Financial accounting
Chapter 1 Financial statements and business decisions
The four basic financial statements: an overview
Internal decision makers: managers
External decision makers: stockholders and creditors
Accounting: a system that collects and processes (analyzes, measures, and records) financial
information about an organization and reports that information to decision makers.
Financing activities: borrowing or paying back money to lenders and receiving additional funds from
stockholders or paying them dividends.
Investing activities: buying or selling items such as plant and equipment used in the production of
beverages.
Operating activities: the day-to-day process of purchasing raw tea and other ingredients from
suppliers, manufacturing beverages, delivering them to customers, collecting cash from customers,
paying suppliers.
Balance sheet: reports the amount of assets, liabilities, and stockholders’ equity of an accounting
entity at a point in time.
Heading:
- name of entity
- title of statement
- specific date of the statement
- unit of measure
Accounting entity: the organization for which financial data are to be collected.
Basic accounting equation:
Totale activa = Schulden + eigen vermogen
Activa zijn economische bronnen die worden beheerd door de onderneming als een resultaat van
transacties uit het verleden.
Schulden en eigen vermogen zijn bronnen van financiering voor economische bronnen
The 5 basic financial statements:
1. Balans 1. Statement of financial position
2. Verlies en winstrekening / 2. Income statement / profit & loss
Resultatenrekening account
3. Totaal resultaat 3. Statement of other comprehensive
4. (Mutatiestaat) Eigen vermogen income
5. Kasstroomoverzicht 4. Statement of equity / statement of
retained earnings
2 & 3 = comprehensive income statement 5. Statement of cashflow
,Balans
Debet Credit
Vaste Activa Eigen vermogen
Non current assets Equity
Vlottende activa Schulden lang
Current assets Non current liabilities
Total assets Schulden kort
Current liabilities
Total liability & assets
Assets = activa Equity = eigen vermogen
- non-current assets (Fixed assets) = vaste activa - aandelen kapitaal = common stocks / shares
- Materiële vaste activa = PPE - agio = contributed capital
- Immateriële activa = intangible assets - reserves ==
- current assets = vlottende activa - winstreserve = retained earnings
- Effecten = short-term investment
- Debiteuren = accounts receivable Liabilities = schulden / passiva
- Voorraad = inventory (to be sold) - long-term liabilities = schulden op lange
- Voorraad materiaal = supplies termijn
- Vooruit betaalde kosten = prepaid expenses - loans = leningen
- Deelnemingen = long term investment - hypotheek = mortgage
- Kas = cash - provisions = voorzieningen
- short-term liabilities = schulden op korte
termijn
- crediteuren = accounts payable
- nog te betalen kosten = accrued expenses
- (bank) lening = notes payable
- te betalen VPB = taxes payable
- obligaties = bonds
,Winst- en verliesrekening/The income statement
Statement of income: reports the revenue less the expenses of the accounting period
Revenues= expenses + net income
Revenues (Net) are earnings from the … of goods or services to customers. Revenue is normally
recognized in the period in which goods and services are sold, not necessarily the period in which
cash is received. Net income is niet altijd gelijk aan opbrengsten van operationele activiteiten.
Operational lease komt niet op de balans omdat het kort is, financial lease komt wel op de balans.
Verlies en winstrekening
Cost of goods sold sales revenue
Wages expense Fee revenue (vergoeding)
Rente expense Interest revenue
Interest expense Rent revenue
Depreciation expense
Amortisation expense (Amortisation = afschrijving
immateriële vaste activa)
Advertising expense
Insurance expense
Repair expense
Income tax expense
De kosten van niet verkochte voorraad komen niet op de verlies-en winst rekening te staan.
Netto-omzet
Kostprijs verkopen -
Brutowinst
Verkoopkosten
Algemene administratiekosten
Totale bedrijfskosten
Bedrijfsresultaat
Rentebaten
Rentelasten
Netto rentebaten mbt pensioenen
Overige rentelasten
Netto rentelasten
Winst voor belasting
Vennootschapsbelasting
Aandeel in resultaat van joint ventures
Resultaat uit voortgezette activiteit
Resultaat uit beëindigde activiteiten
,Nettowinst
Net profit margin: income from continuing operations : net sales
EPS: earnings per share = winst : aantal gemiddelde aandelen
Income statement
Revenues
Expenses
Other gains & losses
= income before tax
Income tax expense
Net income (nettowinst)
,Totaaloverzicht
Netto winst +/-
Veranderingen in herwaardering
Veranderingen in valuta
Ongerealiseerde winsten/verliezen in aangekochte effecten
Overige verandering in het EV niet veroorzaakt door houders
EV……………………………………………………………………..
