1. Boundless Lecture Slides Free to share, print, make copies and changes. Get yours at www.boundless.com Available on the Boundless Teaching Platform

2. Using Boundless Presentations The Appendix The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. Free to share, print, make copies and changes. Get yours at www.boundless.com Boundless Teaching Platform Boundless empowers educators to engage their students with affordable, customizable textbooks and intuitive teaching tools. The free Boundless Teaching Platform gives educators the ability to customize textbooks in more than 20 subjects that align to hundreds of popular titles. Get started by using high quality Boundless books, or make switching to our platform easier by building from Boundless content pre-organized to match the assigned textbook. This platform gives educators the tools they need to assign readings and assessments, monitor student activity, and lead their classes with pre-made teaching resources. Get started now at: If you have any questions or problems please email: educators@boundless.com http://boundless.com/teaching-platform

3. Boundless is an innovative technology company making education more affordable and accessible for students everywhere. The company creates the world’s best open educational content in 20+ subjects that align to more than 1,000 popular college textbooks. Boundless integrates learning technology into all its premium books to help students study more efficiently at a fraction of the cost of traditional textbooks. The company also empowers educators to engage their students more effectively through customizable books and intuitive teaching tools as part of the Boundless Teaching Platform. More than 2 million learners access Boundless free and premium content each month across the company’s wide distribution platforms, including its website, iOS apps, Kindle books, and iBooks. To get started learning or teaching with Boundless, visit boundless.com.boundless.com Free to share, print, make copies and changes. Get yours at www.boundless.com About Boundless

4. Sales Forecast Input Inputs to the Production Schedule Inputs to COGS Other Expenses Pro Forma Income Statement Forecasting the Income Statement Forecasting Financial Statements > Forecasting the Income Statement Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance?campaign_content=book_192_section_50&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir ect&utm_source=boundless

5. Net sales are operating revenues earned by a company for selling its products or rendering its services. Gross sales are the sum of all sales during a time period. Net sales are gross sales minus sales returns, sales allowances, and sales discounts. The purpose of profit-based sales target metrics is to ensure that marketing and sales objectives mesh with profit targets. Sales Forecast Input Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/forecasting-the-income-statement-50/sales- forecast-input-240- 3864?campaign_content=book_192_section_50&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess Sales View on Boundless.com Forecasting Financial Statements > Forecasting the Income Statement

6. A good purchased as a "raw material" goes into the manufacture of a product. A good only partially completed during the manufacturing process is called "work in process". When the good is completed as to manufacturing but not yet sold or distributed to the end-user, it is called a "finished good". Inventory management is primarily about specifying the shape and percentage of stocked goods. Basic reasons for keeping an inventory involve time, uncertainty and economics of scales. Inputs to the Production Schedule Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/forecasting-the-income-statement- 50/inputs-to-the-production-schedule-241- 3865?campaign_content=book_192_section_50&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess Production budget View on Boundless.com Forecasting Financial Statements > Forecasting the Income Statement

7. Costs include all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. The key components of cost generally include: parts - raw materials and supplies used, labor - including associated costs such as payroll taxes and benefits, and overhead of the business allocable to production. A miscalculation or faulty estimation can be amplified drastically, causing a vastly different forecasted amount of income than what will actually come to pass. Inputs to COGS Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/forecasting-the-income-statement- 50/inputs-to-cogs-242- 3866?campaign_content=book_192_section_50&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess A Sample Income Statement View on Boundless.com Forecasting Financial Statements > Forecasting the Income Statement

8. Other expenses include operation expenses section and non-operation expenses section. Operation section expenses include SG&A, depreciation, amortization, and R&D expenses. Non-operation section expenses include finance costs, income tax expense, and discontinued operations expenses. SG&A is usually understood as a major portion of non-production related costs, in contrast to production costs such as direct labour. Other Expenses Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/forecasting-the-income-statement-50/other- expenses-243- 7075?campaign_content=book_192_section_50&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess Expenses View on Boundless.com Forecasting Financial Statements > Forecasting the Income Statement

