Understanding Accounting
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ACC 300 · Meeting 10 · Thu 10/1

The balance sheet and the company project

74 slides · Unit 3 · Optional Kieso: Chapter 4; Chapter 12

Lecture

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  1. Slide 1. Understanding the balance sheet
  2. Slide 2. Financial position at a date
  3. Slide 3. Major types of assets
  4. Slide 4. Major types of liabilities
  5. Slide 5. Why classify assets and liabilities?
  6. Slide 6. Classifying assets
  7. Slide 7. Asset classification and expected use
  8. Slide 8. Assets in the ordinary operating process
  9. Slide 9. The operating cycle
  10. Slide 10. What is "current"?
  11. Slide 11. What about assets outside the operating cycle?
  12. Slide 12. Use identifies the classification
  13. Slide 13. Restrictions can affect cash classification
  14. Slide 14. iClicker check, asset classification
  15. Slide 15. Asset classification: answer
  16. Slide 16. Classify Northfield's assets
  17. Slide 17. Northfield's asset classifications
  18. Slide 18. Classifying liabilities
  19. Slide 19. How do we classify a liability?
  20. Slide 20. Settlement does not always mean paying cash
  21. Slide 21. Customer advances remain liabilities
  22. Slide 22. One loan can have two classifications
  23. Slide 23. Which Northfield liabilities are current?
  24. Slide 24. Northfield's liability classifications
  25. Slide 25. iClicker check, liability classification
  26. Slide 26. Customer advances: answer
  27. Slide 27. Equity and the classified balance sheet
  28. Slide 28. Equity as a residual interest
  29. Slide 29. Measurement and classification
  30. Slide 30. Build Riverton's classified balance sheet
  31. Slide 31. Classified balance sheet: assets
  32. Slide 32. Classified liabilities and equity
  33. Slide 33. Riverton Bicycles classified balance sheet
  34. Slide 34. Interpreting reported amounts
  35. Slide 35. Recognition, measurement, interpretation
  36. Slide 36. Economic value and asset recognition
  37. Slide 37. Different measurement processes
  38. Slide 38. Reported equity is not business value
  39. Slide 39. The notes are part of the balance-sheet story
  40. Slide 40. Interpreting reported amounts
  41. Slide 41. Reported amounts: answer
  42. Slide 42. Liquidity
  43. Slide 43. Liquidity and near-term obligations
  44. Slide 44. Working capital and the current ratio
  45. Slide 45. Calculate Riverton's liquidity measures
  46. Slide 46. Working capital and current ratio: answer
  47. Slide 47. A current ratio is not a cash ratio
  48. Slide 48. Same ratio, different composition
  49. Slide 49. Same ratio, different composition: answer
  50. Slide 50. Paying a current liability
  51. Slide 51. Paying a current liability: answer
  52. Slide 52. iClicker check, liquidity measures
  53. Slide 53. Liquidity measures: answer
  54. Slide 54. Comparing reported amounts
  55. Slide 55. Before comparing reported amounts
  56. Slide 56. A comparability problem
  57. Slide 57. Use comparable presentation
  58. Slide 58. Horizontal analysis
  59. Slide 59. Riverton's changes across years
  60. Slide 60. Common-size analysis
  61. Slide 61. Riverton's inventory share
  62. Slide 62. From a signal to the next question
  63. Slide 63. Balances and period activity
  64. Slide 64. A balance sheet is a snapshot
  65. Slide 65. Why use an average balance?
  66. Slide 66. Average-balance example
  67. Slide 67. Which comparison fits the question?
  68. Slide 68. Choosing the comparison: answer
  69. Slide 69. iClicker check, choosing an analysis
  70. Slide 70. Choosing an analysis: answer
  71. Slide 71. Course project and AI
  72. Slide 72. Company project placeholder
  73. Slide 73. Company project placeholder
  74. Slide 74. Account for current obligations

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Contents

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Opening and financial position Slides 1–5

  1. 1 Understanding the balance sheet
  2. 2 Financial position at a date
  3. 3 Major types of assets
  4. 4 Major types of liabilities
  5. 5 Why classify assets and liabilities?

Classifying assets Slides 6–17

  1. 6 Classifying assets
  2. 7 Asset classification and expected use
  3. 8 Assets in the ordinary operating process
  4. 9 The operating cycle
  5. 10 What is "current"?
  6. 11 What about assets outside the operating cycle?
  7. 12 Use identifies the classification
  8. 13 Restrictions can affect cash classification
  9. 14 iClicker check, asset classification
  10. 15 Asset classification: answer
  11. 16 Classify Northfield's assets
  12. 17 Northfield's asset classifications

Classifying liabilities Slides 18–26

  1. 18 Classifying liabilities
  2. 19 How do we classify a liability?
  3. 20 Settlement does not always mean paying cash
  4. 21 Customer advances remain liabilities
  5. 22 One loan can have two classifications
  6. 23 Which Northfield liabilities are current?
  7. 24 Northfield's liability classifications
  8. 25 iClicker check, liability classification
  9. 26 Customer advances: answer

Equity and the classified balance sheet Slides 27–33

  1. 27 Equity and the classified balance sheet
  2. 28 Equity as a residual interest
  3. 29 Measurement and classification
  4. 30 Build Riverton's classified balance sheet
  5. 31 Classified balance sheet: assets
  6. 32 Classified liabilities and equity
  7. 33 Riverton Bicycles classified balance sheet

Interpreting reported amounts Slides 34–41

  1. 34 Interpreting reported amounts
  2. 35 Recognition, measurement, interpretation
  3. 36 Economic value and asset recognition
  4. 37 Different measurement processes
  5. 38 Reported equity is not business value
  6. 39 The notes are part of the balance-sheet story
  7. 40 Interpreting reported amounts
  8. 41 Reported amounts: answer

Liquidity Slides 42–53

  1. 42 Liquidity
  2. 43 Liquidity and near-term obligations
  3. 44 Working capital and the current ratio
  4. 45 Calculate Riverton's liquidity measures
  5. 46 Working capital and current ratio: answer
  6. 47 A current ratio is not a cash ratio
  7. 48 Same ratio, different composition
  8. 49 Same ratio, different composition: answer
  9. 50 Paying a current liability
  10. 51 Paying a current liability: answer
  11. 52 iClicker check, liquidity measures
  12. 53 Liquidity measures: answer

Comparing reported amounts Slides 54–62

  1. 54 Comparing reported amounts
  2. 55 Before comparing reported amounts
  3. 56 A comparability problem
  4. 57 Use comparable presentation
  5. 58 Horizontal analysis
  6. 59 Riverton's changes across years
  7. 60 Common-size analysis
  8. 61 Riverton's inventory share
  9. 62 From a signal to the next question

Balances and period activity Slides 63–70

  1. 63 Balances and period activity
  2. 64 A balance sheet is a snapshot
  3. 65 Why use an average balance?
  4. 66 Average-balance example
  5. 67 Which comparison fits the question?
  6. 68 Choosing the comparison: answer
  7. 69 iClicker check, choosing an analysis
  8. 70 Choosing an analysis: answer

Course project and AI Slides 71–73

  1. 71 Course project and AI
  2. 72 Company project placeholder
  3. 73 Company project placeholder

Next meeting Slides 74–74

  1. 74 Account for current obligations