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ADMS 1550 (updated), Slides/notes, Text details - Coggle Diagram
ADMS 1550 (updated)
Chapter 1: Introduction to Financial Statements
Forms of Business Organization
Sole Proprietorship
Partnership
Corporation
Stock exchanges
Elements of an Annual Report
Hybrid
Uses and Users of Financial Information
Internal Users
External users
Investors
Creditors
This information is analyzed and looked into for insights by...
Data analytics
Data analytics chart
Ethics of financial reporting
Because of this, the Sarbanes-Oxley Act was created
How to solve an ethical dilemma
The Three types of Financial Activity
The Accounting Information System keeps track of the results of each
Financing Activities
How are you going to raise capital for your business?
Equity financing
Earning common stock
Otherwise known as stock/share
Debt financing
Otherwise known as liabilities
A lot of terms have the term "payable"
Investing Activities
Assets
Investments in other companies
Stocks
Bonds
Investments in equipment for the business
Purchase of resources a company needs to operate
Operating Activities
To earn Revenue
Can come from being a creditor
Expenses
Most expenses have the term "expenses" in them
Liabilities may result
Assets with shorter lives are used to run the business
How do these activities relate to the four financial statements?
What are different accounts mentioned in financial activities?
The Four Financial Statements
Income statement
This is where you will see revenue and expenses
Useful for investors and creditors too
Retained earnings statement
Profit that is invested back into the company instead of given away as dividends
Balance sheet
Basic accounting question
Cash Flow Statement
We don't have to prepare this, just understand what it is
Interrelation of Statements
Chapter 2: A Further Look at the Balance Sheet
The Classified Balance Sheet
Standard balance sheet classifications
Assets
Long-term investments
Alternative terminology: investments
Investments in stocks/bonds that are held for more than one year
Long-term assets
Long-term notes receivable
Property, plant, and equipment
Alternative terminologies: fixed assets or plant assets
Depreciation
Accumulated depreciation
Land would never depreciate
Includes anything that can be considered property
Intangible assets
Exclusive rights
Alternative terminology: other assets
Current assets
Operating cycle
Liabilities and Stockholder's Equity
Liabilities
Current liabilities
Long-term liabilities
Stockholder's Equity
Common stock
Retained earnings
Analyzing the Balance Sheet Ratios
Ratio Analysis
Financial ratio classifications
Liquidity Ratios
Solvency Ratios
Profitability Ratios
How "Financial ratio classifications" can be used
Intracompany comparisons
Industry-average comparisons
Intercompany comparisons
Using a Classified Balance Sheet
Liquidity
Working Capital = Current Assets - Current Liabilities
Current Ratios = Current Assets / Current Liabilities
Does not take into account composition of Current Assets
Solvency
Solvency ratios
Debts to Assets Ratios = Total Liabilties/Total Assets
Slides/notes
Text details