1. Interpret Changes in a Financial Position Over a Period of Time
Intermediate Cost Analysis
and Management
Show Slide #1: Interpret Changes in a Financial Position Over a Period of Time
Title: Calculate Financial Position and Net Change in Financial Position
References: Handouts, Excel Spreadsheets
Facilitator’s Material and Student Material: Dry erase markers, white boards, access to Excel spreadsheets, case-studies
Facilitator’s Material: Each primary Facilitator’s should possess a lesson plan, slide deck, course handouts, practical exercises, access to Excel spreadsheets, case-studies All required references and technical manuals will be provided by the local Command.
Student Material: Students should possess course handouts, practical exercises, access to Excel spreadsheets, case-studies and standard classroom supplies.
The 21st Century Soldier Competencies are essential to ensure Soldiers and leaders are fully prepared to prevail in complex, uncertain environments. This lesson reinforces the following 21st Century Soldier Competencies:
Communication and Engagement (Oral, written, and negotiation)
Critical thinking, intergovernmental, and multinational competence
Tactical and Technical Competence
Throughout the lesson discussion seek opportunities to link the competencies with the lesson content through the student’s experiences.

2. Why is it useful to know an entity’s financial position?
Show Slide #2: Concrete Experience (Why is it useful to know an entity’s financial position?)
Facilitator’s Note: (Concrete Experience 10 minutes) Present students the slide statements Ask students what their thoughts are on “Why is it useful to know an entity’s financial position?”
Facilitator’s Note: (Publish and Process 10 minutes) The critical portion of this part of the ELM process is to force the students to reflect. Ask a series of thought influencing questions.

3. Terminal Learning Objective
Action: Interpret Changes in a Financial Position Over a Period of Time
Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy:
Classify assets & liabilities
Classify revenues and expenses (cash basis)
Enter relevant report data to solve Financial Position equation (using macros provided in Excel template)
Show Slide #3: TLO
Action: Interpret Changes in a Financial Position Over a Period of Time
Conditions: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy: Classify assets & liabilities, Classify revenues and expenses (cash basis), Enter relevant report data to solve Financial Position equation (using macros provided in Excel template)
Safety Requirements: In a training environment, leaders must perform a risk assessment in accordance with DA PAM , Risk Management. Leaders will complete a DD Form 2977 DELIBERATE RISK ASSESSMENT WORKSHEET during the planning and completion of each task and sub-task by assessing mission, enemy, terrain and weather, troops and support available-time available and civil considerations (METT-TC). Local policies and procedures must be followed during times of increased heat category in order to avoid heat related injury. Consider the work/rest cycles and water replacement guidelines IAW TRADOC Regulation
Environmental Considerations: Environmental protection is not just the law but the right thing to do. It is a continual process and starts with deliberate planning. Always be alert to ways to protect our environment during training and missions. In doing so, you will contribute to the sustainment of our training resources while protecting people and the environment from harmful effects. Refer to FM Environmental Considerations and GTA ENVIRONMENTAL-RELATED RISK ASSESSMENT.
INSTRUCTIONAL LEAD-IN. Accounting information should be useful. What is useful about an entity’s financial position?
In one sense, it is like GPS. It tells where we are now. If we don’t know where we are now, we won’t know how to get to where we want to be, or how far we have come at a future date. It also gives a snapshot of our financial ability to continue into the future. What resources do we have available? What obligations do we have?

4. Meet the Simmons Family
Gomer, Madge and kids:
Bert, Lacy and baby Maddie
Stunt doubles for a popular cartoon family
Task: Calculate the family’s Financial Position
Show Slide #4: Define terminology used in basic accounting
1. Learning Step/Activity #1 Define terminology used in basic accounting
Method of Instruction: DSL (large or small group discussion)
Facilitator’s to Student Ratio:
Time of Instruction: 2.0 (Total)
Media: Power Point Presentation, Printed Reference Materials
Facilitator’s’s Note: We will use a fictional family example to demonstrate the concept of financial position
That family is the “Simmons” family, Gomer, Madge, Bert, Lacy and baby Maddie.
They are stunt doubles for a popular cartoon family who is unavailable due to contractual obligations (and legal copyright reasons as well!)
Note: Hopefully the instructor and students will make the connection.