9. The pro forma accounting is a statement of the company's financial activities while excluding "unusual and nonrecurring transactions" when stating how much money the company actually made. Income statement is a company's financial statement that indicates how the revenue is transformed into the net income during a certain period of time. Pro forma Income statement includes revenue, COGS, operational expenses and non-operational expenses. Pro Forma Income Statement Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/forecasting-the-income-statement-50/pro- forma-income-statement-244- 7076?campaign_content=book_192_section_50&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess View on Boundless.com Forecasting Financial Statements > Forecasting the Income Statement

10. Free to share, print, make copies and changes. Get yours at www.boundless.com Appendix

11. Key terms ABC analysis The ABC analysis is a business term used to define an inventory categorization technique often used in materials management. It is also known as Selective Inventory Control. Policies based on ABC analysis: A ITEMS, very tight control and accurate records; B ITEMS, less tightly controlled, and good records; and C ITEMS, simplest controls possible and minimal records. allocate To distribute according to a plan. contribution margin In cost-volume-profit analysis, a form of management accounting, contribution margin is the marginal profit per unit sale. deferred tax liabilities Deferred tax liabilities generally arise where tax relief is provided in advance of an accounting expense, or income is accrued but not taxed until received. depreciation The measurement of the decline in value of assets. Not to be confused with impairment, which is the measurement of the unplanned, extraordinary decline in value of assets. fixed costs In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. intangible assets Intangible assets are defined as identifiable non-monetary assets that cannot be seen, touched or physically measured, and are created through time and effort, and are identifiable as a separate asset. overhead Any cost or expenditure (monetary, time, effort or otherwise) incurred in a project or activity, which does not directly contribute to the progress or outcome of the project or activity. pro forma For the sake of form only. write-off The term written-off describes a reduction in recognized value. In accounting terminology, it refers to recognition of the reduced or zero value of an asset. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements

12. A Sample Income Statement Expenses are listed on a company's income statement. Free to share, print, make copies and changes. Get yours at www.boundless.com Flickr. "All sizes | y2cary3n6mng-5ha51l-income-statement-example | Flickr - Photo Sharing!." CC BY-SA http://www.flickr.com/photos/sampjb/7690678408/sizes/l/ View on Boundless.comCC BY-SAhttp://www.flickr.com/photos/sampjb/7690678408/sizes/l/ View on Boundless.com Forecasting Financial Statements

13. Production budget Production budget is important for inventory and sales revenue Free to share, print, make copies and changes. Get yours at www.boundless.com Flickr. "All sizes | 1995-2004 animation: Budget vs US Gross | Flickr - Photo Sharing!." CC BY http://www.flickr.com/photos/metatim/4375503553/sizes/m/in/photostream/ View on Boundless.comCC BY http://www.flickr.com/photos/metatim/4375503553/sizes/m/in/photostream/View on Boundless.com Forecasting Financial Statements

14. Production schedule Production schedule plays an important role in financial forecasting. Free to share, print, make copies and changes. Get yours at www.boundless.com Google. "Google Image Result for." CC BY http://www.google.com/imgres?q=production+schedule&hl=en&biw=1280&bih=595&tbs=sur:fmc&tbm=isch&imgrefurl=http://www.planning-templates.com/master- schedule-template.html&tbnid=b-3zSiArYpXfGM&docid=RoUzz39Y8Sz6PM&ved=0CE8QhRYoAQ&ei=0El6UO6KDoqN0QGs4YCABQ&dur=3508 View on Boundless.comCC BY http://www.google.com/imgres?q=production+schedule&hl=en&biw=1280&bih=595&tbs=sur:fmc&tbm=isch&imgrefurl=http://www.planning-templates.com/master- schedule-template.html&tbnid=b-3zSiArYpXfGM&docid=RoUzz39Y8Sz6PM&ved=0CE8QhRYoAQ&ei=0El6UO6KDoqN0QGs4YCABQ&dur=3508View on Boundless.com Forecasting Financial Statements

