MODULE 6 Financial Statements

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "MODULE 6 Financial Statements"

Transcription

1 Introduction. 102 Projected Outcomes 103 Facilitators Notes. 104 What is Accounting. 104 The Accounting Equation Accounting Terminology 106 Assets 106 Liabilities. 106 Owner s Equity, Partner s Equity, Retained Earnings Revenue 106 Cost of Goods Sold Expenses Start-up Expenses Schedule Income Statement Balance Sheet. 109 Cash-Flow Basics

2 Introduction: Financial statements usually invoke feelings of fear and trepidation for the neophyte entrepreneur. This should not be the case; the majority of the work has already been completed in the previous modules. Research on how much rent will cost, what is the office supplies and equipment going to cost, and what will the labour cost. The importance of accounting in business cannot be overstated. Lenders, investors, and other stakeholders in your business will examine your financial statements and accounting procedures very carefully before getting involved with your business. Your financial plan will be highly scrutinized by the E-Spirit Team and Judges. The concepts and strategies you discussed throughout your entire business plan form the basis for, and should flow into, your financial statements and projections in some manner. When all is said and done it is all about if your business makes financial sense, will it make money and support any debt and growth? Team participants are in no way expected to provide professionally developed financial statements. This module was designed to increase participants awareness of accounting fundamentals, the role of financial statements in business planning, and basic financial statement preparation and presentation. Taxation issues will only be briefly discussed due to the complexity of the Revenue Canada Tax Code in relation to the Indian Act. Some Aboriginal businesses located onreserve may be tax-free. But no business located on reserve should consider itself taxation free until they are provided with a ruling from Revenue Canada. Basic accounting theory and practices have been included with this module to provide team members an accounting foundation. As with previous modules overhead transparencies have been provided. 102

3 Projected Outcomes: Upon completion of Module 6, participants will: Increase awareness of accounting role and importance in small business Understand the accounting equation Increase awareness of basic financial statements; Start-up Schedule, Income Statement, Balance Sheet, and Cash projections Increase awareness of accounting terminology Increase awareness of financial statement preparation 103

4 Facilitators Notes: Accounting is at the heart of almost every business decision. In fact, you must understand the basics of accounting if you want to understand business. Accounting is not difficult though, you must understand some terminology and understand bookkeeping basics; from the information gathered from keeping your books, financial statements can be prepared. Very few examples have been provided in this module. Excellent examples of the required financial statements have been provided on the E-Spirit website. What is Accounting: Have fun!!! Accounting is the process of recording, processing, classifying, summarizing, and interpreting financial transactions. These transactions include buying and selling of products or services, purchasing equipment/supplies, and receiving and paying out cash for expenses, wages, and income taxes. Transactions are grouped or classified by common characteristics such all purchases or sales. By classifying transactions, management or entrepreneur can extract information about different areas of their business over a given period of time. Information can be utilized to make decisions about the business. The methods for recording and summarizing accounting data are referred to as the Accounting System. Recording or journalizing accounting information can be done manually or by computer. But regardless of the method, understanding some accounting basics is a must!! Module 6 will only cover aspects of financial accounting. Financial accounting differs from managerial accounting in that financial accounting is done for people outside the business such as lenders, creditors, employee unions, customers, and investors. 104

5 Financial accounting and statement reports answer the following questions: Is the businesses income sufficient to carry debt, pay creditors, etc? Should we, Bank or other lender, lend this business money? Can the business afford employees? Can the business afford to pay rent? How much money will you require 6 months from now? Should we, suppliers, sell to your business? Financial statements provide a recorded history of how well your performed over a given period of time. Financial statements can be prepared monthly, quarterly, bi-annually, or annually. The majority of small business owners in Canada hire an accountant either full-time or on a casual basis to provide accounting expertise to their business. Financial statements will show sales increases/decreases, cost increases, overhead fluctuations, effectiveness of marketing, and changes in profit. Overhead transparencies and activities have been included. Some material may be not be relevant to your class in terms of accounting understanding. This module has been designed for the novice entrepreneur who has little or no accounting background. The Accounting Equation : At the core of all accounting transactions and records is a fundamental accounting equation: ASSETS = LIABILITIES + OWNERS EQUITY The basic accounting equation is derived from the double-entry accounting system. This is a standardized system around the world. 105