5. What is Financial Position?
Financial position is represented by the equation:
Assets – Liabilities = Financial Position Or
Assets = Liabilities + Financial Position
Financial Position may also be called Equity or Net Assets
Show Slide #5: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: Financial position is represented by the equation:
Assets – Liabilities = Financial Position
Or (by adding Liabilities to both sides of the equation)
Assets = Liabilities + Financial Position
Financial Position may also be called Equity or Net Assets

6. What’s an Asset? An Asset is:
Something you OWN
Represents FUTURE BENEFIT
What kinds of assets might the Simmons family own?
Show Slide #6: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: The students should have a fill-in-the-blanks version. Blanks would be “OWN” and “FUTURE BENEFIT”

7. What’s an Asset? An Asset is:
Something you OWN
Represents FUTURE BENEFIT
What kinds of assets might the Simmons family own?
Show Slide #7: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: An Asset is: Something you OWN. Assets are either legally owned or controlled by the entity.

8. What’s an Asset? An Asset is:
Something you OWN
Represents FUTURE BENEFIT
What kinds of assets might the Simmons family own?
Show Slide #8: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: Represents FUTURE BENEFIT. Benefits fall into a few major categories: Spend (as with cash), Sell (as with merchandise, investments, or property, buildings and equipment), Consume (as with supplies), and use (as with property, buildings and equipment)

9. What’s an Asset? An Asset is:
Something you OWN
Represents FUTURE BENEFIT
What kinds of assets might the Simmons family own?
Show Slide #9: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: What kinds of assets might the Simmons family own?
Students should think of the types of assets they have personally. With each asset named, the instructor should ask, “What’s the future benefit?” to emphasize that portion of the definition.
Examples:
House – family may live there without having to pay rent; may sell it in the future.
Car – no need to use public transportation; can sell it in the future
Bank account, cash in wallet or purse – can spend it!
Investments – may convert to cash for spending, potential for growth in value, dividends or interest earned
If they name things that aren’t on the list, ask them to describe the benefit.
Represents FUTURE BENEFIT
What kinds of assets might the Simmons family own?
Facilitator’s Note: Students should think of the types of assets they have personally. With each asset named, the instructor should ask, “What’s the future benefit?” to emphasize that portion of the definition.
House – (Use or sell) family may live there without having to pay rent; may sell it in the future.
Car – (Use or sell) no need to use public transportation; can sell it in the future
Investments – (sell) may convert to cash for spending, potential for growth in value, dividends or interest earned

10. What’s a Liability? A Liability is:
Something you OWE
Represents FUTURE SACRIFICE
A creditor’s CLAIM against your assets
What kinds of Liabilities might the Simmons family have?
Show Slide #10: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: Students would have the fill-in version. Blanks are OWE, FUTURE SACRIFICE, and CREDITOR’S CLAIM

11. What’s a Liability? A Liability is:
Something you OWE
Represents FUTURE SACRIFICE
A creditor’s CLAIM against your assets
What kinds of Liabilities might the Simmons family have?
Show Slide #11: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: A Liability is: Something you OWE – an obligation or debt.

12. What’s a Liability? A Liability is:
Something you OWE
Represents FUTURE SACRIFICE
A creditor’s CLAIM against your assets
What kinds of Liabilities might the Simmons family have?
Show Slide #12: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: Represents FUTURE SACRIFICE – you will have to give up something in the future in order to satisfy the obligation. In most cases the future sacrifice is a cash payment. There are some instances where the future sacrifice might be providing a service or giving up some other type of asset besides cash.

13. What’s a Liability? A Liability is:
Something you OWE
Represents FUTURE SACRIFICE
A creditor’s CLAIM against your assets
What kinds of Liabilities might the Simmons family have?
Show Slide #13: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: A creditor’s CLAIM against your assets – means that someone else has a right a portion of to your assets (something like collateral on a loan, if you fail to pay they can take your assets.)

14. What’s a Liability? A Liability is:
Something you OWE
Represents FUTURE SACRIFICE
A creditor’s CLAIM against your assets
What kinds of Liabilities might the Simmons family have?
Show Slide #14: Define terminology used in basic accounting (Cont.)
Facilitator’s Note: What kinds of Liabilities might the Simmons family have? Mortgage, car loan, credit cards, bills (utility, doctor, etc.)

