English Accounting - Lecture 7B

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,December 9, 2013,#,English for accountinglecture 7B,Email:,chuckezuma,Wechat: chucknyc,review,What is another name for the “statement of cash flows”?,What is the 1,st,section of the statement of cash flows?,What is the 2,nd,section of the statement of cash flows?,What is the 3,rd,section of the statement of cash flows?,What is the difference between the “accrual” method of accounting and the “cash” method of accounting?,Review - answers,What is another name for the “statement of cash flows”,?,Cash Flow Statement,What is the 1,st,section of the statement of cash flows,?,Operating Activities,What is the 2,nd,section of the statement of cash flows,?,Investing Activities,What is the 3,rd,section of the statement of cash flows?,Financing Activities,What is the difference between the “accrual” method of accounting and the “cash” method of accounting,?,The Accrual method recognizes revenues and expenses when incurred, whereas the,C,ash method recognizes revenues and expenses when cash is received or paid out.,review,Which of the following items belong under the operating expenses section of the statement of cash flows?,Depreciation,Capital Expenditures,Changes in Liabilities,Investments,Changes in Depreciation,Changes in Non-Current Assets,Changes in Accounts Receivables,Review answers,Depreciation,Yes,Capital,Expenditures,No,Changes in,Liabilities,Yes,Investments,No,Changes in,Depreciation,No,Changes in Non-Current,Assets,No,Changes in Accounts,Receivables,Yes,review,State whether the following term belongs in the “Investing Activities” section of the statement of cash flows:,Dividends Paid,Net Borrowings,Capital Expenditures,Changes in Liabilities,Investments,Adjustments to Net Income,Other Cash flows from Investing Activities,Review - answers,Dividends,Paid,No,Net,Borrowings,No,Capital,Expenditures,Yes,Changes in,Liabilities,No,Investments,Yes,Adjustments to Net,Income,No,Other Cash flows from Investing,Activities,Yes,Financing activities,This section of the statement of cash flows measures the flow of cash between a firm and its owners and creditors. Negative numbers can mean the company is servicing debt, but it can also mean the company is making dividend payments and stock repurchases, which investors might be glad to see.,Financing activities,The financing activities section of the cash flow statement is made up of four items:,Dividends Paid,Sale Purchase of Stock,Net Borrowings,Other Cash Flows from Financing Activities,Dividends paid,The term dividends paid represents all payments made to a companys stockholders.,Sale purchase of stock,The term sale purchase of stock represents all cash flows resulting from the sale or purchase of stock.,Net borrowings,The term net borrowings represents all cash flows resulting from the borrowing of cash.,Financing activities,review,What is the financing activities section of the cash flow statement?,What does the term dividends paid represent?,What does the term sale purchase of stock represent?,What does the term net borrowings represent?,What does the term other cash flows from financing activities represent?,Review - answers,What is the financing activities section of the cash flow statement,?,It is the section of the cash flow statement that shows the changes in cash flows resulting from financing activities,What does the term dividends paid represent,?,It represents changes in cash flows resulting from the payment of dividends to shareholders,What does the term sale purchase of stock represent,?,It represents the changes in cash flows resulting from the sale of purchase of shares,Review - answers,What does the term net borrowings represent,?,It represents the changes in cash flows resulting from the borrowing of cash,What does the term other cash flows from financing activities represent,?,Everything else,Review - vocabulary,Give a sentence explaining the definition of each of the following accounting terms:,DividendStockSecurityBondShareholder,Sole ProprietorshipPartnershipCorporation,Accrual BasisCash BasisExpenditureRatio,AICPAAnalystAuditFiscal YearCOGS,CPADepreciationEPSEquityLiability,LIFOFIFOGAAPGoodwillIntangibleTangible,LiquidityMarketInsolventIPO,Dividend,Dividends,Distribution of earnings to owners of a CORPORATION in CASH, other ASSETS of the corporation, or the corporations CAPITAL STOCK.,stock,An ownership right in a company,security,Any kind of transferable certificate of ownership including EQUITY SECURITIES and DEBT SECURITIES.,bond,One type of long-term PROMISSORY NOTE, frequently issued to the public as a SECURITY regulated under federal securities laws or state BLUE SKY LAWS. Bonds can either be registered in the owners name or are issued as bearer instruments.,shareholder,Owner of one or more shares of stock in a CORPORATION.,Sole proprietorship,A business entity having only one owner,partnership,A business entity having 2 or more owners,corporation,Form of doing business pursuant to a charter granted by a state or federal government. Corporations typically are characterized by the issuance of freely transferable CAPITAL STOCK, perpetual life, centralized MANAGEMENT, and limitation of owners LIABILITY to the amount they INVEST in the business.,Accrual basis,Method of ACCOUNTING that recognizes REVENUE when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.,Cash basis,Method of bookkeeping by which REVENUES and EXPENDITURES are recorded when they are received and paid.,expenditure,Payment, either in CASH, by assuming a LIABILITY, or by surrendering ASSET.,ratio,Comparison of actual or projected data for a particular company to other data for that company or industry in order to analyze trends or relationships.,aicpa,National professional membership organization that represents practicing CERTIFIED PUBLIC ACCOUNTANTS (CPAs). The AICPA establishes ethical and auditing standards as well as standards for other services performed by its members. Through committees, it develops guidance for specialized industries. It participates with the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and the GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB) in establishing accounting principles.,analyst,Person in a brokerage house, bank trust dept., or mutual fund group who studies a number of companies and makes buy or sell recommendations on the securities of particular companies and industry groups.,audit,A professional examination of a companys financial statement by a professional accountant or group to determine that the statement has been presented fairly and prepared using GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).,Fiscal year,Period of 12 consecutive months chosen by an entity as its ACCOUNTING period which may or may not be a calendar year. Fixed Asset - Any tangible ASSET with a life of more than one year used in an entitys operations.,cogs,Cost of Goods Sold,Figure representing the cost of buying raw materials and producing finished goods.,cpa,Certified Public Accountant,depreciation,Expense allowance made for wear and tear on an ASSET over its estimated useful life.,eps,Earnings per Share,equity,Residual INTEREST in the ASSETS of an entity that remains after deducting its LIABILITIES. Also, the amount of a business total assets less total liabilities. Also, the third section of a BALANCE SHEET, the other two being assets and liabilities.,liability,DEBTS or OBLIGATIONS owed by one entity (DEBTOR) to another entity (CREDITOR) payable in money, goods, or services.,lifo,ACCOUNTING method of valuing inventory under which the costs of the last goods acquired are the first costs charged to expense.,Fifo,First in First Out,ACCOUNTING method of valuing INVENTORY under which the costs of the first goods acquired are the first costs charged to expense.,GAAP,Generally Accepted Accounting Principles,Goodwill,Premium paid in the acquisition of an entity over the fair value of its identifiable tangible and intangible ASSETS less LIABILITIES assumed.,intangible,Asset having no physical existence such as trademarks and patents.,tangible,ASSETS having a physical existence, such as cash, land, buildings, machinery, or claims on property, investments or goods in process.,liquidity,Available money on hand to pay bills when they are due and to take care of unexpected needs for CASH.,market,Public place where products or services are bought and sold, directly or through intermediaries.,insolvent,When an entitys LIABILITIES exceed its ASSETS.,Ipo,Initial Public Offering,