Comprehensive income (CI)
Verschil in netto winst → CI in EV
Verschil tussen netto winst en comprehensive income komt direct in het eigen vermogen terecht.
Statement of other comprehensive income = het overzicht van niet gerealiseerde resultaten.
Een getal tussen haakjes is vaker negatief!
Eigen vermogen
Statement of stockholders equity: reports the way that net income and the distribution of dividends
affect the financial position of the company during a period.
Beginning retained earnings + net income - dividends = ending retained earnings
Cash flow
The statement of cash flows reports the inflows and outflows of cash during the period in the
categories of operating, investing and financing.
Liquide middelen begin van het jaar
Cash & cash equivalents begin of the year
Kasstromen uit operationele activiteiten ≈ nettowinst
Cash generated by operating activities CFO
Kasstromen uit investeringsactiviteiten
Cash used by investing activities CFI
Kasstromen uit financieringsactiviteiten
Cash generated by financing activities CFF
Verandering in liquide middelen
Increase (decrease) in cash & cash equivalents
Liquide middelen einde van het jaar
Cash & cash equivalents end of the year
, Kosten zijn vaak niet gelijk aan de uitgaven.
Accounting: a system that collects and processes (analyzes, measures, and records) financial
information about an organization and reports that information to decision makers.
Financing activities: borrowing or paying back money to lenders and receiving additional funds from
stockholders or paying them dividends.
Investing activities: buying or selling items such as plant and equipment used in the production of
beverages.
Het beginsaldo van de balans is het beginsaldo van het kasstroomoverzicht en het eindsaldo van het
kasstroomoverzicht komt terecht op het eindsaldo van de balans. Dit kan alleen bij een indirect
kasstroomoverzicht.
Indirect of direct?
Bij een direct kasstroomoverzicht begint het overzicht met de ontvangsten van klanten en de
betalingen.
Bij een indirect kasstroomoverzicht begint het overzicht met de nettowinst.
Notes and financial statement formats
Notes (footnotes): provides supplemental
information about the financial condition of a
company, without which the financial
statements cannot be fully understood.
Generally accepted accounting principles
(GAAP): the measurement and disclosure
rules used to develop the information in
financial statements.
In de VS is er de SEC the Securities and
Exchange Commission die de regels bepaald
van de financial statements van
ondernemingen die aandelen hebben.
Vandaag heeft de FASB Financial Accounting
Standards Board deze verantwoordelijkheid.
(Accounting Standards Codification)
FASB creëert U.S. GAAP
Ze willen de economische consequenties hiervan beperken:
- effects of the selling price of a company’s stock
- Effects on the amount of bonuses received by management and employees
- Loss of competitive information to other companies
,Ethical conduct
1. Identify the benefits of a decision (often to the manager or employee involved) and who will
be harmed
2. Identify alternative courses of action
3. Choose the one you would like your family and friends to see reported on your local new.
That is usually the ethical choice.
Responsibility and the need for controle
Audit: an examination of the financial reports to ensure that they claim and conform with generally
accepted accounting principles.
Three steps to ensure the accuracy of records: system of controls, external auditions, board of
directors.
Ponzi scheme: met de betalingen van nieuwe crediteuren oude crediteuren afbetalen. (Door nieuw
geld te lenen een oude lening af te betalen).
Relationships among the statements:
1. Net income from the income statement results in an increase in ending retained earning on
the statement of retained earnings
2. Ending retained earnings form the statement of retained earnings is one of the two
components of stockholder’s equity on the balance sheet
3. The change in cash on the statement of cash flows is added to the beginning-of-year balance
in cash to arrive at end-of-year cash on the balance sheet
,Chapter 2 Investing and financing decisions and the accounting system
Overview of Accounting Concepts
Objective of Financial Reporting
Primary objective of financial reporting to external users: to provide financial information about the
reporting entity that is useful to existing and potential investors, lenders, and other creditors in
making decisions about providing resources to the entity.
Most users are interested in information to help them asses the amounts, timing, and uncertainty of
a business’s future cash inflows and outflows.
Qualitative Characteristics of Useful Information
Fundamental Qualitative characteristics of useful information: relevance (including materiality) and
faithful representation. Attributes that enhance qualitative characteristics: comparability,
verifiability, timeliness and understandability.
Relevant information: information that can influence a decision; it has predictive and/or feedback
value.
Faithful representation: requires that the information be complete, neutral, and free from error.
Recognition and Measurement Concepts
Separate entity assumption: states that business transactions are separate from the transactions of
the owners.