15. LSA #1 Check on Learning
Q1. What is the equation to represent financial position?
A1. Assets = Liabilities + Financial Position
Q2. Which element of the equation represents future benefits of the entity?
A2. Assets
Show Slide #15: LSA #1 Check on Learning
Facilitator’s Note: Ask the following Questions. Facilitate the answers given.
Q1. What is the equation to represent financial position?
A1. Assets = Liabilities + Financial Position
Q2. Which element of the equation represents future benefits of the entity?
A2. Assets

16. LSA #1 Summary
During this lesson, we introduced the Financial Position equation and discussed some accounting terminology with definitions.
Show Slide #16: LSA #1 Summary
Facilitator’s Note: During this lesson, we introduced the Financial Position equation and discussed some accounting terminology with definitions.

17. Sorting the Data Madge’s stack of papers contains the following:
Deed to the house $230,000
Mortgage note on house ,000
Title to the car ,000
Grocery receipts
Furniture receipts ,000
Credit card statements ,300
Property tax bill ,500
The kids’ birth certificates -0-
Hospital bill for Maddie
Clothing receipts
Bank Statement (reconciled balance)
Cash in Madge’s purse
Task: Calculate the Simmons’ Net Worth
Show Slide #17: Demonstration problem – Classify Assets and Liabilities
2. Learning Step/Activity #2 Demonstration problem – Classify Assets and Liabilities
Method of Instruction: DSL (large or small group discussion)
Facilitator’s to Student Ratio:
Time of Instruction: 2.0 (Total)
Media: Power Point Presentation, Printed Reference Materials
Facilitator’s Note: Go over the data with the class, making sure to identify the task.
Go through the list and ask the class to identify each as an asset or a liability;
Deed to the house $230,000 (A)
Mortgage note on house ,000 (L)
Title to the car ,000(A)
Grocery receipts
Furniture receipts ,000(A)
Credit card statements ,300(A)
Property tax bill ,500 (L)
The kids’ birth certificates
Hospital bill for Maddie (L)
Clothing receipts (A)
Bank Statement (reconciled balance) (A)
Cash in Madge’s purse (A)
Go on to the next page, or work the example on the board or overhead projector

18. Sorting the Data Madge’s stack of papers contains the following:
Deed to the house $230,000
Mortgage note on house ,000
Title to the car ,000
Grocery receipts
Furniture receipts ,000
Credit card statements ,300
Property tax bill ,500
The kids’ birth certificates -0-
Hospital bill for Maddie
Clothing receipts
Bank Statement (reconciled balance)
Cash in Madge’s purse
Task: Calculate the Simmons’ Net Worth
Show Slide #18: Demonstration problem – Classify Assets and Liabilities (Cont.)
Facilitator’s Note: The green-highlighted items are assets:
Deed to the house $230,000 (A)
Title to the car ,000(A)
Furniture receipts ,000(A)
Credit card statements ,300(A)
Clothing receipts (A)
Bank Statement (reconciled balance) (A)
Cash in Madge’s purse (A)

19. Sorting the Data Madge’s stack of papers contains the following:
Deed to the house $230,000
Mortgage note on house ,000
Title to the car ,000
Grocery receipts
Furniture receipts ,000
Credit card statements ,300
Property tax bill ,500
The kids’ birth certificates -0-
Hospital bill for Maddie
Clothing receipts
Bank Statement (reconciled balance)
Cash in Madge’s purse
Task: Calculate the Simmons’ Net Worth
Show Slide #19: Demonstration problem – Classify Assets and Liabilities (Cont.)
Facilitator’s Note: The red-highlighted items are liabilities:
Mortgage note on house ,000 (L)
Property tax bill ,500 (L)
Hospital bill for Maddie (L)

20. Classifying Assets & Liabilities
Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash (Bank + purse) Total $240,077.47
Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total $230,750
Show Slide #20: Demonstration problem – Classify Assets and Liabilities (Cont.)
Facilitator’s Note: Here the Assets are listed in one column and the Liabilities are listed in another. The difference between the two columns is the Simmons’ family’s net worth or financial position.
Financial Position or Net Worth =
$240, $230,750 = $9,327.47

21. Graphic Solution
Show Slide #21: Demonstration problem – Classify Assets and Liabilities (Cont.)
Facilitator’s Note: This graph allows us to visualize the proportion of total assets that are actually “owned” by Gomer & Madge.