6 Accounting Terminology: Assets: Things of value owned by the business. Assets may include cash on hand or in the bank, accounts receivable, inventory, land, buildings, vehicles, patents, copyrights, etc. Current assets are items that can be converted into cash within one year. Fixed Assets are items required to produce the ventures products or services. Examples of fixed assets include buildings, land, equipment, etc. Liabilities: Liabilities simply stated are those de bts the business owes others. Liabilities may include accounts payable, bonds payable, notes payable, etc. Owners Equity, Partners Equity, and Retained Earnings: Owners equity includes all of the monies invested by the owners plus all profits accumulated since the business started but may not have been paid for. Owners equity refers to a sole proprietorship. In a partnership owners equity is referred to as Partners Equity or Capital. In a corporation owners equity is referred to as Shareholders Equity. Profit is distributed to shareholders by paying them dividends from any profits made. Any monies reinvested into the business are referred to as Retained Earnings. Revenue : Revenue accounts are where all income is recorded. Sources of revenue may include sales, rentals, commissions, royalties, interest earned, etc. 106

7 Cost of Goods Sold: The Cost of Goods Sold is used when a business venture sells products. This account shows all of the costs associated with selling the product. Costs may include inventory, transportation, purchases, purchase discounts, packaging, and marketing. Expenses: An expense refers to the costs incurred of running the business. Expenses may include rent, insurance, utilities, advertising, other? 107

8 Start-Up Expense Schedule: This section should prove to be very simple, as most of the legwork has been completed in previous modules. Start-up Schedules include all costs incurred, or projected to be incurred, to open your business venture. It is important not to underestimate start-up costs. If you are under capitalized in the beginning it will be very difficult to go back to your lender and ask for additional money to operate your business. Income Statement: E-Spirit requires pro forma statements for this section. Pro forma is just the term used to indicate these statements are projections of what is expected to take place. Income Statements demonstrate whether the business has earned any revenue or profit from operations. A business is said to have earned a Net Profit if revenue exceeds expenses, and if the business expenses exceed revenue the business would be in a Net Loss position. Income statements indicate business performance over a given period of time. For example, income statement titles will indicate that the Income Statement is for Year/Month Ending January 30, XXXX. 108

9 Balance Sheet: The Balance Sheet provides readers financial information as of a given date, not over a given time period, for the business venture in question. The balance sheet is also known as Statement of Financial Position. The balance sheet is frequently used by financial institutions to assist in ascertaining whether to loan money to a business. Comparisons can be made between the businesses assets and liabilities for the purpose of risk assessment, assessing business performance, and planning. Cash Flow Basics: Cash flow shows the movement of cash through your business. A Cash Flow Statement will de scribe the financial situation of a business. Poor cash flow management may lead to disaster. Planning your cash flow requires projecting : How much money you require over a given period of time When you will need the money How the money will be generated Where will you spend the money When will you spend the money Now make your dreams a reality, because you know how to plan, set goals and objectives, and what you are doing!!!!!!!!! 109

Financial Statements Tutorial

Financial Statements Tutorial Financial Statement Review: Financial Statements Tutorial There are four major financial statements used to communicate information to external users (creditors, investors, suppliers, etc.) - 1. Balance

More information

Chapter 1. Introduction to Accounting and Business

Chapter 1. Introduction to Accounting and Business 1 Chapter 1 Introduction to Accounting and Business Learning Objective 1 Describe the nature of a business, the role of accounting, and ethics in business. Nature of Business and Accounting A business

More information

Bookkeeping Tips & T Accounts Prepared by Accomp Services (www.accompservices.ca)

Bookkeeping Tips & T Accounts Prepared by Accomp Services (www.accompservices.ca) Bookkeeping Tips & T Accounts Prepared by Accomp Services (www.accompservices.ca) Further valuable accounting and bookkeeping website resources are listed at the end of this document. A business is one

More information

Accounts Payable are the total amounts your business owes its suppliers for goods and services purchased.

Accounts Payable are the total amounts your business owes its suppliers for goods and services purchased. Accounts Payable are the total amounts your business owes its suppliers for goods and services purchased. Accounts Receivable are the total amounts customers owe your business for goods or services sold

More information

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information.

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information. 0 Learning Objectives: 14.1 Describe the important of accounting and financial information. 14.2 Differentiate between managerial and financial accounting. 14.3 Identify the six steps of the accounting

More information

The Basics of Accounting ACCT 201

The Basics of Accounting ACCT 201 The Basics of Accounting ACCT 201 Content Accounting definition Accounting equation Accounting elements Asset, Liabilities, & Equity Transactions Accounts Receivable vs Accounts Payable Retained Earnings

More information

Financial Plan. A) Estimated One-Time Financial Requirements. Part One

Financial Plan. A) Estimated One-Time Financial Requirements. Part One Financial Plan The Financial Plan is perhaps one of the most important components of your Business Plan (see Business Plan Handout). Not only is it essential if you are seeking external financing it is

More information

Developing Business Plans and Funding Proposals

Developing Business Plans and Funding Proposals The best source of information and training on Aboriginal finance and management The Aboriginal Finance and Management Capacity Development Series Developing Business Plans and Funding Proposals A Practical