Going concern assumption: states that businesses are assumed to continue to operate into the
foreseeable future (also called the continuity assumption).
Monetary unit assumption: states that accounting information should be measured and reported in
the national monetary unit without any adjustment for changes in purchasing power.
Mixed-attribute measurement model: applied to measuring different assets and liabilities of the
balance sheet.
Cost (historical cost): the cash-equivalent value of an asset on the date of the transaction.
Elements of the balance sheet:
- Assets: probable future economic benefits owned by the entity as a result of past
transactions.
- Current assets: assets that will be used or turned into cash within one year. Inventory is
always considered a current asset regardless of the time needed to produce and sell it.
- Liabilities: probable future sacrifices of economic benefits arising from a present obligation
to transfer cash, goods, or services as a result of a past transaction.
- Current liabilities: short-term obligations that will be paid in cash (or other current assets)
within the current operating cycle or one year whichever is longer.
, - Stockholders’ equity (shareholders’ equity or owners’ equity): the financing provided by
the owners and the operations of the business.
Financing provided by owners is referred to as contributed capital.
Financing provided by operations is referred to as earned capital or retained earnings: cumulative
earnings of a company that are not distributed to the owners and are reinvested in the business.
Op de balans zijn twee soorten events met transacties:
- External events: dit zijn ruilingen van activa of goederen van het ene bedrijf naar een ander
bedrijf.
- Internal events: dit zijn events die geen ruilingen zijn tussen verschillende bedrijven, maar
binnen het bedrijf zoals afschrijvingskosten.
Bij een transactie hoeft er niet altijd sprake te zijn van een ruil in activa of passiva. Een contract
bijvoorbeeld is niet meer dan een ruil van beloften.
Accounts
Account: a standardized format that organizations use to accumulate the dollar effect of transactions
on each financial statement item.
General ledger: grootboek
Unearned revenue: zijn altijd schulden want dit representeert de hoeveelheid betaald in het verleden
aan het bedrijf door anderen die toekomstige goederen of diensten verwachten van het bedrijf.
How Do Transactions Affect Accounts?
Transaction analysis: the process of studying a transaction to determine its economic effect on the
business in terms of the accounting equation.
Two principles underlying the transaction analysis process follow:
- every transaction affects at least two accounts; correctly identifying those accounts and the
direction of the effect (whether an increase or decrease) is critical.
- The accounting equation must remain in balance after each transaction.
Par value: 1) the nominal value per share of stock as specified in the corporate charter, 2) Also,
another name for bond principal, or the maturity amount of a bond.
Common stock: the basic voting stock issued by a corporation.
Additional paid-in capital (paid-in capital, contributed capital excess of par): the amount of
contributed capital less the par value of the stock.
How Do Companies Keep Track Of Account Balances?
Accounting cycle: the process used by entities to analyze and record transactions, adjust the records
at the end of the period, prepare financial statements and prepare the records for the next cycle.
, Debit: the left side of an account. Credit: the right side of an account
Journal entry: an accounting method for expressing the effects of transaction on accounts in a
debits-equal-credits format.
T-account: a tool for summarizing transaction effects for each account, determining balances and
drawing inferences about a company's activities.
How Is The Balance Sheet Prepared And Analyzed
Trial balance: a list of all accounts with their balances to provide a check on the equality of the debits
and credits. (Vaak gebruikt als een balans met alleen investerings en financieringsactiviteiten)
GAAP IFRS
Assets: Assets:
Current Noncurrent
Noncurrent Current
Liabilities: Stockholders’ equity
Current Liabilities:
Noncurrent Noncurrent
Stockholders’ equity Current
Current ratio—> current assets:current liabilities
Hoe vaak men de schulden kan betalen
Cash flows wordt verdeeld in drie categorieën:
- operating activities
- Investing activities include buying and selling noncurrent assets and short- and long-term
investments
- Financing activities include borrowing and repaying debt, including short-term bank loans;
issuing and repurchasing stock; and paying dividends. (Not lending money!!)
Alleen transacties die betrekking hebben tot ‘cash’ horen bij de cashflow
Start van de periode
- transactionele analyse (activa = schulden + eigen vermogen)
- Journaalposten
- Grootboekrekeningen
Bij schulden als het toeneemt komt het bij credit erbij en als het afneemt gaat het bij debit eraf.
Stockholders equity wordt verdeeld in 3 delen
Common stock and additional paid-in capital & retained earnings
Contributed capital & earned capital
Als contributed capital toeneemt dan staat dit ook weer credit
