1. BMGT 220, Discussion #2 Kristian Sooklal kristiansooklal@yahoo.com 443-797-4588 (cell) | 410-575-4719 (text)

2. Important News Wizards vs. Grizzlies tonight at 8 Request tickets to Duke basketball game today Wake Forest game tomorrow at 2:00 pm Ravens Super Bowl in 55 hours

3. Topics in Chapter 1 What is Accounting? Three Activities: identification, recording, communication Who uses accounting? (External vs. Internal) GAAP Assets = Stockholder’s Equity + Liabilities Transactions Financial Statements

4. Plan for today Quiz 0 back Financial Statements Knowledge Check Questions Review of class notes + homework Any questions? Quiz 1

5. Net income is the difference between Revenues and Expenses. The income statement describes a company’s revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities. Income Statement

6. The net income of $1,200 increases Retained Earnings, but the dividend reduces Retained Earnings by $500. Statement of Retained Earnings

7. The Balance Sheet describes a company’s financial position at a point in time. Balance Sheet

8. Statement of Cash Flows

9. Knowledge Check # 5: A corporation purchased a $40,000 delivery truck by paying 4,000 cash and signing a $36,000 note payable. Immediately prior to this transaction the corporation had liabilities of $52,000, and owners’ equity $23,000. What is the total amount of the corporation’s assets after this transaction has been recorded? 1.$115,000 2.$111,000 3.$ 79,000 4.$ 71,000

10. Knowledge Check # 6: On January 1, 2012, Kroger company’s Stockholder’s Equity account had a balance of $23,500. During the year 2012, the company issued additional stock for $6,000, generated revenues of $92,200, and recorded expenses of $64,100. They also paid dividends to their shareholders. If the Stockholders’ Equity had a balance of $55,600 on December 31, 2012, determine the amount of dividends paid by Kroger Company during 2012. 1.$4,000 2.$3,000 3.$2,000 4.$1,000

11. Any Questions?

12. Practice Quiz Which of the following events will not be recorded as a transaction? – Appointment of new CEO Linda’s Corporation receives payment of $200,000 from customers who owed Linda money. This results in a: – $0 net effect on assets

13. Practice Quiz Beginning Equity: $145,000; Revenues: $210,000; Expenses: $165,000; Ending Liabilities: $72,000. What are ending assets? – Equity [$145000 + ($210000-$165000)] + Liabilities [$72,000] = $262,000 Beginning Assets: $100,000; Beginning Liabilities: $50,000; Ending Assets: $500,000; Ending Liabilities: $350,000, $50,000 stock issued, $25,000 dividends – $75,000

14. Practice Quiz Beginning retained earnings: $25,000; Expenses: $30,000; Dividends: $5,000; Ending Retained Earnings: $80,000 – Revenues: $90,000