Upload
letuan8vn
View
240
Download
0
Embed Size (px)
Citation preview
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
1/68
http://doc.wendoc.com/
02_sm_FA7e
!"#$%&'"()*(+,-1http://doc.wendoc.com/b4de0fe4194d5cc5da8fde28f.html
3n4nc345 st4tement 8pt e9e8c3se so5t3ons
;o5t3ons
7e
?=
@ohn o>>ett Bew Cdw48ds @ohn
http://doc.wendoc.com/http://doc.wendoc.com/http://doc.wendoc.com/http://doc.wendoc.com/http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
2/68
http://doc.wendoc.com/
I4>e
JK;GL;;KMN OLC;DKMN; P ;MBLDKMN; 2.Q
CRCSGK;C ;MBLDKMN;: C9e8c3se 2.T I8ep483n> 4 ?454nce sheet 2.T0 C9e8c3se 2.2
Kncome st4tement 4nd 4n45=s3s 2.T2 C9e8c3se 2.Q An45=s3s o eU3t= 2.TQ
C9e8c3se 2.V Jete8m3n3n> p8o3t 8om eU3t= ?454nces 2.TV C9e8c3se 2.W
Mpe84t3n> 3nXest3n> 4nd 3n4nc3n> 4ct3X3t3es 2.TW C9e8c3se 2.Y C5ements 3n
3n4nc345 st4tements 2.TY C9e8c3se 2.7 Assmpt3ons 4nd ch484cte83st3cs o
3no8m4t3on 2.T7 C9e8c3se 2.Z [s3ness t84ns4ct3ons 2.TZ C9e8c3se 2.\
I8ep484t3on o 4 ?454nce sheet 2.T\ C9e8c3se 2.T0
C9http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5p543n3n> 4ccont3n>
t84ns4ct3ons 2.2T C9e8c3se 2.TT Seco8d3n> t84ns4ct3ons 2.22 C9e8c3se 2.T2
I8ep484t3on o 3ncome st4tement 4nd ?454nce sheet 2.2W C9e8c3se 2.TQ Cect o
t84ns4ct3ons on 4 ?454nce sheet 2.27 C9e8c3se 2.TV Cect o t84ns4ct3ons on3n4nc345 st4tements 2.Q0 C9e8c3se 2.TW Jete8m3n4t3on o p8o3t ?= e94m3n3n>
eU3t= ch4n>es 2.Q2
ISM[BC< ;MBLDKMN;: I8o?5em 2.T I8ep483n> 3n4nc345 st4tements 2.QQ I8o?5em
2.2 I8ep483n> 3n4nc345 st4tements 2.QV I8o?5em 2.Q Jete8m3n3n> m3ss3n>
e5ements 3n 4ccont3n> eU4t3on 2.QW I8o?5em 2.V Kdent3=3n>
t84ns4ct3ons 8om ?454nce sheet ch4n>es 2.QY I8o?5em 2.W I8ep484t3on o
3n4nc345 st4tements 2.Q7 I8o?5em 2.Y Go88ect3on o 3n4nc345 st4tements2.Q\ I8o?5em 2.7 Ie8o8m4nce 4ssessment 8om 3n4nc345 st4tements 2.VT
I8o?5em 2.Z Seco8d3n> t84ns4ct3ons 4nd p8ep483n> 3n4nc345 st4tements
2.VQ I8o?5em 2.\ G54ss3=3n> 3tems o8
3n4nchttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5345 st4tements 2.VY
I8o?5em 2.T0 Seco8d3n> t84ns4ct3ons 4nd p8ep483n> 3n4nc345 st4tements
2.V7 I8o?5em 2.TT Kdent3=3n> t84ns4ct3ons 8om ?454nce sheet ch4n>es 2.V\
I8o?5em 2.T2 Seco8d3n> t84ns4ct3ons 4nd p8ep483n> 3n4nc345
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
3/68
http://doc.wendoc.com/st4tements 2.W0
I8o?5em 2.TQ Go88ect3n> e88o8s 4nd p8ep483n> 3n4nc345 st4tements 2.WQ
I8o?5em 2.TV An45=s3n> 3n4nc345 st4tement e5ements 2.WW I8o?5em 2.TW
I8ep484t3on o 3n4nc345 st4tements 2.W7
;o5t3ons 7e ?= o>>ett et 45
GA;C ;DLJ] ;MBLDKMN; Jec3s3on G4se ;cht^ [35d3n> ;e8X3ces 3n4nc345
st4tements G83t3c45 Dh3nH3n> G4se ;po8t3n> >5o8= P the >8e4t 3nt4n>3?5e
Gommn3c4t3on/ _8op Act3X3t= I8ep483n> ?454nce sheets Cth3c45 Ksses
[83?3n> >oXe8nment o3c345s F3n4nc345 Sepo8t3n> G4se J4X3d @ones B3m3ted
2.W\ 2.YT 2.Y2 2.YV 2.YW
Gh4pthttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5e8 2: F3n4nc345
st4tements o8 dec3s3on m4H3n>
T.
C9p543n the ?4s3c d3e8ences ?etween 4 so5e t84de8 o8 s3n>5e p8op83eto8sh3pa4 p48tne8sh3p 4nd 4 comp4n=. Eh4t 4cto8s need to ?e cons3de8ed 3n se5ect3n> 4n
4pp8op834te st8ct8e o8 J488enbs 54wnmow3n> ?s3nessb
Dhe th8ee ?4s3c ?s3ness st8ct8es 48e:
b ;o5e t84de8s 48e whe8e 3nd3X3d45s condct ?s3ness 3n the38 own c4p4c3t=.
Dhe=
wo5d ?e cont83?t3n> the38 own c4p3t45 o8 eU3t= to the ?s3ness 4nd wo5d ?e
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
4/68
http://doc.wendoc.com/?o88ow3n> mone= 3n the n4me o the ?s3ness 3n the38 own n4me. Dhe= wo5d ?e
534?5e to 8ep4= the otst4nd3n> de?t o the ?s3ness 4nd 3 n4?5e to 8ep4=
the ?4nH wo5d h4Xe 4ccess to the38 own pe8son45 4ssets to 8ep4= the
otst4nd3n> de?t. Dh3s ?s3ness st8ct8e 3s s3t4?5e o8 sm455 ope84t3ons w3th
sm455 st4 4nd t8noXe8. Dhe so5e t84de8 h4s so5e 8espons3?353t= 4nd cont8o5
o8 the ?s3ness ope84t3ons 4nd
4cthttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm53X3t3es. Dh3s st8ct8e
3s s3t4?5e o8 sm455 ?s3nesses wh3ch 8eU38e m3n3m45 c4p3t45 to set p 4nd
h4Xe 8e54t3Xe5= 5ow 8nn3n> costs 4nd 83sH. b
A p48tne8sh3p 3s two o8 mo8e pe8sons 3n ?s3ness to>ethe8 ope84t3n> nde8 4
p48tne8sh3p 4>8eement wh3ch m4= o8 m4= not ?e 4 o8m455= w83tten docment.
I48tne8sh3ps h4Xe the 4dX4nt4>e oXe8 so5e t84de8s 3n th4t the= h4Xe 4 548>e8
?4se o8 c4p3t45 cont83?t3on 4nd 48e 4?5e to sh48e the 83sHs 4nd
8espons3?353t3es 4ssoc34ted w3th 8nn3n> 4 ?s3ness. Dhe p48tne8sh3p 3s t8e4ted
4s 4 sep484te ent3t= o8 4ccont3n> p8poses ?t 3s not 4 sep484te 5e>45 ent3t=.
Dh3s me4ns th4t the nde85=3n> 4ssets 4nd 534?353t3es o 4 p48tne8sh3p ?e5on> to
the 3nd3X3d45 p48tne8s 3n the p8opo8t3on 4>8eed pon 4s p48t o the p48tne8sh3p
4>8eement. Dhe8eo8e 3 the ?s3ness 4ct3X3t3es p8oXe to ?e nsccess5
c8ed3to8s h4Xe the 83>ht to 4ccess the pe8son45 4ssets o the 3nd3X3d45p48tne8s 3n the eXent http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5the
?s3ness 3s n4?5e to 8ep4= 4n= otst4nd3n> de?t. Fo8 th3s 8e4son the
p48tne8sh3p st8ct8e 3s s455= sed whe8e the8e 3s 4 5ow e5ement o 83sH to
the ?s3ness o8 whe8e the 54w d3ct4tes th4t the ?s3ness ent3t= mst ?e 8n ?=
the 3nd3X3d45s p8oX3d3n> the se8X3ce. Fo8 e94mp5e wo8H comp5eted ?=
p8oess3on45s 3nc5d3n> 4ccont4nts 4nd 54w=e8s.