15. Sales Increasing sales revenue is one of the goals of businesses. Free to share, print, make copies and changes. Get yours at www.boundless.com Google. "Google Image Result for." CC BY http://www.google.com/imgres?q=sales&hl=en&biw=1280&bih=595&tbs=sur:fmc&tbm=isch&imgrefurl=http://processspecialist.com/increasesales/2012/09/&tbnid=Ii CgLYBze4548M&docid=fchCfsiEMAHGMM&ved=0CF8QhRYoAQ&ei=mjt6UM75C8X40gHy5IAg&dur=4160 View on Boundless.comCC BY http://www.google.com/imgres?q=sales&hl=en&biw=1280&bih=595&tbs=sur:fmc&tbm=isch&imgrefurl=http://processspecialist.com/increasesales/2012/09/&tbnid=Ii CgLYBze4548M&docid=fchCfsiEMAHGMM&ved=0CF8QhRYoAQ&ei=mjt6UM75C8X40gHy5IAg&dur=4160View on Boundless.com Forecasting Financial Statements

16. Expenses Operational expenses and non-operational expenses are the main cash outflow of a business. Free to share, print, make copies and changes. Get yours at www.boundless.com Flickr. CC BY http://www.flickr.com/photos/andresrueda/3274955487/sizes/m/in/photostream/ View on Boundless.comCC BYhttp://www.flickr.com/photos/andresrueda/3274955487/sizes/m/in/photostream/View on Boundless.com Forecasting Financial Statements

17. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements A company wants to have $5 million in sales with $1 million in profit. It will have fixed costs of $3 million. Each unit of its product sells for $20. How much contribution per unit must the company have to meet its goals? A) $16 B) $0.79 C) $1.60 D) $8

18. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Forecasting Financial Statements A company wants to have $5 million in sales with $1 million in profit. It will have fixed costs of $3 million. Each unit of its product sells for $20. How much contribution per unit must the company have to meet its goals? A) $16 B) $0.79 C) $1.60 D) $8

19. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements Which of the following appropriately defines a type of production schedule input? A) Work in process are materials and components that have begun transformation to finished goods. B) All of these answers. C) Goods for resale are returned products that can still be sold. D) Raw materials are basic materials that are used to make a company's products.

20. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Forecasting Financial Statements Which of the following appropriately defines a type of production schedule input? A) Work in process are materials and components that have begun transformation to finished goods. B) All of these answers. C) Goods for resale are returned products that can still be sold. D) Raw materials are basic materials that are used to make a company's products.

21. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements Which of the following statements correctly defines a component of Cost of Goods Sold? A) Labor costs are the wages paid to employees who spend their time working directly on the product. B) Parts, Raw Materials, and supplies used are all physical objects that go into making a good. C) All overhead costs are associated with production activities. D) All of these answers.

22. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Forecasting Financial Statements Which of the following statements correctly defines a component of Cost of Goods Sold? A) Labor costs are the wages paid to employees who spend their time working directly on the product. B) Parts, Raw Materials, and supplies used are all physical objects that go into making a good. C) All overhead costs are associated with production activities. D) All of these answers.

23. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements Which of the following statements correctly defines a type of other expenses input? A) Selling, General, and Administrative expenses consist of the combined payroll costs. B) All of these answers. C) Depreciation is the decrease in the value of an asset due to its use over time. D) Amortization is the process of depreciating an intangible asset of the company.

24. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Forecasting Financial Statements Which of the following statements correctly defines a type of other expenses input? A) Selling, General, and Administrative expenses consist of the combined payroll costs. B) All of these answers. C) Depreciation is the decrease in the value of an asset due to its use over time. D) Amortization is the process of depreciating an intangible asset of the company.

25. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements A company is considering merging with another business. It is planning on preparing a pro forma income statement. Which of the following should be included in the pro forma statement? A) How much the company's revenues will increase due to the merger. B) If the merged company will have increased Research & Development (R&D) expenses. C) All of these answers. D) How much the merged company's income tax expense will increase.

26. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Forecasting Financial Statements A company is considering merging with another business. It is planning on preparing a pro forma income statement. Which of the following should be included in the pro forma statement? A) How much the company's revenues will increase due to the merger. B) If the merged company will have increased Research & Development (R&D) expenses. C) All of these answers. D) How much the merged company's income tax expense will increase.