More information

STATEMENT OF CHANGES IN FINANCIAL POSITION

STATEMENT OF CHANGES IN FINANCIAL POSITION Home Page - Statement of Changes in Financial Position STATEMENT OF CHANGES IN FINANCIAL POSITION by Dr. J. Herbert Smith/ACOA Chair Technology Management and Entrepreneurship Faculty of Engineering University

More information

Understanding Financial Statements. For Your Business

Understanding Financial Statements. For Your Business Understanding Financial Statements For Your Business Disclaimer The information provided is for informational purposes only, does not constitute legal advice or create an attorney-client relationship,

More information

Financial Statements

Financial Statements Financial Statements The financial information forms the basis of financial planning, analysis & decision making for an organization or an individual. Financial information is needed to predict, compare

More information

Financial Accounting. (Exam)

Financial Accounting. (Exam) Financial Accounting (Exam) Your AccountingCoach PRO membership includes lifetime access to all of our materials Take a quick tour by visiting wwwaccountingcoachcom/quicktour Table of Contents (click to

More information

Guide to Financial Statements Study Guide

Guide to Financial Statements Study Guide Guide to Financial Statements Study Guide Overview (Topic 1) Three major financial statements: The Income Statement The Balance Sheet The Cash Flow Statement Objectives: Explain the underlying equation

More information

FINANCIAL ACCOUNTING. Robert Libby Patricia A. Libby Daniel G. Short. Irwin/McGraw-Hill

FINANCIAL ACCOUNTING. Robert Libby Patricia A. Libby Daniel G. Short. Irwin/McGraw-Hill FINANCIAL ACCOUNTING Robert Libby Patricia A. Libby Daniel G. Short Chapter 1 Financial Statements and Business Decisions The Objectives of Financial Accounting Financial statements are the primary means

More information

Business Plan Guidelines

Business Plan Guidelines Business Plan Guidelines The following Business Plan Format checklist is meant as a guideline only listing the most important sections of the business plan in the order in which they will likely appear

More information

ALL NATIONS TRUST COMPANY SAMPLE BUSINESS PLAN

ALL NATIONS TRUST COMPANY SAMPLE BUSINESS PLAN ALL NATIONS TRUST COMPANY SAMPLE BUSINESS PLAN WHAT MAKES A GOOD BUSINESS PLAN? A business plan is a written document, which outlines: the business and owner s background the proposed resources to be used

More information

Financing Entrepreneurial Ventures Part 1 Financial Plan & Statements

Financing Entrepreneurial Ventures Part 1 Financial Plan & Statements Financing Entrepreneurial Ventures Part 1 Financial Plan & Statements Barbara Peitsch Program Director, Univ. of Michigan Peter Scott Professor of Entrepreneurship/Consultant August 2015 Economic Empowerment

More information

The Nature of Accounting Systems

The Nature of Accounting Systems Basic Accounting & Budgeting February 4, 2009 The Nature of Accounting Systems Accounting is the process of recording, classifying, summarizing, reporting and interpreting information about the economic

More information

CASH FLOW STATEMENT. MODULE - 6A Analysis of Financial Statements. Cash Flow Statement. Notes

CASH FLOW STATEMENT. MODULE - 6A Analysis of Financial Statements. Cash Flow Statement. Notes MODULE - 6A Cash Flow Statement 30 CASH FLOW STATEMENT In the previous lesson, you have learnt various types of analysis of financial statements and its tools such as comparative statements, common size

More information

Understanding A Firm s Financial Statements

Understanding A Firm s Financial Statements CHAPTER OUTLINE Spotlight: J&S Construction Company (http://www.jsconstruction.com) 1 The Lemonade Kids Financial statement (accounting statements) reports of a firm s financial performance and resources,

More information

BUSINESS PLAN TEMPLATE

BUSINESS PLAN TEMPLATE PARRY SOUND AREA COMMUNITY BUSINESS & DEVELOPMENT CENTRE INC. A Community Futures Development Corporation 1A Church Street, Parry Sound, ON P2A 1Y2 Telephone: (705)746-4455 Toll Free: 1-888-746-4455 Fax:

More information

Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods TABLE OF CONTENTS

Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods TABLE OF CONTENTS Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods Module 2: Preparing for Capital Venture Financing Financial Forecasting Methods 1.0 FINANCIAL FORECASTING METHODS 1.01 Introduction

More information

RENAISSANCE ENTREPRENEURSHIP CENTER First Finance Class (FIN-1)