22. LSA #2 Check on Learning
Q1. Which of the following would be considered a liability?
A1. Credit card account $246
Checking account $327
Credit card account $246
Groceries $50
Q2. Assuming these are the only relevant items, what is the financial position?
A2. Checking account 327 – credit card account 246 = financial position $81
Show Slide #22: LSA #2 Check on Learning
Facilitator’s Note: Ask the following Questions;
Q1. Which of the following would be considered a liability?
A1. Credit card account $246
Checking account $327
Credit card account $246
Groceries $50
Q2. Assuming these are the only relevant items, what is the financial position?
A2. Checking account 327 – credit card account 246 = financial position $81

23. LSA #2 Summary
During this lesson, we distinguished the difference between assets and liabilities, and gave clear examples of each.
Show Slide #23: LSA #2 Summary
Facilitator’s Note: During this lesson, we distinguished the difference between assets and liabilities, and gave clear examples of each.

24. Reporting Financial Position
The Statement of Financial Position presents the financial position of an entity as of a SINGLE DATE.
May also be called:
Balance Sheet (for-profit entity)
Statement of Net Assets (not-for-profit entity)
Statement of Net Worth (individual or family)
Show Slide #24: Prepare Statement of Financial Position
Learning Step/Activity #3 Prepare Statement of Financial Position
Method of Instruction: DSL (large or small group discussion)
Facilitator’s to Student Ratio:
Time of Instruction: 2.0 (Total)
Media: Power Point Presentation, Printed Reference Materials
Facilitator’s Note: The Statement of Financial Position presents the financial position of an entity as of a SINGLE DATE. As such it can be somewhat limited, the very next day the financial position of an entity can change drastically (an earthquake destroys the family home, for example. Or, a rich uncle dies and leaves Gomer a million dollars.) But, the statement of financial position is a standard measure and a should be a truthful picture of the entity’s financial position on the specified date.
The same statement might have a different name depending upon the entity. It may also be called:
Balance Sheet (for-profit entity)
Statement of Net Assets (not-for-profit entity)
Statement of Net Worth (individual or family)
In the federal government, entities where the Liabilities routinely exceed the Assets report a Statement of Net position. The term “net position” indicates that the entity has a negative net worth.

25. Statement of Financial Position
Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash (Bank + purse) Total $240,077.47
Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total Liab. $230,750 Net Worth 9, Total $240,077.47
Show Slide #25: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Here is the Statement of Financial Position for the Simmons’ family as of the current date. Notice that the Total of Assets is equal to the Total of Liabilities and Net Worth.

26. Questions What about the groceries? What about the kids?
Items that will be consumed during the current month are considered Expenses
What about the kids?
Show Slide #26: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Students will have the blank version of the slides

27. Questions What about the groceries? What about the kids?
Items purchased and consumed during the current period are considered Expenses
What about the kids?
First, would they be assets or liabilities? 
Second, they aren’t “owned”
Third, their value cannot be quantified monetarily
Monetary Unit Assumption:
Financial information must be measured and reported in a monetary unit such as U.S. Dollars
Show Slide #27: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: We’ll talk about some of the accounting principles that help us to assign value to assets.
Groceries – Future benefit is presumed to extend beyond the current accounting period (usually a month)
Therefore, the groceries would not be considered assets.

28. Questions What about the groceries? What about the kids?
Items purchased and consumed during the current period are considered Expenses
What about the kids?
First, would they be assets or liabilities? 
Second, they aren’t “owned”
Third, their value cannot be quantified monetarily
Monetary Unit Assumption:
Financial information must be measured and reported in a monetary unit such as U.S. Dollars
Show Slide #28: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Kids – put here as a joke, but also to make a point. Depending upon one’s point of view, kids could be assets or liabilities. In agrarian societies, large families are considered beneficial, because the kids can be used as free labor on the farm. In industrial societies, kids are seen as somewhat of a burden, if not a true liability. Any parent can tell you that their kids represent sacrifices, past, present and future 

29. Questions What about the groceries? What about the kids?
Items purchased and consumed during the current period are considered Expenses
What about the kids?
First, would they be assets or liabilities? 
Second, they aren’t “owned”
Third, their value cannot be quantified monetarily
Monetary Unit Assumption:
Financial information must be measured and reported in a monetary unit such as U.S. Dollars
Show Slide #29: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: The key points are
Human beings cannot be owned, therefore cannot be counted as assets. The definition of an asset is something that is owned or controlled. This is the reason why, although many organizations talk about employees as their greatest asset, they are not reported in financial position.

