hospitality financial accounting week 5 financial statements matakuliah: v0232 – akuntansi...
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Hospitality Financial AccountingWeek 5
Financial Statements
Matakuliah : V0232 – Akuntansi Keuangan HotelTahun : 2009
6-1 Multi-Step vs. Single-Step Income Statement
Multiple-step Single-step
Sales Revenue Net Sales a Total Revenue
Cost of Goods Sold Gross Profit b Total Expenses
Operating Expenses
Income from operations c
Non-operating items
Net Income d
aa Sales - Sales returns - Sales Discounts Sales - Sales returns - Sales Discounts
bb Net sales - Cost of goods sold Net sales - Cost of goods sold
cc Gross profit - Operating expenses Gross profit - Operating expenses
dd Income from operations + Other revenue/gains - other expenses/losses Income from operations + Other revenue/gains - other expenses/losses
Other Revenues and Gains Other Expenses and Losses
Interest revenue from notes receivable and marketable securities Interest expense on notes and loans payable
Dividend revenue from investments in capital stock Casualty losses from recurring causes such as vandalism and accidents
Rent revenue from subleasing a portion of the store Losses from the sales of abandonment of property, plant, and equipment
Gain from sale of property, plant and equipment Loss from strikes by employees and suppliers
6-2 Typical Receipts and Payments Classified by Activity
Operating activitiesOperating activities Cash inflows:Cash inflows: From sale of goods or services.From sale of goods or services. From returns on loans (interest) and on equity securities (dividends).From returns on loans (interest) and on equity securities (dividends). Cash outflows:Cash outflows: To suppliers for inventory.To suppliers for inventory. To employees for services.To employees for services. To government for taxes.To government for taxes. To lenders for interest.To lenders for interest. To others for expenses.To others for expenses.
Investing activitiesInvesting activities Cash inflows:Cash inflows: From sale of property, plant, and equipment.From sale of property, plant, and equipment. From sale of debt or equity securities of other entities.From sale of debt or equity securities of other entities. From collection of principal on loans to other entities.From collection of principal on loans to other entities. Cash outflows:Cash outflows: To purchase property, plant, and equipment.To purchase property, plant, and equipment. To purchase debt or equity securities of other entities.To purchase debt or equity securities of other entities. To make loans to other entities.To make loans to other entities.
Financing activitiesFinancing activities Cash inflows:Cash inflows: From sale of equity securities (company’s own stock).From sale of equity securities (company’s own stock). From issuance of debt (bonds and notes).From issuance of debt (bonds and notes). Cash outflows:Cash outflows: To stockholders as dividends.To stockholders as dividends. To redeem long-term debt or reacquire capital stock.To redeem long-term debt or reacquire capital stock.
6-3 Information Sources for Activities
OPERATING ACTIVITIES
Analyze Income statement items
Changes in noncash current asset and current liability items
FINANCING ACTIVITIES
Analyze increases and decreases in long-term liability and stockholders’ equity items
INVESTING ACTIVITIES
Analyze increases and decreases in investments and long-term asset items
6-4 Format of the Statement of Cash Flows
COMPANY NAMEStatement of Cash Flows
Period Covered
Cash flows from operating activities (List of individual items) Net cash provided (used) by operating activities
XXXXX
Cash flows from investing activities (List of individual inflows and outflows) Net cash provided (used) by investing activities
XXXXX
Cash flows from financing activities (List of individual inflows and outflows) (Net cash provided (used) by financing activities
XXXXX
Net increase (decrease) in cash XXX
Cash at beginning of period XXX
Cash at end of period XXX
Noncash investing and financing activities (List of individual noncash transactions)
XXX
6-5 Converting Net Income to Net Cash Provided (Used) by Operating Activities
Accrual Basis of Accounting Cash Basis of Accounting
Earned Revenue
Net Income
Adjust Revenues to Cash Receipts
Net Cash Provided by Operating Activities
Incurred Expenses Adjust Expenses to Cash Disbursements
INDIRECT METHOD
1. Begin with net income and adjust for income statement items that did not effect cash.
2. Reconcile net income to net cash provided (used) by operating activities.
DIRECT METHOD
1. Adjust each item on the income statement from the accrual basis to the cash basis.
2. Major classes of operating cash receipts and cash payments are reported.
OROR
6-6 Operating Activities – Indirect Method Adjustments for Noncash Items
Adjustments for noncash charges and credits
Noncash charges and creditsAdd to (Deduct from)
Net Income
Depreciation Expense Add
Patent amortization expense Add
Depletion expense Add
Loss on sale of equipment Add
Gain on sales of equipment Deduct
Adjustments to convert net Adjustments to convert net income to net cash income to net cash provided by operating provided by operating activities.activities.
All noncash expenses are added to net income, and all noncash All noncash expenses are added to net income, and all noncash revenues are subtracted from net income.revenues are subtracted from net income.
6-7 Operating Activities – Indirect Method Adjustments For Current Assets and
Liabilities
Adjustments for Current Items
For Changes In: Add to Net IncomeDeduct from Net Income
Current assets Decreases Increases
Current liabilities Increases Decreases
For Changes in Individual Accounts: Add to Net Income
Deduct from Net Income
Accounts receivable Decrease Increase
Inventory Decrease Increase
Prepaid expenses Decrease Increase
Accounts payable Increase Decrease
Accrued expenses payable Increase Decrease
Adjustments to convert net income Adjustments to convert net income to net cash provided by operating to net cash provided by operating
activities.activities.
All changes in current assets are handled in a similar manner All changes in current assets are handled in a similar manner and all changes in current liabilities are handled in a similar and all changes in current liabilities are handled in a similar manner, but the adjustments are exactly the opposite.manner, but the adjustments are exactly the opposite.
6-8 Cash Flows from Operating Activities – Indirect Method
Problem Problem DataData
DEMONSTRATION COMPANYComparative Balance Sheet Accounts
December 31
Current Assets 2003 2002 Change
Accounts receivable $30,000 $39,000 $9,000 Decrease
Prepaid rent 15,000 10,000 5,000 Increase
Inventory 20,000 18,000 2,000 Increase
Current Liabilities
Accounts payable 18,000 12,000 6,000 Increase
Interest payable 6,000 2,000 4,000 Increase
Taxes payable 3,000 5,000 2,000 Decrease
DEMONSTRATION COMPANYIncome Statement
For the Year Ended December 31, 2008
Revenues Sales revenue Gain on sale of land Total revenues
$400,00020,000
$420,000
Expenses Cost of goods sold Operating expenses Depreciation expense Interest expense Income tax expense Total expenses
280,00075,00015,000
8,0007,000
385,000
Net Income $35,000
Using the data Using the data provided, provided, prepare the prepare the cash flows from cash flows from operating operating activities section activities section of the statement of the statement of cash flows of cash flows using the using the indirect method.indirect method.
6-8 Cash Flows from Operating Activities – Indirect Method (continued)
DEMONSTRATION COMPANYStatement of Cash Flows (Indirect Method)
For the Year Ended December 31, 2008
Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Gain on sale of land Decrease in accounts receivable Increase in prepaid rent Increase in inventory Increase in accounts payable Increase in interest payable Decrease in taxes payable Net cash provided by operating activities
$15,000(20,000
)9,000
(5,000)(2,000)
6,0004,000
(2,000)
$35,000
5,000$40,00
0