchandise Purchases or Cost of Goods Manufactured Goods Available for Sale = + Needs to be allocated between: Ending Invent