...CHAPTER 2: Recording Process ( SWD: Lecture Review) What is an account? An account is an accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. For example, Softbyte (the company discussed in Chapter 1) would have separate accounts for Cash, Accounts Receivable, Accounts Payable, Service Revenue, and Salaries Expense. In its simplest form, an account consists of three parts: (1) a title, (2) a left or debit side, and (3) a right or credit side. Because the format of an account resembles the letter T, we refer to it as a T account. Debits and Credits The terms debit and credit are directional signals: Debit indicates left, and credit indicates right.They indicate which side of a T account a number will be recorded on. Entering an amount on the left side of an account is called debiting the account. Making an entry on the right side is crediting the account.We commonly abbreviate debit as Dr. and credit as Cr. Double-entry accounting system • Each transaction must affect two or more accounts to keep the basic accounting equation in balance. • Recording done by debiting at least one account and crediting another. • DEBITS must equal CREDITS. If Debits are greater than Credits, the account will have a debit balance. If Credits are greater than Debits, the account will have a credit balance. The normal balance of an account is on the side where an increase in the account is recorded. The Journal Companies initially record transactions...
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...Chapter 2 Financial Reporting and Analysis REVIEW Financial statements are the most visible products of a company’s financial reporting process. The financial reporting process is governed by accounting rules and standards, managerial incentives, and enforcement and monitoring mechanisms. It is important for a user of financial information to understand the financial reporting environment along with the accounting information presented in financial statements. In this chapter, the concepts underlying financial reporting are discussed with special emphasis on accounting rules. Next the purpose of financial reporting is discussed – its objectives and how these objectives determine both the quality of the accounting information and the principles that underlie the accounting rules. The relevance of accounting information for business analysis and valuation is also discussed and limitations of accounting information are identified. Last, accrual accounting is discussed including the strengths and limitation of accruals, and the implications of accruals for financial statement analysis. OUTLINE | | |Financial Reporting Environment | |Statutory Financial Reports ...
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...(1) Uses of Accounting Information and the Financial Statements a. Accounting as an Information System i. Accounting is an information system that measures, processes, and communicates financial information about an economic entity. Accountants focus on the needs of decision makers. ii. External decision makers use financial accounting reports to evaluate how well a business has achieved its goals. These reports are called financial statements. iii. The primary external users of accounting information are investors and creditors. Users with indirect financial interests include, among others, tax authorities (IRS) and regulatory agencies (SEC). b. The Corporate Form of Business i. There are three basic forms of business: 1. Sole Proprietorship: One person is the owner, takes all the profits or losses of the business, and is liable for all of its obligations. 2. Partnership: Two or more owners (“partners”) share the profits and losses of the business according to a prearranged formula. Legally, there is no economic separation between the owners and the business. This unlimited liability of its partners is a key disadvantage of a partnership. 3. Corporation: A business unit chartered by the state that is legally separate from its owners (“stockholders”). Stockholders enjoy limited liability. 4. Limited Liability Company (MM addition): c. The Financial Statements and their Elements i. Income Statement 1. Many people consider the income statement (aka the “Statement...
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...Chapter 2 Pages 85-86 (2-1) An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined federal and state tax bracket. What is the bond’s after-tax yield? We have 9% pretax yield X 36% combined taxes = .09x.36=.0324 (3%) .09-.0324=.0576 (6%) The after tax yield= %6 (2-2) Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds? After Tax Yield (ATy) = (Before tax yield, BTy)(1-T) (8%)(1-T) = (6%)(1-0) = 6% (.08(1-T) = .06 .08 - .08T = .06 -.08T = .06-.08 -.08T = -.02 T = .02/.08 = 25% (2-3) Molteni Motors Inc. recently reported $6 million of net income. Its EBIT was $13 million, and its tax rate was 40%. What was it’s interest expense? Net Income = $6,000,000 Tax rate = 40% EBT = NET Income/ (1-T) = $6,000,000/ (1-.40) = $10,000,000 EBT = EBIT – Interest Expense EBT = $13,000,000 – $10,000,000 Interest expense = $3,000,000 (2-4) Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? EBT = Net Income/ (1-T) = 2,400,000/ (1-.40) = $4,000,000 Tax = EBT * T = $4,000,000 * 40% = $1,600,000 Dep. & Amort. = Earning after Interest but before Depreciation – EBT Dep & Amort. = $6,000,000 - $4,000,000 =$2,000,000 (2-5) Kendall...
