balance sheet usefulness of balance sheet –liquidity –financial flexibility limitations of...
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Balance Sheet
Usefulness of Balance Sheet– Liquidity– Financial flexibility
Limitations of Balance Sheet– Values are not current value– Estimates are used– Valuable resources and claims are not
included
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Balance Sheet
Current Assets - cash and other assets expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.– Cash– Short term Investments– Accounts Receivable– Receivables– Inventory– Prepaid Expenses
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Balance Sheet
Long-Term Investments Property, Plant, & Equipment Intangibles Other Assets
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Balance Sheet
Current Liabilities - obligations reasonably expected to be liquidated either through the use of current assets or the creation of other current liabilities
Long-Term Liabilities Financial Instruments
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Balance Sheet (cont)
Owners’ Equity– Capital stock– Additional paid in capital– Retained earnings
Classified Balance Sheet Format
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Additional Information
Contingencies– Gain not recorded until contingency is
resolved– Loss recorded if probable and amount can
be reasonably estimated• if reasonably possible, then disclose the
existence of the contingency
Valuations & Accounting Policies Contracts & Negotiations
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Additional Information (cont.)
Subsequent Events– Events that provide additional evidence about
conditions that existed at the balance sheet date, affect the estimates used in preparing financial statements, and, therefore, result in needed adjustments
– Events that provide evidence about conditions that did not exist at the balance sheet date, but arise subsequent to that date and do not require adjustment of the financial statements
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Additional Information (cont.)
Techniques of Disclosure– Notes– Cross reference and contra items– Supporting schedules
Terminology
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Statement of Cash Flows
Purpose Content & Format
– Operating activities– Investing activities– Financing activities
Preparation Usefulness of the Statement of Cash
Flows