RENAISSANCE ENTREPRENEURSHIP CENTER First Finance Class (FIN-1) Finance 1 (FIN-1) RENAISSANCE ENTREPRENEURSHIP CENTER (FIN-1) Learning Outcomes At the conclusion of this class, you should: Know what will be covered in the six finance class sessions. Have reviewed some

More information

Cash Flow Forecasting & Break-Even Analysis

Cash Flow Forecasting & Break-Even Analysis Cash Flow Forecasting & Break-Even Analysis 1. Cash Flow Cash Flow Projections What is cash flow? Cash flow is an estimate of the timing of when the cash associated with sales will be received and when

More information

MODULE 4. Operations Plan

MODULE 4. Operations Plan Introduction: The is a key component for most business concerns. This is particularly true for manufacturing and assembly businesses that need to identify uses of technology, production timetables, inventory

More information

SMALL BUSINESS PLANNER

SMALL BUSINESS PLANNER SMALL BUSINESS PLANNER As a business owner, you will spend a great deal of time considering your business, how it will look in the beginning and how it will look in the future. Writing a business plan

More information

Management & Principles of Accounting Date: 09/11/2015 Introduction to financial accounting Basic concepts and tools

Management & Principles of Accounting Date: 09/11/2015 Introduction to financial accounting Basic concepts and tools Management & Principles of Accounting Date: 09/11/2015 Introduction to financial accounting Basic concepts and tools Patrizia Tettamanzi Sophie Goodman Source: Kimmel/Weygandt/Kieso Financial Accounting

More information

How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute

How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute Other free books by BizMove that may interest you: Free starting a business books Free management skills

More information

* * * Chapter 15 Accounting & Financial Statements. Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

* * * Chapter 15 Accounting & Financial Statements. Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 15 Accounting & Financial Statements Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall Bookkeeping vs. Accounting Bookkeeping Accounting The recording of business transactions.

More information

Review of Accounting Principles

Review of Accounting Principles Appendix A Review of Accounting Principles Appendix A is a review of basic accounting principles and procedures. Standard accounting procedures are based on the double-entry system. This means that each

More information

PREPARING FINAL ACCOUNTS. part

PREPARING FINAL ACCOUNTS. part 15_1312MH_CH09 27/1/05 8:38 am Page 87 PREPARING part 3 FINAL ACCOUNTS 9 The final accounts of sole traders 10 Accounting principles, concepts and policies 11 Depreciation and fixed assets 12 Bad debts

More information

E2-2: Identifying Financing, Investing and Operating Transactions?

E2-2: Identifying Financing, Investing and Operating Transactions? E2-2: Identifying Financing, Investing and Operating Transactions? Listed below are eight transactions. In each case, identify whether the transaction is an example of financing, investing or operating

More information

Assessing Viability and Feasibility of Business Ideas. Dr. Neeraj Pandey Assistant Professor LM Thapar School of Management

Assessing Viability and Feasibility of Business Ideas. Dr. Neeraj Pandey Assistant Professor LM Thapar School of Management Assessing Viability and Feasibility of Business Ideas Dr. Neeraj Pandey Assistant Professor LM Thapar School of Management WHY NEW VENTURES FAIL Lack of Objective Evaluation No Real Insight into the Market

More information

ALBERTA INDIAN INVESTMENT CORPORATION (AIIC)

ALBERTA INDIAN INVESTMENT CORPORATION (AIIC) ALBERTA INDIAN INVESTMENT CORPORATION (AIIC) Business plan information request Alberta Indian Investment Corporation Required Client Information Starting or operating a business can provide you the entrepreneur

More information

Financial. Management FOR A SMALL BUSINESS

Financial. Management FOR A SMALL BUSINESS Financial Management FOR A SMALL BUSINESS 1 Agenda Welcome, Pre-Test, Agenda, and Learning Objectives Benefits of Financial Management Budgeting Bookkeeping Financial Statements Business Financing Key

More information

Bean Counter's Accounting and Bookkeeping "Cheat Sheet"

Bean Counter's Accounting and Bookkeeping Cheat Sheet Page 1 of 6 Bean Counter's ing and Bookkeeping "Cheat Sheet" Provided by: Bean Counter Source Documents ( Invoices, Checks, etc.) Journals -Transactions first recorded using Debits and s General Ledger

More information

how to finance the business

how to finance the business A DV I C E B O O K L E T how to finance the business HOW TO FINANCE THE BUSINESS Getting enough of the right funding is one of the more difficult tasks that you will face as a new entrepreneur. Typically,

More information

Glossary of Accounting Terms Peter Baskerville

Glossary of Accounting Terms Peter Baskerville Glossary of Accounting Terms Peter Baskerville Account for or 'bring to account': An accounting phrase used to describe the recording of a financial transaction that is required under the generally accepted