27. Attribution Wikipedia. "Profit-based sales targets." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Profit-based_sales_targetsCC BY-SA 3.0http://en.wikipedia.org/wiki/Profit-based_sales_targets Wikipedia. "Sales (accounting)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Sales_(accounting)CC BY-SA 3.0http://en.wikipedia.org/wiki/Sales_(accounting) Wiktionary. "fixed costs." CC BY-SA 3.0 http://en.wiktionary.org/wiki/fixed+costsCC BY-SA 3.0http://en.wiktionary.org/wiki/fixed+costs Wikipedia. "contribution margin." CC BY-SA 3.0 http://en.wikipedia.org/wiki/contribution%20marginCC BY-SA 3.0http://en.wikipedia.org/wiki/contribution%20margin Wikipedia. "Raw materials." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Raw_materialsCC BY-SA 3.0http://en.wikipedia.org/wiki/Raw_materials Wikipedia. "Inventory." CC BY-SA 3.0 http://en.wikipedia.org/wiki/InventoryCC BY-SA 3.0http://en.wikipedia.org/wiki/Inventory Wikipedia. "Finished goods." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Finished_goodsCC BY-SA 3.0http://en.wikipedia.org/wiki/Finished_goods Wikipedia. "Work in process." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Work_in_processCC BY-SA 3.0http://en.wikipedia.org/wiki/Work_in_process Wikipedia. "ABC analysis." CC BY-SA 3.0 http://en.wikipedia.org/wiki/ABC%20analysisCC BY-SA 3.0http://en.wikipedia.org/wiki/ABC%20analysis Wikipedia. "Cost of goods sold." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cost_of_goods_soldCC BY-SA 3.0http://en.wikipedia.org/wiki/Cost_of_goods_sold Wiktionary. "overhead." CC BY-SA 3.0 http://en.wiktionary.org/wiki/overheadCC BY-SA 3.0http://en.wiktionary.org/wiki/overhead Wiktionary. "allocate." CC BY-SA 3.0 http://en.wiktionary.org/wiki/allocateCC BY-SA 3.0http://en.wiktionary.org/wiki/allocate Wikipedia. "R&D." CC BY-SA 3.0 http://en.wikipedia.org/wiki/R%2526DCC BY-SA 3.0http://en.wikipedia.org/wiki/R%2526D Wikipedia. "SG&A." CC BY-SA 3.0 http://en.wikipedia.org/wiki/SG%2526ACC BY-SA 3.0http://en.wikipedia.org/wiki/SG%2526A Wikipedia. "Income statement." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Income_statementCC BY-SA 3.0http://en.wikipedia.org/wiki/Income_statement Wikipedia. "Amortization." CC BY-SA 3.0 http://en.wikipedia.org/wiki/AmortizationCC BY-SA 3.0http://en.wikipedia.org/wiki/Amortization Wikipedia. "Depreciation." CC BY-SA 3.0 http://en.wikipedia.org/wiki/DepreciationCC BY-SA 3.0http://en.wikipedia.org/wiki/Depreciation Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements

28. Wikipedia. "intangible assets." CC BY-SA 3.0 http://en.wikipedia.org/wiki/intangible%20assetsCC BY-SA 3.0http://en.wikipedia.org/wiki/intangible%20assets Wikipedia. "deferred tax liabilities." CC BY-SA 3.0 http://en.wikipedia.org/wiki/deferred%20tax%20liabilitiesCC BY-SA 3.0http://en.wikipedia.org/wiki/deferred%20tax%20liabilities Wikipedia. "Pro forma." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Pro_formaCC BY-SA 3.0http://en.wikipedia.org/wiki/Pro_forma Wikipedia. "Income statement." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Income_statementCC BY-SA 3.0http://en.wikipedia.org/wiki/Income_statement Wiktionary. "depreciation." CC BY-SA 3.0 http://en.wiktionary.org/wiki/depreciationCC BY-SA 3.0http://en.wiktionary.org/wiki/depreciation Wiktionary. "pro forma." CC BY-SA 3.0 http://en.wiktionary.org/wiki/pro+formaCC BY-SA 3.0http://en.wiktionary.org/wiki/pro+forma Wiktionary. "write-off." CC BY-SA 3.0 http://en.wiktionary.org/wiki/write-offCC BY-SA 3.0http://en.wiktionary.org/wiki/write-off Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements