Kế toán, kiểm toán - Chapter 3: Financial accounting reports

Chapter 3 Financial accounting reports1 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by ObjectivesDescribe the purpose and format of a Statement of Financial Performance.Explain the difference between gross profit and net profit.Differentiate between cash and accrual accounting systems. Explain the matching principle and the need for balance day adjustments.2 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Objectives (continued)Define depreciation, closing inventory, prepayments, accruals and doubtful debts.Describe the purpose and format of a Statement of Financial Position. Prepare a classified Statement of Financial Performance and a classified Statement of Financial Position from the Trial Balance of a sole trader, with no balance day adjustments.3 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Objectives (continued):Explain the use of an Appropriation Statement for a partnership and a company.Describe the purpose and format of a Statement of Cash Flows.Explain the differences between company financial reports prepared for internal purposes, and those prepared to meet statutory requirements.4 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performanceaims to match the revenue of the business with the expenses associated with earning that revenue for the relevant period of timeis produced for a particular Period of timeis generally produced for a year at 30 June (end of the Financial year)can be produced at more frequent intervalsdetermines the profit or loss of the business.5 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Two types of businessesService firmsless complicated statements Trading/manufacturing firmsmore complicated statements.6 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Service Firms7 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Trading firmsCOGSBeg Inv + Purchases + buying exp – (Closing Inv + Purch returns)Gross profitNet sales less COGS8 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)9 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Trading firmOther revenueall other revenue not from the sale of inventorye.g. rent, interestSelling expensesall expenses related to the sale of inventorye.g. advertising, salesperson salaries.10 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Admin expensesall expenses related to the running of the businesse.g. office wages, rent, electricityFinancial expensesall finance expensese.g. discount allowed, bad debts.11 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Net profitGross profit + other revenues less all other expenses12 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Abnormal revenues and expensesItems that normally appear on the Statement of Financial Performance.Due to some abnormality such as the magnitude of the items, they are not typical of the average operations of the business.They are reported separately.13 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)14 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Performance (continued)Gross profitonly applies to a business involved in the trading of stockshows the difference between sales revenue and the direct costs that are associated with purchasing the stock of goods that have been sold. Net profitis the difference between all revenues and all expenses for the period.15 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Cash and accrual accountingCash accounting systems involve recording transactions when the flow of cash occurs.Accrual accountingrecords both revenue and expenses as they occur regardless of whether the flow of cash accompanies the transactione.g. credit sales are recorded as revenue and credit purchases as an expense.16 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Balance day adjustmentsMatching principleinvolves dividing the continuous life of a business into set periodsenables revenues earned and the expenses incurred can be matched within each periodcauses adjustments to be needed at the end of the period to determine profit correctly.17 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by DefinitionsDepreciationClosing inventoryPrepaymentsAccrualsDoubtful debts18 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by DepreciationDepreciation is the annual allocation of thecost of a non-current asset over its useful life.Expense is the purchase cost.Accumulated depreciationappears in the Statement of Financial Position as a ‘contra’ account or negative asset.19 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Depreciation (Continued)General Journal entryDepreciation expense DebitAccumulated depreciation Credit Straight-lineCost allocated evenly over it’s useful life.20 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Depreciation (continued)Reducing balancethe cost of the asset is depreciated more in the earlier years of the asset using a percentage to reduce the book value annually.21 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Depreciation (continued)Units of use methodthe use of the asset is allocated relative to its life.22 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Closing inventoryInventory balance at the end of the year is:determined by a stock-takeshown in the Statement of Financial Position as a current asset.23 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by PrepaymentsWhere an expense is paid before it is incurred:the un-incurred portion of the prepayment is treated as an asset and recorded in the Statement of Financial Positionthe incurred portion is recorded in the Statement of Performance as an expense.24 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by AccrualsWhere an expense has been incurred but is yet to be recorded for the accounting period, the expense needs to be increased to reflect the true amount of the expense.An expense is recorded in the Statement of Financial Performance and a current liability in the Statement of Financial Position.25 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Doubtful debtsWhere a portion of debtors turn out to be non-payers, a Provision for doubtful debts account will need to be created in the Statement of Financial Position.Doubtful debts are recorded in the Statement of Financial Performance as an expense.26 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial PositionPrepared at the end of the financial year, 30 June XXXXincludes Assets, Liabilities and Owners Equityreflects the financial position of a business on the last day of the period.27 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Presentation of Statement of Financial Position: T-Format28 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Statement of Financial Position: Narrative-Format29 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Appropriation StatementAn Appropriation Statement:details how the profit of a partnership is company are distributedprovides owners with an explanation of how the net profit of the business is distributed.30 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Appropriation Statement (continued)In an Appropriation Statement for Partnerships:net profit is divided between partnerspartners’ entitlements need to be calculated beforehandentitlements include interest on capital, and interest on loanstaxation of partnerships is done at individual partners’ level.31 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Appropriation Statement (continued)An Appropriation Statement for Companiesshows the amount of:company tax payabledividends for shareholdersretained profits.32 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Cash Flow StatementA Cash Flow Statement:is prepared at the end of the financial yearenables interested parties in the business to assess the sources of cash for the businessshows inflows and outflows of cash for the business.33 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Cash Flow Statement Example34 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Financial reportsCompanies prepare the following statementsand reports:Statement of Financial PerformanceStatement of Financial PositionStatement of Cash FlowDirector’s ReportAuditor’s ReportNotes to accounts.35 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Financial Reports: Statement of Financial Performance36 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by Financial Reports: Statement of Financial Position37 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Accounting for Business – A non-accountant’s guide 2/e by