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...N (Prerequisite: ACC 557 or ACC 556) COURSE DESCRIPTION Introduces the concepts of finance. Reviews the basic tools and their use for making financial decisions. Explains how to measure and compare risks across investment opportunities. Analyzes how the firm chooses the set of securities it will issue to raise capital from investors as well as how the firm’s capital structure is formed. Examines how the choice of capital structure affects the value of the firm. Presents valuation and integrate risk, return and the firm’s choice of capital structure. INSTRUCTIONAL MATERIALS Required Resources Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management (14th ed.). Mason, OH: South-Western Cengage Learning. Supplemental Resources MBA Primer Note: The MBA Primer is designed to help students with little or no educational background in business to prepare for the rigors of an MBA program. The MBA Primer is also a useful tool for students who have the business background but might need a refresher. It is a way to help you prepare for the types of activities and concepts that will be covered in the MBA program, so you can feel more comfortable and confident as you progress into higher level courses. Students are emailed an access code for this product when they purchase MBA Primer from the Strayer Bookstore, accessible through iCampus. CNN Money. (2013). General format. Retrieved from http://money.cnn.com/ Criniti, A. (2013). The necessity of finance. Philadelphia...
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...NORTHEASTERN UNIVERSITY D’Amore-McKim School of Business ACCT1201: FINANCIAL ACCOUNTING & REPORTING Fall 2015 Professor: Cynthia Jackson Class days/time/location: MWTh/1:35-2:40 p.m./70 Dodge Hall MWTh/4:35-5:40 p.m./70 Dodge Hall Office hours/location: M/12:00-1:00 p.m./404 Hayden Hall W/3:00-4:00 p.m./404 Hayden Hall and by appointment Network/Voice-mail: 617-373-4643 E-mail: c.jackson@neu.edu Teaching Assistant: Nghia (Mash) Pham E-mail: pham.ng@husky.neu.edu Office location: 439 Dodge Hall/TBA Course Materials: • TEXT: Financial Accounting, 8th edition, Libby, Libby, & Short (Irwin McGraw-Hill) • Connect Plus • Learn Smart • Simple 4-function calculator Text and Connect Plus Options • Hardcover (including Connect Plus plus ebook access) o $303 at the Bookstore (resale value approximately $137 at the Booskstore) • Ebook and Connect Plus o $105 – online purchase o Valid for both semesters of this course • Connect Plus only o $76 – online purchase o No ebook or text material included o You can use this option if you have purchased a 2nd hand text • Looseleaf Text o $40 “upgrade” – you must have purchased one of the Connect Plus options o Online purchase through Connect Plus o This is a black & white, 3-hole punched...
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...College of City University CM20269 Financial Management – Semester B 2012/13 |Name |Office (AC 2) |Office Phone No. |E-mail | |Mr. Toby Butt |Room: 6217 |3442 4969 |mkbutt@cityu.edu.hk | |Mr. Joe Pong |Room: 5429 |3442 6943 |hkpong@cityu.edu.hk | |Mr. Kennix Chiu |Room: 5416 |3442 7585 |swchiu@cityu.edu.hk | |Ms. Maria Wong |Room: 5423 |3442 9762 |laikwong@cityu.edu.hk | Course Aims: Provide students with some fundamental concepts of modern financial management theory relevant to making operating and investment decisions. The course also introduces some of the core financial management and decision making techniques used in the business world. Course Intended Learning Outcomes (CILOs) Upon successful completion of this course, students should be able to: 1. Describe the financial environment, agency costs, the goals of the participants, and the basic structure of Hong Kong financial and banking systems 2. Explain working capital policies and apply working capital management tools 3. Apply the concepts of risk-return trade-off and time value of money in financial management decisions, and in stock, bond...
