Today’s Target!  Thurs., Oct. 22 nd  Students will identify accounting concepts and practices related to preparation of an income statement Agenda  Start Chapter 7 Guiding Question:  “How do we close out our accounting cycle?” NOTE: Test – Chapter 6 Monday., Oct. 26 th

Reporting Financial Information  Financial information needed by managers and owners to make good business decisions can be found in the general ledger accounts. However, it’s very detailed.  To make information more usable, it’s summarized, organized and reported to the owners and managers.

Reporting Financial Information  ALL financial information must be reported if good business decisions are to be made.  A financial statement with incomplete information is similar to a book with missing pages.  Adequate Disclosure – when financial statements contain all information necessary to understand a business’s financial condition

Reporting Financial Information  Businesses always prepare financial statements at the end of each fiscal period. Example: Monthly, Annually  Income Statement  Balance Sheet

Income Statement  Reports financial information over a specific period of time, indicating the financial progress of a business in earning a net income or net loss.  Revenue = earnings from business activities  Expenses = amounts a business pays to operate the business and earn revenue  The revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period

Income Statement  All the information necessary to prepare the income statement can be found on the work sheet  Four sections (pg ) Heading Revenue Expenses Net income or net loss

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 7-1 HEADING OF AN INCOME STATEMENT page name of the company 2.name of the report 3.date of the report

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 7-1 REVENUE, EXPENSES, AND NET INCOME SECTIONS OF AN INCOME STATEMENT 1 Revenue 3 Revenue amount 4 Expenses 5 Account titles 6 Expense amount 8 Total expenses 9 Total of expenses 12 Net Income 7 Single line Calculate net income 14 Double lines 13 Record net income 2 Account title page 183

Component Percentage Analysis  Revenue is compared to two components on an income statement: Total expenses Net income  A manager analyzes relationships between these two components and the total sales to make decisions about future operations.

Component Percentage Analysis  Component percentage – percentage relationship between one financial statement item and the total that includes that item  Calculated by dividing the amount of each component by the total amount of sales  Various industries publish average percentages for similar businesses  Also beneficial to compare percentages from one fiscal period to the next

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 7-1 COMPONENT PERCENTAGE ANALYSIS OF AN INCOME STATEMENT page 184

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 7-1 INCOME STATEMENT WITH TWO SOURCES OF REVENUE AND A NET LOSS 1 Revenue 3 Revenue amounts 2 Account titles 6 Net Loss 7 Record Net Loss 5 Total Revenue 4 Total of revenue page 185

Assignment  7-1 Work Together & On Your Own  7-1 Application

Balance Sheet  Reports financial information on a specific date, indicating the financial condition of the business  A business with adequate available assets and few liabilities is in strong financial condition

Balance Sheet  All the information necessary to prepare the balance sheet can be found on the work sheet  A balance sheet has four sections: Heading (CENTER) Assets (on the LEFT) Liabilities (on the RIGHT) Owner’s Equity (on the RIGHT)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 7-2 HEADING OF A BALANCE SHEET page name of the company 2.name of the report. 3.date of the report.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 7-2 BALANCE SHEET page 187

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 7-2 ASSETS AND LIABILITIES SECTIONS OF A BALANCE SHEET page Liabilities 1 Assets Total Liabilities8 2 Account titles 3 Asset amounts Single line 7 6 Liability amounts 5 Account titles Total of liabilities 9

Capital  Companies may choose to report only the amount of current capital. It is calculated using the amounts on the worksheet CapitalNetDrawing Account + Income- AccountBalance OR-Net Loss

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 7-2 OWNER’S EQUITY SECTION OF A BALANCE SHEET page Total Liab. and Owner’s Eq.5 Total Assets 1 Owner’s Equity 2 Account title 3 Capital amount 4 Single line 6 Total of assets 8 Total of Liabilities and Owner’s Equity 9 Compare totals 10 Double lines

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 7-2 OWNER’S EQUITY REPORTED IN DETAIL ON A BALANCE SHEET page Beginning capital amount 6 Difference 8 Current capital amount 1 Beginning capital 3 Net Income 4 Drawing Ending capital 7 9 Total Liabilities and Owner’s Equity 5 Single line

Today’s Target!  Mon., Oct. 26 th  Students will demonstrate accounting concepts and practices related to preparation of a worksheet Agenda  Chapter 6 Test  Finish Chapter 7 Guiding Question:  “How do we close out our accounting cycle?” NOTE: Test – Chapter 7 – Wed., Oct. 28th

Today’s Target!  Wed., Oct. 28 th  Students will demonstrate accounting concepts and practices related to preparation of Income and Balance Sheet Statements  Agenda  Chapter 7 Review and Questions  Chapter 7 Test  AQR Carnival  Something Different Guiding Question:  “How do we close out our accounting cycle?”

Assignment  Questions on:  7-1 Application  7-2 Application  7-3 Application  Chapter 7 Study Guide  Chapter 7 Test A

Today’s Target!  Fri., Oct. 30 th  Students will demonstrate accounting concepts and practices related to preparation of Income and Balance Sheet Statements  Agenda  Chapter 7 Test  Something Different Guiding Question:  “What are the official end of month documents?”

Today’s Target!  Nov. 3 rd  Students will demonstrate accounting concepts and practices related to preparation of Income and Balance Sheet Statements Agenda  Something Different:  Researching Company Information using Accounting Concepts Guiding Question:  “How can you use Accounting data to make wise business &/or investing decisions?”

Bringing Accounting to Life….  Watch Steve Jobs Video  Read Apple Articles  Research Apple’s Financial Activity Fill out chart in packet

Today’s Target!  Nov. 5 th  Students will demonstrate accounting concepts and practices related to preparation of Income and Balance Sheet Statements Agenda  Something Different:  Researching Company Information using Accounting Concepts  Present company findings to class  Decide on stock shares – purchase stocks Guiding Question:  “How can you use Accounting data to make wise business &/or investing decisions?”

Bringing Accounting to Life….  Yahoo Finance Activity  Research given company below: Monster Beverage (MNST) Keurig Green Mountain (GMCR) Celgene (CELG) Microsoft (MSFT) Hewlet Packard (HPQ) Tesla (TSLA) Disney (DIS) Nike (NKE) IBM (IBM)  Create a brief PP about your company and it’s financial data (What’s your company, how financial secure is it, what’s happening in the news/company, your recommendations on investing into your company (future outlook etc)

Bringing Accounting to Life….  Create a brief PP about your company and it’s financial data: What’s your company How financial secure is it What’s happening in the news/company Your recommendations on investing into your company (future outlook etc.)

Today’s Target!  Nov. 9 th  Students will invest into companies presented using accounting data presented Agenda  Something Different:  Present company findings to class  Decide on stock shares – purchase stocks  Chapter 8 Guiding Question:  “How can you use Accounting data to make wise business &/or investing decisions?”

Bringing Accounting to Life…  Present information to class Using PowerPoint  Individually decide how you might invest in these companies  You have $100,000  Open Investment Spreadsheet Input stock decisions  Chapter 8