More information

how to prepare a cash flow statement

how to prepare a cash flow statement business builder 4 how to prepare a cash flow statement zions business resource center zions business resource center 2 how to prepare a cash flow statement A cash flow statement is important to your business

More information

Financial Statements and Ratios: Notes

Financial Statements and Ratios: Notes Financial Statements and Ratios: Notes 1. Uses of the income statement for evaluation Investors use the income statement to help judge their return on investment and creditors (lenders) use it to help

More information

Plan and Track Your Finances

Plan and Track Your Finances Plan and Track Your Finances 9.1 Financing Your Business 9.2 Pro Forma Financial Statements 9.3 Recordkeeping for Businesses Lesson 9.1 Financing Your Business Goals Estimate your startup costs and personal

More information

Assets, Liabilities, and Net Worth

Assets, Liabilities, and Net Worth Assets, Liabilities, and Net Worth C H A P T E R 3 OVERVIEW Assets, liabilities, and net worth are part of the language of finance. As such, it is important to understand both their composition and how

More information

Preparing a Successful Financial Plan

Preparing a Successful Financial Plan Topic 9 Preparing a Successful Financial Plan LEARNING OUTCOMES By the end of this topic, you should be able to: 1. Describe the overview of accounting methods; 2. Prepare the three major financial statements

More information

Module 2: Preparing for Capital Venture Financing Building Pro-Forma Financial Statements

Module 2: Preparing for Capital Venture Financing Building Pro-Forma Financial Statements Module 2: Preparing for Capital Venture Financing Building Pro-Forma Financial Statements Module 2: Preparing for Capital Venture Financing Building Pro-Forma Financial Statements TABLE OF CONTENTS 1.0

More information

Using Accounts to Interpret Performance

Using Accounts to Interpret Performance Using s to Interpret Performance ing information is used by stakeholders to judge the performance and efficiency of a business Different stakeholders will look for different things: STAKEHOLDER Shareholders

More information

SMALL BUSINESS OWNER S HANDBOOK

SMALL BUSINESS OWNER S HANDBOOK SMALL BUSINESS OWNER S HANDBOOK PART II: FINANCIAL PLANNING FOR SMALL BUSINESSES Introduction Financial Planning Methods of Financing Your Business Other Types of Funds & Financing How to Approach Lenders

More information

EasyPC Training. Accounting Basics

EasyPC Training. Accounting Basics EasyPC Training Accounting Basics Contents Accounting Basics... 3 The Accounting Equation... 3 Assets... 3 Liabilities... 3 Owner s Equity... 3 The Balance Sheet... 5 Double Entry Bookkeeping... 6 Ledger

More information

INTERNATIONAL ACCOUNTING STANDARDS. CIE Guidance for teachers of. 7110 Principles of Accounts and. 0452 Accounting

INTERNATIONAL ACCOUNTING STANDARDS. CIE Guidance for teachers of. 7110 Principles of Accounts and. 0452 Accounting www.xtremepapers.com INTERNATIONAL ACCOUNTING STANDARDS CIE Guidance for teachers of 7110 Principles of Accounts and 0452 Accounting 1 CONTENTS Introduction...3 Use of this document... 3 Users of financial

More information

ACS 1803 Accounting SUPPLEMENTARY NOTES prepared by E. Kaluzniacky & K. Augustine. Computerized Accounting - The General Ledger System

ACS 1803 Accounting SUPPLEMENTARY NOTES prepared by E. Kaluzniacky & K. Augustine. Computerized Accounting - The General Ledger System ACS 1803 Accounting SUPPLEMENTARY NOTES prepared by E. Kaluzniacky & K. Augustine Computerized Accounting - The General Ledger System Every business must keep track of financial information that relates

More information

What is a business plan?

What is a business plan? What is a business plan? A business plan is the presentation of an idea for a new business. When a person (or group) is planning to open a business, there is a great deal of research that must be done

More information

STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS

STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS C H A P T E R 1 0 STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS I N T R O D U C T I O N Historically, profit-oriented businesses have used the accrual basis of accounting in which the income statement,

More information

CASH FLOW STATEMENT & BALANCE SHEET GUIDE

CASH FLOW STATEMENT & BALANCE SHEET GUIDE CASH FLOW STATEMENT & BALANCE SHEET GUIDE The Agriculture Development Council requires the submission of a cash flow statement and balance sheet that provide annual financial projections for the business

More information

Accounting Self Study Guide for Staff of Micro Finance Institutions

Accounting Self Study Guide for Staff of Micro Finance Institutions Accounting Self Study Guide for Staff of Micro Finance Institutions LESSON 2 The Balance Sheet OBJECTIVES The purpose of this lesson is to introduce the Balance Sheet and explain its components: Assets,

