Financial Accounting Mission One Agenda Introductions Syllabus January 28, 2016 Agenda Introductions Syllabus Mission slides Problems

Accounting is crucial for success Pavlina and Singh Copyright 2016 - Mission One

Luca Pacioli: The Father of Accounting Pavlina and Singh Copyright 2016 - Mission One

The Accounting Equation Assets = Liabilities + Equity Pavlina and Singh Copyright 2016 - Mission One

Pavlina and Singh Copyright 2016 - Mission One Chart of Accounts Assets Liabilities Stockholders' Equity Current assets Current liabilities Capital by owners Cash and Cash Equivalents Accrued Expense Payable Common Stock Accounts Receivables Accounts Payable Additional Paid-In Capital Inventory Salaries and Wages Payable Supplies Utility Expense Payable Prepaid Expenses Taxes Payable Investment Securities Unearned Revenue Retained earnings Notes Receivables Dividends Payable Net Income - Dividends Non-current assets Non-current liabilities   Land Notes Payable Property, Plant and Equipment Long-Term Bonds Intangibles Deferred Tax Liabilities Pavlina and Singh Copyright 2016 - Mission One

Hannah’s Furniture Store Pavlina and Singh Copyright 2016 - Mission One

For the month ending, January 31, 2016 Income Statement Hannah's Furniture Store Income Statement For the month ending, January 31, 2016 Revenues $ 10,000 Cost of Goods Sold $ (8,000) Salaries and wage expense $ (1,500) Utility expense $ (100) Net Income $ 400 Pavlina and Singh Copyright 2016 - Mission One

Balance Sheet Hannah's Furniture Store Balance Sheet On January 31, 2016 Assets Cash $ 48,500 Accounts Receivables $ 10,000 Inventory $ 42,000 Total Assets $ 100,500   Liabilities Utility expense payable $ 100 Total Liabilities Shareholders' Equity Common Stock $ 100,000 Retained Earnings $ 400 Total Shareholders' Equity $ 100,400 Total Liabilities and Shareholders' Equity Pavlina and Singh Copyright 2016 - Mission One

Changes in Stockholders’ Equity Hannah's Furniture Store Changes in shareholders' equity For the month of January 2016 Common stock Beginning $ - New issuance $ 100,000 Total common stock Retained earnings Net Income $ 400 Dividends Total retained earnings Total common stock and retained earnings $ 100,400 Pavlina and Singh Copyright 2016 - Mission One

Statement of Cashflows Hannah's Furniture Store Statement of cash flows For the month of January 2016 Cash flow from Operations Net Income $ 400 Increase in accounts receivables $ (10,000) Increase in inventory $ (42,000) Increase in utility expense payable $ 100 Cash flow from operating activities $ (51,500) Cash flow from Investing No transactions Cash flow from investing activities $ - Cash flow from Financing Issuance of common stock $ 100,000 Cash flow from financing activities Change in cash $ 48,500 Beginning cash Ending cash Pavlina and Singh Copyright 2016 - Mission One

The Financial Accounting Model Pavlina and Singh Copyright 2016 - Mission One

The Financial Accounting Model (contd.) Pavlina and Singh Copyright 2016 - Mission One

Hannah’s Furniture Store - Trial Balance 1/1/2016 January 1/31/2016 Trial Balance Beginning Balances Transactions Adjusted Trial Balance   Debit Credit Assets: Cash  0 100,000  1,500 50,000  48,500 Accounts Receivable  10,000 10,000 Inventory  50,000  8,000 42,000 Liabilities: Utility Expense Payable  100 100 Stockholder's Equity: Common Stock  100,000 100,000 Retained Earnings Revenues: Sales Revenue: 0  10,000  Expenses: Cost of Goods Sold 8,000  Wages & Salary Expense  1,500 Utility Expense Total 169,600 110,100 Pavlina and Singh Copyright 2016 - Mission One

Hannah’s Furniture Store - Trial Balance 1/31/2016 Month End Trial Balance Adjusted Trial Balance Closing Entries Post-Closing Trial Balance   Debit Credit Assets: Cash 48,500 Accounts Receivable 10,000 Inventory 42,000 Liabilities: Utility Expense Payable 100 Stockholder's Equity: Common Stock 100,000 Retained Earnings 400 Revenues: Sales Revenue: Expenses: Cost of Goods Sold 8,000 Wages & Salary Expense 1,500 Utility Expense Total 110,100 100,500 Pavlina and Singh Copyright 2016 - Mission One

Pavlina and Singh Copyright 2016 - Mission One Two Global Standards U.S. GAAP IFRS Pavlina and Singh Copyright 2016 - Mission One

Accounting Concepts and Principles Transactions in General Ledger and then Trial Balance Financial Statements Pavlina and Singh Copyright 2016 - Mission One