30. Questions What about the groceries? What about the kids?
Items purchased and consumed during the current period are considered Expenses
What about the kids?
First, would they be assets or liabilities? 
Second, they aren’t “owned”
Third, their value cannot be quantified monetarily
Monetary Unit Assumption:
Financial information must be measured and reported in a monetary unit such as U.S. Dollars
Show Slide #30: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: B) Another reason why so-called human capital is not reported in financial position is that the value of employees to the company cannot be reported monetarily.

31. Questions What about the groceries? What about the kids?
Items purchased and consumed during the current period are considered Expenses
What about the kids?
First, would they be assets or liabilities? 
Second, they aren’t “owned”
Third, their value cannot be quantified monetarily
Monetary Unit Assumption:
Financial information must be measured and reported in a monetary unit such as U.S. Dollars
Show Slide #31: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: According to the Monetary Unit assumption, financial information must be measured and reported in a monetary unit such as U.S. Dollars

32. Questions Isn’t the house worth more now than when they bought it?
Possibly, but it’s difficult to objectively determine its value
Cost Principle:
The most objective measure of an asset’s value is its HISTORICAL COST: the price paid for it in an arm’s length transaction
Is it necessary to report the 47₵ from the bank account?
Materiality Constraint:
Report only the level of detail that will affect a user’s decision
Show Slide #32: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Students will have the blank version of the slide

33. Questions Isn’t the house worth more now than when they bought it?
Possibly, but it’s difficult to objectively determine its value
Cost Principle:
The most objective measure of an asset’s value is its HISTORICAL COST: the price paid for it in an arm’s length transaction
Is it necessary to report the 47₵ from the bank account?
Materiality Constraint:
Report only the level of detail that will affect a user’s decision
Show Slide #33: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Isn’t the house worth more now than when they bought it? Possibly, but it’s difficult to objectively determine its value – in order for information to be reliable, there must be some level of objectivity. There are a large number of variables that could influence the current value of the home.

34. Questions Isn’t the house worth more now than when they bought it?
Possibly, but it’s difficult to objectively determine its value
Cost Principle:
The most objective measure of an asset’s value is its HISTORICAL COST: the price paid for it in an arm’s length transaction
Is it necessary to report the 47₵ from the bank account?
Materiality Constraint:
Report only the level of detail that will affect a user’s decision
Show Slide #34: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Cost Principle: The accounting principle that governs in this instance is the Cost principle. The most objective measure of an asset’s value is its HISTORICAL COST: the price paid for it in an arm’s length transaction.

35. Questions Isn’t the house worth more now than when they bought it?
Possibly, but it’s difficult to objectively determine its value
Cost Principle:
The most objective measure of an asset’s value is its HISTORICAL COST: the price paid for it in an arm’s length transaction
Is it necessary to report the 47₵ from the bank account?
Materiality Constraint:
Report only the level of detail that will affect a user’s decision
Show Slide #35: Prepare Statement of Financial Position (Cont.)
Facilitator’s Note: Is it necessary to report the 47₵ from the bank account?
Materiality Constraint:
The accounting principle that governs in this case is Materiality, or significance. Financial information should report only the level of detail that is significant enough to affect a user’s decision. This is the reason that financial statements might be reported in whole dollars, thousands, or millions. The additional detail detracts, rather than adds to the value of the information. It can prove distracting from what is really the significant information in the report.

36. LSA #3 Check on Learning
Q1. What is the name of the report that presents a government organization’s financial position? An individual’s?
A1. Statement of Financial position / Statement of Net Worth
Q2. What is the time frame of this report?
A2. A Single Day
Q3. What principle defines the value that should be reported for an asset on the Statement of Financial Position?
A3. Cost Principle
Show Slide #36: LSA #3 Check on Learning
Facilitator’s Note: Ask the following Questions. Facilitate the answers given.
Q1. What is the name of the report that presents a government organization’s financial position? An individual’s?
A1. Statement of Financial position / Statement of Net Worth
Q2. What is the time frame of this report?
A2. A Single Day
Q3. What principle defines the value that should be reported for an asset on the Statement of Financial Position?
A3. Cost Principle

37. LSA #3 Summary
During this lesson, we completed a statement of financial position complete with assets and liabilities, and posed some relevant questions pertaining to the process.
Show Slide #37: LSA #3 Summary
Facilitator’s Note: During this lesson, we completed a statement of financial position complete with assets and liabilities, and posed some relevant questions pertaining to the process.

38. What if Gomer inherits $1,000,000?
Show Slide #38: Describe Changes in Financial Position
4. Learning Step/Activity #4 Describe Changes in Financial Position
Method of Instruction: DSL (large or small group discussion)
Facilitator’s to Student Ratio:
Time of Instruction: 2.0 (Total)
Media: Power Point Presentation, Printed Reference Materials
Facilitator’s Note: What if Gomer inherits $1,000,000? How would the family’s financial position change?

39. Changes in Financial Position
The Statement of Financial Position (Balance Sheet) reflects the Assets, Liabilities and Net Assets as of a SINGLE DATE. (Like a snapshot)
Beginning
Financial
Position
Ending
Statement of Activities
Show Slide #39: Describe Changes in Financial Position (Cont.)
Facilitator’s Note: Review: The purpose of the Statement of Financial Position is to reflect the assets, liabilities and net assets (financial position) as of a single date. This is a limited view. From the beginning of the period to the end of the period there can be significant change. The Balance Sheet doesn’t tell us how we got from point A to point B.

40. Changes in Financial Position
The Statement of Activities, or Income Statement, reflects activity for a period of time. (Like a video)
Beginning
Financial
Position
Ending
Statement of Activities
Show Slide #40: Describe Changes in Financial Position (Cont.)
Facilitator’s Note: The Statement of Activities reflects activity for a period of time, like a video, and explains the changes in the statement of financial position.

41. Changes in Financial Position
Under the Cash Basis of Accounting:
Revenues:
Represent earnings received in cash
Increase Assets and Increase Financial Position
Costs:
Represent cash payments for goods and services received
Decrease Assets and Decrease Financial Position
ReveRevenues – Costs =
Net Change in Financial Position
nues – Costs =
Show Slide #41: Describe Changes in Financial Position (Cont.)
Facilitator’s Note: Under the Cash Basis Revenues are reported in the period in which cash is received. Represent earnings RECEIVED in cash. Revenues Increase Assets (Cash) and increase Financial Position

42. LSA #4 Check on Learning
Q1. What is the equation for the change in financial position?
A1. Revenues – Costs = Net Change
Q2. What is the name of the statement that describes changes in financial position?
A2. Statement of Activities
Show Slide #42: LSA #4 Check on Learning
Facilitator’s Note: Ask the following Questions. Facilitate the answers given.
Q1. What is the equation for the change in financial position?
A1. Revenues – Costs = Net Change
Q2. What is the name of the statement that describes changes in financial position?
A2. Statement of Activities

43. LSA #4 Summary
During this lesson, we discussed the summary of changes in a financial position and provided the following formula;
ReveRevenues – Costs =
Net Change in Financial Position
Show Slide #43: LSA #4 Summary
Facilitator’s Note: During this lesson, we discussed the summary of changes in a financial position and provided the following formula;
ReveRevenues – Costs =
Net Change in Financial Position

44. The Simmons: Statement of Financial Position 1/1/XX
Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash 327 Total $240,077
Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total Liabilities $230,750 Net Assets: 9,327 Total $240,077
Show Slide #44: Demonstration problem
5. Learning Step/Activity #5 Demonstration problem
Method of Instruction: DSL (large or small group discussion)
Facilitator’s to Student Ratio:
Time of Instruction: 2.0 (Total)
Media: Power Point Presentation, Printed Reference Materials
Facilitator’s Note: This is the Statement of financial position for the Simmons family at the beginning of the month. Note that Total assets = Total Liabilities + Net Assets
This is the beginning state of the Simmons family. We will look at activity for one month and see the results of that activity in the Financial position at the end of the month.
NOTE: XX represents current FY.

45. The Simmons: Financial Activity for January
Date
Activity
Cash Amount
2-Jan
Madge puts gasoline in the car
120
4-Jan
Gomer buys doughnuts 35
7-Jan
Gomer’s paycheck
925
8-Jan
Madge buys groceries
600
12-Jan
Lacy has a dentist appointment
100
14-Jan
Bert breaks a window 50
15-Jan
Madge babysits the neighbor kids 25
21-Jan
22-Jan
Madge pays interest on mortgage
938
Show Slide #45: Demonstration problem (Cont.)
Facilitator’s Note: Go over the Data in the problem and identify the task at the bottom of the page. Classify each item as a Revenue or Expenditure
Task: Calculate the Net Change in Financial Position for January.

46. The Simmons: Financial Activity for January
Date
Activity
Cash Amount
2-Jan
Madge puts gasoline in the car
120
4-Jan
Gomer buys doughnuts 35
7-Jan
Gomer’s paycheck
925
8-Jan
Madge buys groceries
600
12-Jan
Lacy has a dentist appointment
100
14-Jan
Bert breaks a window 50
15-Jan
Madge babysits the neighbor kids 25
21-Jan
22-Jan
Madge pays interest on mortgage
938
Show Slide #46: Demonstration problem (Cont.)
Facilitator’s Note: The Green highlighted items are Revenues:
Gomer’s paycheck 925
Madge babysits the neighbor kids (Revenue) 25
Task: Calculate the Net Change in Financial Position for January.

47. The Simmons: Financial Activity for January
Date
Activity
Cash Amount
2-Jan
Madge puts gasoline in the car
120
4-Jan
Gomer buys doughnuts 35
7-Jan
Gomer’s paycheck
925
8-Jan
Madge buys groceries
600
12-Jan
Lacy has a dentist appointment
100
14-Jan
Bert breaks a window 50
15-Jan
Madge babysits the neighbor kids 25
21-Jan
22-Jan
Madge pays interest on mortgage
938
Show Slide #47: Demonstration problem (Cont.)
Facilitator’s Note: The Red highlighted items are Costs:
Madge puts gasoline in the car 120
Gomer buys doughnuts 35
The $75 tax in Gomer’s paycheck is an expenditure
Madge buys groceries 600
Lacy has a dentist appointment 100
Bert breaks a window 50
Madge pays interest on mortgage 938
Task: Calculate the Net Change in Financial Position for January.

48. The Simmons: Changes in Financial Position
What are the Revenues?
Gomer’s pay and Madge’s babysitting $1875 gross pay and Madge’s babysitting
What are the Costs?
Gasoline, doughnuts, groceries, dentist, window, and mortgage interest = $1843ax withholding , gasoline, doughnuts, groceries, dentist, window, and mortgage interest
What is the Net Change in Financial Position?
Revenues $1875 – Costs $1843 = $32 Increase
Revenues $2,025 – Costs $1,993 = Increase
What is the Ending Financial Position?
Beginning $9, Increase $32 = Ending $9,359
Show Slide #48: Demonstration problem (Cont.)
Facilitator’s Note: Students will have the blank version of the slide.

49. The Simmons: Statement of Activities for month of January 20XX
Revenues: Gomer’s Salary (Net) $1,850 Madge’s babysitting 25 Total Revenues $1,875 Costs: Interest $938 Groceries 600 Gasoline 120 Dentist 100 Broken Window 50 Doughnuts 35 Total Costs 1,843 Net Change in Financial Position 32 Add: Financial Position January 1, 20XX 9,327 Financial Position January 31, 20XX $9,359
Show Slide #49: Demonstration problem (Cont.)
Facilitator’s Note: This is the Statement of Activities. It lists revenues and Costs, and explains the change in the Financial position for the month of January. Students will use the spreadsheet to prepare a statement of activities in the Practical Exercises.

50. Graphic Representation of Net Change
$1875
$32
$1843
Show Slide #50: Demonstration problem (Cont.)
Facilitator’s Note: Show’s the increase in revenues

51. Graphic Representation of Net Change
$9359
$32
Show Slide #51: Demonstration problem (Cont.)
Facilitator’s Note: Since Revenues exceeded Costs by $32, the Financial position increases by $32.
$9327

52. The Simmons: Statement of Financial Position 1/31/XX
Assets: House $230,000 Car 6,000 Furniture 3,000 Clothing 750 Cash (325+32) 359 Total $240,109
Liabilities: Mortgage $225,000 Credit Card 2,300 Property Tax 2,500 Hospital 950 Total Liabilities $230,750 Net Assets: 9,359 Total $240,109
Show Slide #52: Demonstration problem (Cont.)
Facilitator’s Note: Here is the Statement of Financial position for the end of the month.
Assets = Liabilities + Net Assets
Assets (Cash) increased by $32
Facilitator’s Note: There was no change in Liabilities. Net Assets or Financial Position increased by $32

53. LSA #5 Check on Learning
Q1. What activities will cause financial position to increase?
A1. Revenues
Q2. What activities will cause financial position to decrease?
A2. Costs
Show Slide #53: LSA #5 Check on Learning
Facilitator’s Note: Ask the following Questions. Facilitate the answers given.
Q1. What activities will cause financial position to increase?
A1. Revenues
Q2. What activities will cause financial position to decrease?
A2. Costs

54. LSA #5 Summary
In this lesson, we conducted a demonstration problem based on a given scenario. This involved revenues and costs that were eventually plugged into a formula, resulting in a graphed representation of the answers.
Show Slide #54: LSA #5 Summary
Facilitator’s Note: In this lesson, we conducted a demonstration problem based on a given scenario. This involved revenues and costs that were eventually plugged into a formula, resulting in a graphed representation of the answers.

55. Financial Position Spreadsheet
Enter data in the white spaces
Show Slide #55: Practical Exercises
6. Learning Step/Activity #6 Practical Exercises
Method of Instruction: DSL (large or small group discussion)
Facilitator’s to Student Ratio:
Time of Instruction: 2.0 (Total)
Media: Power Point Presentation, Printed Reference Materials
Facilitator’s Note: Practical exercises will use the Financial Position Spreadsheet.
The financial position spreadsheet will help students produce a Statement of Financial Position (also called Balance Sheet or Statement of Net Assets.)
The Statement of Financial Position presents financial position of an entity (individual or organization) as of a single date.

56. Financial Position Spreadsheet
Use Tabs to Navigate
Show Slide #56: Practical Exercises (Cont.)
Facilitator’s Note: Use the tabs in the spreadsheet to navigate

57. Financial Position Spreadsheet
Show Slide #57: Practical Exercises (Cont.)
Facilitator’s Note: The spreadsheet prepares the statement and the graph for you.
The spreadsheet uses the data you entered to produce the Statement of Financial Position and the pie graph

58. Statement of Activities Spreadsheet
Enter Transaction Data into the register
Show Slide #58: Practical Exercises (Cont.)
Facilitator’s Note: You will enter the beginning financial position data into the statement of activities spreadsheet. Then enter transaction data into the check register.

59. Financial Position Spreadsheet
After entering Data,
Press button to
Create Statement
Of Activities
Show Slide #59: Practical Exercises (Cont.)
Facilitator’s Note: After you enter the data, press the button to create the Statement of Activities.

60. Statement of Activities Spreadsheet
Statement of Activities shows:
Total Revenues,
Total Costs ,
Change in Financial Position, and Ending Financial Position
Show Slide #60: Practical Exercises (Cont.)
Facilitator’s Note: The statement of Activities will show the Net Change in financial position and the ending financial position.

61. Conduct Practical Exercise
Show Slide #61: Conduct Practical Exercises (Cont.)
Facilitator’s Note: Run Phase

62. TLO Summary
Action: Interpret Changes in a Financial Position Over a Period of Time
Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy:
Classify assets & liabilities
Classify revenues and expenses (cash basis)
Enter relevant report data to solve Financial Position equation (using macros provided in Excel template)
Show Slide #62: TLO Summary
Facilitator’s Note: Restate the TLO
Action: Interpret Changes in a Financial Position Over a Period of Time
Conditions: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy: Classify assets & liabilities, Classify revenues and expenses (cash basis), Enter relevant report data to solve Financial Position equation (using macros provided in Excel template)
“Or”
Facilitator's at this time, have one learner from each group to explain the most important take away to them from this lesson. Facilitate a discussion on each answer.