More information

ACCOUNTING IN ACTION CHAPTER 1... OVERVIEW SUMMARY OF STUDY OBJECTIVES

ACCOUNTING IN ACTION CHAPTER 1... OVERVIEW SUMMARY OF STUDY OBJECTIVES CHAPTER 1.......................... ACCOUNTING IN ACTION OVERVIEW You and every other member of society depend on information to function efficiently and effectively. For example, people who invest in

More information

Accounting Basics. Prepared for First Year MBA

Accounting Basics. Prepared for First Year MBA Accounting Basics Prepared for First Year MBA Overview S No Particulars 01 Introduction to Accounting 02 Accounting Equation 03 Types of Transactions 04 Purchase and Sales 05 Types of Accounts 06 Golden

More information

How to Prepare a Cash Flow Forecast

How to Prepare a Cash Flow Forecast The Orangeville & Area Small Business Enterprise Centre (SBEC) 87 Broadway, Orangeville ON L9W 1K1 519-941-0440 Ext. 2286 or 2291 sbec@orangeville.ca www.orangevillebusiness.ca Supported by its Partners:

More information

7. Explain the basic assumptions and principles underlying financial statements.

7. Explain the basic assumptions and principles underlying financial statements. CHAPTER 1 Introduction to Financial Statements Study Objectives 1. Describe the primary forms of business organization. 2. Identify the users and uses of accounting information. 3. Explain the three principal

More information

UNDERSTANDING WHERE YOU STAND. A Simple Guide to Your Company s Financial Statements

UNDERSTANDING WHERE YOU STAND. A Simple Guide to Your Company s Financial Statements UNDERSTANDING WHERE YOU STAND A Simple Guide to Your Company s Financial Statements Contents INTRODUCTION One statement cannot diagnose your company s financial health. Put several statements together

More information

The Accounting Equation & Transaction Analysis

The Accounting Equation & Transaction Analysis HOSP 1210 (Financial Acct) Learning Centre The Accounting Equation & Transaction Analysis Economic transactions must be classified into categories: assets, liabilities, and net worth. Assets (A) are resources

More information

Plan and Track Your Finances

Plan and Track Your Finances Chapter 9 Plan and Track Your Finances 9.1 Finance Your Business 9.2 Pro Forma Financial Statements 9.3 Record Keeping for Businesses Ideas in Action Electronic Safekeeping Katelin Shea addressed the unmet

More information

Financial. Management FOR A SMALL BUSINESS

Financial. Management FOR A SMALL BUSINESS Financial Management FOR A SMALL BUSINESS Welcome 1. Agenda 2. Ground Rules 3. Introductions FINANCIAL MANAGEMENT 2 Objectives Explain the concept of financial management and its importance to a small

More information

Ipx!up!hfu!uif Dsfeju!zpv!Eftfswf

Ipx!up!hfu!uif Dsfeju!zpv!Eftfswf Ipx!up!hfu!uif Dsfeju!zpv!Eftfswf Credit is the lifeblood of South Louisiana business, especially for the smaller firm. It helps the small business owner get started, obtain equipment, build inventory,

More information

Current liabilities and payroll

Current liabilities and payroll Chapter 12 Current liabilities and payroll Current liabilities are obligations that the business has to discharge within 12 months or its operating cycle if longer than one year. Obligations that are due

More information

Introduction. 15.511 Corporate Accounting Summer 2004. Professor SP Kothari Sloan School of Management Massachusetts Institute of Technology

Introduction. 15.511 Corporate Accounting Summer 2004. Professor SP Kothari Sloan School of Management Massachusetts Institute of Technology Introduction 15.511 Corporate Accounting Summer 2004 Professor SP Kothari Sloan School of Management Massachusetts Institute of Technology June 7, 2004 1 Session 1: Agenda Administrative matters Discussion

More information

Understanding Basic Financial Statements

Understanding Basic Financial Statements Understanding Basic Financial Statements During the accounting cycle, the accounting system is used to track, organize and record the financial transactions of an organization. At the close of each period,

More information

SMALL BUSINESS DEVELOPMENT CENTER RM. 032

SMALL BUSINESS DEVELOPMENT CENTER RM. 032 SMALL BUSINESS DEVELOPMENT CENTER RM. 032 FINANCING THROUGH COMMERCIAL BANKS Revised January, 2013 Adapted from: National Federation of Independent Business report Steps to Small Business Financing Jeffrey

More information

UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEXAS REGION 6 MONTHLY OPERATING REPORT

UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEXAS REGION 6 MONTHLY OPERATING REPORT ACCRUAL BASIS JUDGE: UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEXAS REGION 6 MONTHLY OPERATING REPORT MONTH ENDING: MONTH YEAR IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED

More information

CHAE Review. Capital Leases & Forms of Business

CHAE Review. Capital Leases & Forms of Business CHAE Review Financial Statements, Capital Leases & Forms of Business This is a complete review of the two volume text book, Certified Hospitality Accountant Executive Study Guide, as published by The Educational

More information

B. Division of Costs The purpose of a Manufacturing Account is to ascertain Cost of Production ( ).

B. Division of Costs The purpose of a Manufacturing Account is to ascertain Cost of Production ( ). Manufacturing Accounts ( ) S5 Manufacturing Account/LWL A. Function of a Manufacturing Acccount For those businesses which deal with manufacturing products. It is common in today s business to act both

More information

Workbook 1 Buying and Selling

Workbook 1 Buying and Selling Contents Highlights... 2 Quick Practice Session on Buying and Selling... 2 Financial Quiz 1 - Buying & Selling... 3 Learning Zone Buying and Selling... 3 Talk the talk... 4 Understand the link between

More information

CHAPTER 14: THE ROLE OF ACCOUNTANTS AND ACCOUNTING INFORMATION

CHAPTER 14: THE ROLE OF ACCOUNTANTS AND ACCOUNTING INFORMATION CHAPTER 14: THE ROLE OF ACCOUNTANTS AND ACCOUNTING INFORMATION I. What Is Accounting and Who Uses Accounting Information? Accounting is a comprehensive system for collecting, analyzing, and communicating

More information

Chapter 14. 1 Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Chapter 14. 1 Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall. Chapter 14 1 Identify the purposes of the statement of cash flows Distinguish among operating, investing, and financing cash flows Prepare the statement of cash flows by the indirect method Identify noncash

More information

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL)

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Page 1 ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Complete these sample exam problems/objective questions and check your answers with the solutions at the end of the review file and identify where

More information

Exam 1 chapters 1-4 Needles 10ed

Exam 1 chapters 1-4 Needles 10ed Exam 1 chapters 1-4 Needles 10ed Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following is the most appropriate definition of accounting?

More information

Introduction. 15.501/516 Accounting Spring 2004. Professor Sugata Roychowdhury Sloan School of Management Massachusetts Institute of Technology

Introduction. 15.501/516 Accounting Spring 2004. Professor Sugata Roychowdhury Sloan School of Management Massachusetts Institute of Technology Introduction 15.501/516 Accounting Spring 2004 Professor Sugata Roychowdhury Sloan School of Management Massachusetts Institute of Technology Feb 4, 2004 1 Session 1: Agenda Administrative matters Discussion

More information

Dealing With Your Banker &

Dealing With Your Banker & Dealing With Your Banker & Other Lenders Your financing The success or failure of your business will depend on whether or not you have enough capital to: buy the equipment and inventory you need; pay overhead

More information

PLANNING FOR SUCCESS P a g e 0

PLANNING FOR SUCCESS P a g e 0 PLANNING FOR SUCCESS P a g e 0 PLANNING FOR SUCCESS P a g e 1 Planning for Success: Your Guide to Preparing a Business and Marketing Plan This guide is designed to help you put together a comprehensive,

More information

Financial Statements. Chapter 19 Study Guide

Financial Statements. Chapter 19 Study Guide Financial Statements Chapter 19 Study Guide Financial Statements Discuss the nature of a consolidated financial statement? Understand the relationship between the work sheet and the financial statements.

More information

Balance Sheet Accounts

Balance Sheet Accounts Page 1 of 6 Balance Sheet Accounts The Chart of Accounts is normally arranged or grouped by the Major Types of Accounts. The Balance Sheet Accounts (Assets, Liabilities, & Equity) are presented first,

More information

Financial Statements LESSON 15. What are Financial Statements?

Financial Statements LESSON 15. What are Financial Statements? Financial Statements LESSON 15 Main Idea Business owners must have accurate and timely information about the fi nancial status of their business to make the best decisions. Most of this fi nancial information

More information

BUSINESS PLAN TEMPLATE

BUSINESS PLAN TEMPLATE iplanner.net Small Business Plans Online BUSINESS PLAN TEMPLATE For a start-up company 18/01/2012 12:33:19(GMT) Executive Summary... 3 Business Overview... 3 Products and Services... 3 Sales Forecast...

More information

Basic Accounting Principles

Basic Accounting Principles Basic Accounting Principles Basic Accounting Model The basic accounting model represents the relationship between assets (what the company owns), liabilities (what the company owes), and owner s equity

More information

Business Plan Worksheet

Business Plan Worksheet SKILLSPEI First Steps for Business Owners Business Plan Worksheet Page 1 of 28 Business Plan Worksheet This outline is designed to assist you in developing a business plan, which will help you determine

More information

Article Accounting Terminology

Article Accounting Terminology Article Accounting Terminology Contents Page 1. Accounting Period... 4 2. Accounts Payable (Sundry Creditors)... 4 3. Accounts Receivable (Sundry Debtors)... 4 4. Assets... 4 5. Benchmarks... 4 6. B.O.S.

More information

Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle

Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Page 1 of 27 Module 3: Adjusting the accounts, preparing the statements, and completing the accounting cycle Overview In Module 2 you studied the fundamental steps in recording accounting information by

More information

Business Plan Outline

Business Plan Outline Business Plan Outline Submitted To: The Community Development Transportation Lending Services, Inc., CDTLS Insert your Business Logo Here (if you have one) Insert Your Business Name Here Phone Number Here

More information

Basic Business Plan Outline

Basic Business Plan Outline Basic Business Plan Outline A business plan needs to be a well thought out, honest, appraisal of the business and opportunity. This outline is meant to be used for your road map. It should be a living

More information

Financial Statement Analysis: An Introduction

Financial Statement Analysis: An Introduction Financial Statement Analysis: An Introduction 2014 Level I Financial Reporting and Analysis IFT Notes for the CFA exam Contents 1. Introduction... 3 2. Scope of Financial Statement Analysis... 3 3. Major

More information

Accounting 101 you don t have to be an accountant to run MYOB Your Daily Lives Cash vs. Accrual Accounting

Accounting 101 you don t have to be an accountant to run MYOB Your Daily Lives Cash vs. Accrual Accounting MYOB US, Inc. April 2002 Accounting 101 Like all small business owners, you went into business with a dream: to sell your unique product or services and make a living for you, your family, and your employees.

More information

The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET. Initial Paid-in Capital. An Example Entity. Transaction 2.

The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET. Initial Paid-in Capital. An Example Entity. Transaction 2. The Double-Entry System EFFECTS OF TRANSACTIONS ON THE BALANCE SHEET 2001 Richard S. Barr Transaction: Any event that affects the entity's financial position and requires recording Every accounting transaction

More information

Bookkeeping Proficiency

Bookkeeping Proficiency Bookkeeping Proficiency (Exam) Your AccountingCoach PRO membership includes lifetime access to all of our materials. Take a quick tour by visiting www.accountingcoach.com/quicktour. Table of Contents (click

More information

6. Financial Planning. Break-even. Operating and Financial Leverage.

6. Financial Planning. Break-even. Operating and Financial Leverage. 6. Financial Planning. Break-even. Operating and Financial Leverage. Financial planning primarily involves anticipating the impact of operating, investment and financial decisions on the firm s future

More information

Cash Flow Statement. Introduction. Introd. Contd. Chapter 4

Cash Flow Statement. Introduction. Introd. Contd. Chapter 4 Cash Flow Statement Chapter 4 Introduction Management and other interested external parties have always recognized the need for a cash flow statement but it was never required until the FASB (Financial

More information

Income Measurement and Profitability Analysis

Income Measurement and Profitability Analysis PROFITABILITY ANALYSIS The following financial statements for Spencer Company will be used to demonstrate the calculation of the various ratios in profitability analysis. Spencer Company Comparative Balance

More information

The Accounting Equation & Transaction Analysis

The Accounting Equation & Transaction Analysis HOSP 1860 (Financial Acct) Learning Centre The Accounting Equation & Transaction Analysis A business must always have a balance between what it owns and what it owes. This is shown by the basic accounting

More information

1 Money and income Currency currency notes (banknotes) coins cash bank deposits BrE: note or banknote; on paper AmE: bill

1 Money and income Currency currency notes (banknotes) coins cash bank deposits BrE: note or banknote; on paper AmE: bill 1 A B Money and income Currency The money used in a country euros, dollars, yen, etc. is its currency. Money in notes (banknotes) and coins is called cash. Most money, however, consists of bank deposits:

More information

Ratios and interpretation

Ratios and interpretation Unit Ratios and interpretation As we learnt in our earlier studies, accounting information is used to answer two key questions about a business: Is it making a profit? Are its assets sufficient to meet

More information

RATIO ANALYSIS AND BUSINESS VIABILITY

RATIO ANALYSIS AND BUSINESS VIABILITY RATIO ANALYSIS AND BUSINESS VIABILITY Timeframe: Learning Outcome: Recommended reading: Section overview 18 hours Apply ratio analysis in determining the viability of a business. Marx, J., de Swardt, C.,

More information

Preparing Agricultural Financial Statements

Preparing Agricultural Financial Statements Preparing Agricultural Financial Statements Thoroughly understanding your business financial performance is critical for success in today s increasingly competitive agricultural environment. Accurate records

More information