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...College of City University BUS20269 Financial Management – Semester A 2013/14 |Name |Office (AC 2) |Office Phone No. |E-mail | |Mr. Toby Butt |Room: 6217 |3442 4969 |mkbutt@cityu.edu.hk | |Mr. Joe Pong |Room: 5429 |3442 6943 |hkpong@cityu.edu.hk | |Mr. Kennix Chiu |Room: 5416 |3442 7585 |swchiu@cityu.edu.hk | |Mr. Peter Yip |Room: 5406 |3442 7903 |peteryip@cityu.edu.hk | Course Aims: Provide students with some fundamental concepts of modern financial management theory relevant to making operating and investment decisions. The course also introduces some of the core financial management and decision making techniques used in the business world. Course Intended Learning Outcomes (CILOs) Upon successful completion of this course, students should be able to: 1. Describe the financial environment, agency costs, the goals of the participants, and the basic structure of Hong Kong financial and banking systems 2. Explain working capital policies and apply working capital management tools 3. Apply the concepts of risk-return trade-off and time value of money in financial management decisions, and in stock, bond...
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...2016 FRM Exam Study Guide ® The designation recognized by risk management professionals worldwide 2016 Financial Risk Manager (FRM®) Exam Study Guide TOPIC OUTLINE, READINGS, able to deal with them effectively. As TEST WEIGHTINGS such, the Exams are comprehensive in The Study Guide sets forth primary nature, testing a candidate on a number topics and subtopics covered in the FRM of risk management concepts and Exam Part I and Part II. The topics were approaches. selected by the FRM Committee as ones that risk managers who work in practice today have to master. The topics and READINGS Questions for the FRM Exams are related their respective weightings are reviewed to and supported by the readings listed yearly to ensure the Exams are timely under each topic outline. These readings and relevant. The study Guide also were selected by the FRM Committee contains a full listing of all the readings to assist candidates in their review of that are recommended as preparation the subjects covered by the Exams. It is for the FRM Exam Part I and Part II. strongly suggested that candidates review Key concepts (knowledge points) these readings in depth prior to sitting for appear as bullet points at the beginning each exam. All of the readings listed in the of each section and are intended to help FRM Study guide are available through candidates identify the major themes GARP. Further...
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...result in you failing this course or being withdrawn from this course by your instructor, School of Business Dean’s Office or by the Graduate Studies Department. The course syllabus provides a general plan for the course; deviations may be necessary. COURSE PREREQUISITE: All MBA Foundations classes must be completed or waived before enrollment in FIN 611. REQUIRED MATERIALS: 1. Textbook – Corporate Finance: The Core, by J. Berk and P. DeMarzo, published by Prentice Hall, ISBN (10‐digit) 0132153688. Available in loose leaf (3‐ring) format in the U Tampa bookstore. Textbook are also available as an e‐book from coursesmart: 1 Revised 08/21/2012 2. Cases and readings: available from www.study.net – available by 8/27/12 3. Additional files and readings will be distributed via Blackboard 4. Calculator - A financial calculator is required for this class. A Hewlett Packard 10B or a Texas Instruments BAII+ is ideal. Other brands/models may also suffice. Bring your calculator to class every day. Be sure you know how to use it. 5. Laptop computer – Many students find it useful to use their laptop computer during class. This is not required. Any student using a laptop during class is expected to stay fully focused on the subject at hand at all times – no e-mail, internet, etc....
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...2 BASIS FINANCIAL STATEMENTS Chapter Summary Financial statements are the primary means of communicating financial information to users. Chapter 2 covers the income statement, balance sheet, and statement of cash flows. Chapter 1 set forth the objectives of the financial reporting process, and offered the observation that these objectives are met in large part by a set of financial statements. In this chapter, we take up the task of introducing the balance sheet, income statement, and the statement of cash flows. The presentation is organized around the accounting equation. The equation serves as the basis for elementary transaction analysis. A continuing illustration examines the impact of a number of simple transactions upon the balance sheet of a simple service business. Revenue and expense transactions have been included so that we might introduce the income statement and statement of cash flows at an elementary level. This in turn has provided the opportunity to discuss and illustrate statement articulation. Before closing, the chapter emphasizes the importance of adequate disclosure regarding both financial and nonfinancial information, thereby reinforcing the Chapter 1 theme that the financial...
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...working knowledge of financial management by learning to develop a systematic approach to financial analysis; to apply techniques for | |planning, forecasting, and managing; as well as to evaluate and recommend improvements in the organization's financial performance. | | | |III. PREREQUISITES | | | |FIN 5001 OR FINP 5008 and ACTP 5001 | | | |IV. LEARNING OUTCOMES | |Entrance Competencies: | |1) Construct and analyze the financial statements of corporations...
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...2015/2016 Trimester II Course Code and Course Name: INBA 6370 - FINANCIAL STATEMENT ANALYSIS FOR GLOBAL FIRMS Course Type: Core Level: Year 1 Lecturer: Mr. Andre Taitt Lecturer’s e-mail: andre.taitt@fac.gsb.tt Lecturer’s phone #: 1-868-685-5631 Learning Assurance Officer: Alana Ifill Prerequisite/co-requisite course (s): Introduction to Financial Accounting Workshop Involvement of other institutions for delivery: None 1 1.0 Vision and Mission of the Lok Jack GSB Our purpose is to contribute to the development of the human and institutional capacity required to transform the business landscape and shape our own destiny. Through our comprehensive and integrated programmes and consultancy services, we provide a framework for developing new pathways for achieving sustainable growth and competitiveness The mission of the School is to improve the international competitiveness of people and organisations in the Caribbean through business education, training, consulting and research. 2.0 Quality Statement In today’s organization the non financial manager can no longer avoid financial information. Profit statements, operating budgets, and project analyses are constant part of a manager’s day. The concept of the finance and non financial manager has now become very blurred. The modern manager must have the ability to utilize the appropriate methods for analyzing, interpreting, and understanding Financial Information in order to convert this data into powerful...
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...Finance 3101: Key Questions Chapter 1 1. What does Financial Management involve? 2. What is the “Cycle of Money”? 3. How do lenders and borrowers benefit from financial intermediaries? 4. What are the four major areas of Finance? 5. What are the four types of markets for financial assets? 6. What are three ways of classifying financial markets? 7. What are the three main questions financial managers must answer? 8. What is the overriding goal of financial managers? 9. What are the five major determinants of stock prices and which are unambiguous in their impact on stock prices? Chapter 2 1. What are the principal financial statements and what does each one tell us? 2. What is the basic structure of the BS and IS? 3. Why is cash flow more important than Accounting profits? 4. What three factors make cash flow not equal to net income? 5. What are OCF, CFFA, CFTC and CFTO? 6. What is the cash flow identity and how does it relate to the BS identity? 7. Why might a firm’s OCF not all be available for distribution to investors? Chapter 3 1. How do we compare cash flows that occur at different points in time? 2. What is meant by “compounding” and “discounting”? 3. What is a time line and what purpose does it serve? 4. What are the four variables in the simple PV/FV relationship and how does each affect either PV or FV? 5. What specific question does each of the four variables answer? 6....
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...Week 1 Chapter 1 Introducing Money and the Financial System.pdf ECO-316 Week 1 Chapter 2 Money and the Payments System.pdf ECO-316 Week 1 Chapter 3 Overview of the Financial System.pdf ECO-316 Week 1 Chapter 4 Interest Rates and Rates of Return.pdf ECO-316 Week 1 Chapter 5 The Theory of Portfolio Allocation.pdf ECO-316 Week 1 Chapter 6 Determining Market Interest Rates.pdf ECO-316 Week 1 DQ 1.doc ECO-316 Week 1 DQ 2.doc ECO-316 Week 2 Chapter 10 Information and Financial Market Efficiency.pdf ECO-316 Week 2 Chapter 11 Reducing Transactions Costs and Information Costs.pdf ECO-316 Week 2 Chapter 12 What Financial Institutions Do.pdf ECO-316 Week 2 Chapter 7 Risk Structure and Term Structure of Interest Rates.pdf ECO-316 Week 2 Chapter 8 The Foreign-Exchange Market and Exchange Rates.pdf ECO-316 Week 2 Chapter 9 Derivative Securities and Derivative Markets.pdf ECO-316 Week 2 DQ 1.doc ECO-316 Week 2 DQ 2.doc ECO-316 Week 3 Assignment Impacts on Liquidity.doc ECO-316 Week 3 Chapter 13 The Business of Banking.pdf ECO-316 Week 3 Chapter 14 The Banking Industry.pdf ECO-316 Week 3 Chapter 15 Banking Regulation Crisis and Response.pdf ECO-316 Week 3 Chapter 16 Banking in the International Economy.pdf ECO-316 Week 3 Chapter 17 The Money Supply Process.pdf ECO-316 Week 3 Chapter 18 Changes in the Monetary Base.pdf ECO-316 Week 3 DQ 1.doc ECO-316 Week 3 DQ 2.doc ECO-316 Week 4 Chapter 19 Organization...
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