Cash Flow Statement:

Operating Activities

- Reciepts from customers

- reciepts of interest

- reciepts of dividents

-payments to suppliers

- payments to employees

- payments for interest

- payments for income tax

Cash Flow Statement:

Investing Activities

- Receipts from sale of non-current asset

- Receipts from sale of investment

- Receipts from collection of loans and bills receivable

- Payments for acquisition of non-current investment

- Payments for purchase of investment

- Payments for new loans made

Cash Flow Statement:

Financing Activities

- Receipts from issue of long term debt

- Receipts from issue of shares

- Payments of long-term debt

- Payments for share buy backs

- Payments of dividends

Cash flow statement - Operating activity

Receipts from customers formula

Sales revenue + Decrease in accounts receivable

                    -  Increase in accounts receivable

Cash Flow Statement - Operating Activities

Receipts of interest formula

Interest revenue + Decrease in interest receivable

                        -  Increase in interest receivable

Cash flow statement - Operating activities

Receipts of dividents formula

Divident revenue + Decrease in dividends receivable

                        -  Increase in dividends receivable

Cash flow statement - Operating Activities

Payments to suppliers formula

Cost of sales  + Increase in inventory 

                     -  Decrease in inventory

                               + Decrease in accounts payable

                               -  Increase in accounts payable

Cash Flow Statement - Operating Activities

Payments to employee's Formula

Salary Expense + Decrease in salary payable

                      -  Increase in salary payable

Cash Flow Statement - Operating Activities

Payments For interest formula

Interest Expense + Decrease in interest payable

                        -  Increase in interest payable

Cash Flow Statement - Operating Activities

Payments for income tax formula

Income tax expense + Decrease in Tax Payable

                             -  Increase in Tax Payable

What Date headding does the balance sheet, Income Statement & Cash Flow Statement receive?

Balance Sheet: AS AT ____

Income Statement: FOR THE PERIOD ENDED ___

Cash Flow Statement: FOR THE PERIOD ENDED____

MEASURING THE COAST OF PROPPERTY:

What is included in Land and Land improvements?

- Purchase price

- Agents COmission

- Government stamp duty

- Survey and legal fee's

- Cost of clearing the land and removing unwanted buildings.

* The Cost Of Land Is Not Depreciated*

MEASURING THE COST OF PROPPERTY:

What is included in costructing a building?

- Architechtural fee's

- Building permits

- Contractor charges

- Payments for materials, labour & overheads.

- Capitalised interest costs, if self constructed.

MEASURING THE COST OF PROPPERTY:

What are the costs involved in purchasing an existing building?

- Purchase Price

- Costs to renovate the building to ready it for use.

MEASURING THE COSTS OF PROPPERTY:

What costs are involved in machinery and equipment?

- Purchase Price

- Transportation Charges

- Insurance while in transit

- Customs duty or similar charges

- Installation charges

- Costs of testing the asset before its used.

Capital expenditure VS Expense.

When do you capitalise the expense on equipment?

What is the journal for capitalising expenditure?

DR Non Current Assets

CR Capital

DR Repairs and maintenance expense

CR Cash

Depreciable amount x amount of time.

eg. ($41,000 - $1000) x 1/5 (one year of 5) = $8,000

1 - n √ r/c 

(one minus N to the power of R over C)

1. Bring the depreciation up to date

2. remove the old, disposed of asset from the books. Make the asset account equal zero by crediting the asset for its original cost. make the accumulated depreciation account for the asset equal zero by debiting it for all the depreciation taken to date on the asset.

3. record the value of any cash (or other acocunts) paid (or received) for the asset.

4. Determine the difference between the total debits and total credits made in the journal entry. 

DR Depreciation expense

Cr Accumulated depreciation

DR accumulated depreciation

DR loss on disposal of truck

CR Truck

DR depreciation expense

CR accumulated depreciation

DR accumulated depreciaton

DR cash

DR loss on truck

CR Truck

DR Depreciation expense

CR accumulated depreciation

DR accumulated depreciation

DR (item or cash received in exchange)

CR The amount gained

CR Truck (original)

DR Inventory $700

CR Short term notes payable (because its within a year) $700

Then calculate the interest for 3 months:

DR interest expense ($700 x 0.10 x 3/12 (3 months)) = $18

CR interest payable $18

Then the full interest and note payable at end of year.

DR short term note payable $700

DR Interest Payable $18

DR Interest expense (full interest minus interest payable) $52

CR Cash $770

DR Cash

CR Unearned revenue

DR Unearned revenue

CR Service Revenue

1. Record sales on acocunt         3. Estimate the warrenty payable (3% of sales)

DR Accounts receivable                 DR Warrenty expense

CR Sales revenue                        CR Warrenty Payable

2. Record cost of sales              4. Record the actual amount of warrenty claims paid.

DR Cost of sales                         DR Warrenty payable

CR inventory                              CR Cash

Accounting for payroll

What is gross and net pay?

Gross pay: The total amount of salary, wages, comission, and bonus earned by the employee during a pay period

Net Pay: The amount the employee gets to keep.

DR Salary expense (or wage, or comission etc.)

CR Employee income tax payable

CR Payabe to australian red cross

CR Employee suerannualtion contributions

CR Cash or salary payable to employee's

DR Health insurance expense

DR Life insurance expense

DR Superannuation Expense

CR      Employee benefits payable

DR Payroll tax expense

CR    Payroll tax payable

DR Land

DR Building

CR Mortgage payable

CR Cash

Horizontal analysis conpares one year to the next.

Step 1: Calculate the dollar amount of change from earlier period, to later period.

Step 2: Divide the dollar mount of change by the earlier period amount. This will give you the % change.

Vertical analysis % =

Each income ststement item / Revenues (net sales)

x 100 (to make into percent).

Current assets / current liabilities

(answer should be around 2 or slightly higher)

Cash + Short term investments + net current receivables / Current liabilities.

(Shows ability to pay current liabilities if they came due immediately)

Cost of sales / average inventory

(a high rate of turnover indicates ease of selling inventory)

365 days / inventory turnover ratio

(shows us the average number of days that inventory is held by the company)

Gross profit / Net sales

(measures the profitability of each net sales dollar)

Net credit sales / Average net accounts receivable

(measures the ability to collect cash from credit customers)

The higher the ratio, the faster the cash collections.

Total liabilities / Total assets

The debt ratio shows the proportion of assets financed with debt.

If the debt ratio is 1, then all the assets are financed with debt.

Total liabilities / total equity

(the debt to equity ratio shows the proportion of total liabilities relative to the proportion of total equity that is financing the companies assets)

Profit / net sales

Shows the percentage of each net sales dollar earned as profit.

(Profit + Interest before tax expense) / Average total assets

Measures a company's success in using assets to earn a profit.

Net sales / Average total assets

Measures the amount of net sales generated for each average dollar of total assets investes.

(measures how well a company is using its assets to generate sales revenues)

Dividend per prdinary share / market price per ordinary share.

This ratio measures the percentage of a share's market value that is returned anually as dividends to shareholders.

Dividend per ordinary share / earnings per share

This ratio measures the percentage of earnings paid annualy to ordinary shareholders as cash dividends.

Total ordinary shareholders equity / number of ordinary shares issued.

(book value of the shares)