Dhe comp4n= 3s 4 sep484te 5e>45 ent3t= w3th owne8sh3p o 4 comp4n= 4tt83?ted tosh48es he5d. Dhe owne8s o the comp4n= 48e Hnown 4s sh48eho5de8s. Dhe
4dX4nt4>e o th3s ?s3ness st8ct8e 3s th4t 4s 4 sep484te 5e>45 ent3t= the
4ssets 4nd 534?353t3es ?e5on> to the comp4n=. Kn the eXent the ?s3ness 3s
n4?5e to 8ep4= 3ts de?t the c8ed3to8s on5= h4Xe 4ccess to comp4n= 4ssets o8
8ep4=ment o the de?t. Dhe 3nXestment 3n the comp4n= ?= 3ts sh48eho5de8s 3s
53m3ted on5= to the sh48eho5de8sb c4p3t45 cont83?t3on 3.e. wh4t the
sh48eho5de8 p4=s o8 the sh48es. Dh3s ?s3ness
st8chttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5t8e 3s mo8e4pp8op834te o8 ent3t3es 8eU383n> 548>e8 c4p3t45 cont83?t3on wh3ch h4Xe 4
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
5/68
http://doc.wendoc.com/548>e nm?e8 o oXe8he4ds 4nd emp5o=ees 4nd h4s 4 h3>he8 ?s3ness 83sH. Dhe
d3s4dX4nt4>es 3nc5de h3>he8 set p 4nd on>o3n>
b
;o5t3ons 7e ?= o>>ett et 45
costs 4nd poss3?5e 8edct3on 3n cont8o5 oXe8 the ?s3ness ope84t3ons whe8e
sh48eho5de8s 48e not d38ect5= 3nXo5Xed 3n the ?s3ness ope84t3ons.
2.
b_ood p54nn3n> 3s se5ess w3thot >ood cont8o5b. J3scss Io3nts to cons3de8: b b
Fo8 4 ?s3ness to ?e sccess5 c48e5 p54nn3n> 3s 8eU38ed to set 4pp8op834te
>o45s 4nd dete8m3ne 4 co8se o 4ct3on.
Gont8o5 mech4n3sms 48e essent345 to ens8e th4t the co8se o 4ct3on dec3ded on3s 4ch3eXed. ement 3s 8eU38ed to ens8e th4t the 4ct45 pe8o8m4nce
comp48es 4Xo84?5= w3th the >o45s est4?53shed 3n the p54nn3n> nct3on.
Q.://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5p48
J3scss the me4n3n> o bpe8o8m4nceb o8 ?oth ?s3ness ent3t3es 4nd noto8
p8o3t ent3t3es. Ks pe8o8m4nce 4?5e to ?e e9p8essed tot455= 3n 3n4nc345
te8msb b
Ie8o8m4nce o8 4 ?s3ness ent3t= me4ns 3ts 4?353t= to se 3ts 4ssets
e3c3ent5= 4nd eect3Xe5= to 4ch3eXe ?s3ness >o45s. fe= 3nd3c4to8s o8
?s3ness 3n4nc345 >o45s 3nc5de p8o3t tot45 3ncome 4nd e9penses tot45 4ssets
4nd 534?353t3es. Ie8o8m4nce o8 noto8p8o3t ent3t3es m4= ?e the
4ch3eXement o 4 soc345 o8 mo845 >o45 84the8 th4n m493m3s4t3on o sh48eho5de8sb
p8o3t. Do 4ssess 4n ent3t=bs pe8o8m4nce wo5d ?e to comp48e 3ts 4ct3X3t3es o8
t84ns4ct3ons o8 the pe83od comp48ed to 3ts st4ted >o45s o8 m3ss3on st4tement.
V.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
6/68
http://doc.wendoc.com/
Dhe co4ch o the 5oc45 oot?455 te4m w4s 4ttempt3n> to mot3X4te the te4m ?eo8e
4 ?3> m4tch. e s43d: bM8 te4m 3s 53He 4n= o8>4n3s4t3on. Ee mst h4Xe >o45s
we mst p84ct3se the s45 m4n4>ement nct3ons
4nhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5d we mst m4He se o 455
8e5eX4nt 3no8m4t3on.b Jo =o 4>8ee w3th the co4chb C9p543n =o8 pos3t3on. b
Dhe m4n4>ement o 4 spo8t3n> te4m mst h4Xe >o45s e.>. w3nn3n> ptt3n> p 4
>ood pe8o8m4nce 8ept4t3on ch484cte8?35d3n> o te4m mem?e8s 4nd 8ec83tment
o new mem?e8s.
Dhe m4n4>ement o 4 spo8t3n> te4m mst p54n o8>4n3se d38ect 4nd cont8o5 the
te4mbs eo8ts 4nd >ene8455= ope84te 53He 4n= othe8 ?s3ness o8>4n3s4t3on. Kn
o8de8 to p54n te4m pe8o8m4nce the co4ch wo5d need some 8e5eX4nt 4X4354?5e
3no8m4t3on to p54n pe8o8m4nce deXe5op 4 >4me p54n d38ect p54= d83n> the
m4tch 4nd >4the8 3no8m4t3on so th4t 4n 4n45=s3s o the >4me m4= 5e4d to
3mp8oXed t8e pe8o8m4nce.
;ome d3scss3on co5d t4He p54ce on how 4 te4m wo5d ope84te w3thot sch
m4n4>ement p83nc3p5es ?e3n> sed.
b b
b
W.
Je3ne the te8ms 4ssets 534?353t3es 4nd eU3t=. A8e these
te8http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5ms 8e54ted 3n 4n= w4=b K
so howb
Assets 48e de3ned 3n the F84mewo8H 4s 8eso8ces cont8o55ed ?= the ent3t= 4s 4
8es5t o p4st eXents 4nd 8om wh3ch t8e econom3c ?ene3ts 48e e9pected to
5ow to the ent3t=.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
7/68
http://doc.wendoc.com/B34?353t3es 48e de3ned 3n the F84mewo8H 4s p8esent o?53>4t3ons o 4n ent3t=
483s3n> 8om p4st eXents the sett5ement o wh3ch 3s e9pected to 8es5t 3n 4n
ot5ow 8om the ent3t= o 8eso8ces em?od=3n> econom3c ?ene3ts. B34?353t3es
8eU38e t8e p4=ments 8om 4ssets >ene8455= 3n the o8m o c4sh o8 the
pe8o8m4nce o se8X3ces to c4nce5 them.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
CU3t= 3s the owne8bs c543m to o8 the 8es3d45 3nte8est 3na the 4ssets o the
ent3t= 4te8 dedct3n> 455 3ts 534?353t3es. Dhe ?4s3c 4ccont3n> eU4t3on
`Assets b B34?353t3es b CU3t=a 3nd3c4tes the 8e54t3onsh3p ?etween 4ssets
534?353t3es 4nd eU3t=. F8om the eU4t3on the tot45 4ssets o the
ent3thttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5= eU45 the tot45
c543ms 4>43nst those 4ssets ?= c8ed3to8s 4nd owne8s. G8ed3to8sb c543ms t4He
p8ecedence oXe8 owne8sb c543ms 4nd owne8s 48e seen 4s the 5t3m4te 83sHt4He8s
3n the ent3t=. Dhs eU3t= 3s 4 8es3d45 c543m on the 4ssets o the ent3t=
4te8 534?353t3es 48e 55= p43d 4nd the ?4s3c 4ccont3n> mode5 wh3ch e9p8esses
th3s 3de4 c5e485= 3s:
Assets b B34?353t3es b CU3t=
Y.
Eh= 3s 3t th4t 3n 4n ent3t=bs 3n4nc345 st4tements 4ssets 5e4sed ?= 4n ent3t=
48e somet3mes shown on th4t ent3t=bs ?454nce sheet eXen tho>h those 4ssets 48e
not 5e>455= ownedb
Accont4nts 4ssme the econom3c s?st4nce o 4 ?s3ness t84ns4ct3on 4pp53es tothe 8epo8t3n> o those t84ns4ct3ons. Dh3s me4ns th4t when t84ns4ct3ons 48e
e94m3ned the econom3c 8e453t= o the t84ns4ct3ons 3s 8epo8ted 4s opposed to
the38 5e>45 o8m. Dhe8eo8e 3 the ?s3ness h4s e9c5s3Xe se o 4n 4sset o8
the 8nn3n> o 4 ?s3ness 4nd o8
thhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5e >ene84t3on o 3ts
p8o3t the econom3c s?st4nce o the t84ns4ct3on sho5d 8eco8d the 4sset 4s 4
?s3ness 4sset. Kn 4 5e4s3n> t84ns4ct3on 5e>45 t3t5e to the 4sset does not
p4ss nt35 the end o the 8e5eX4nt 5e4se te8m when 455 the p4=ments 48e m4de.oweXe8 the ent3t= h4s se o 4nd e48ns econom3c ?ene3ts 8om the 4sset o8
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
8/68
http://doc.wendoc.com/th3s t3me pe83odg hence 3t sho5d ?e 8eco8ded 4s 4 ?s3ness 4sset o the ent3t=
d83n> the pe83od o the 5e4se te8m.
7.
A 5oc45 8est484nt 3s noted o8 3ts 3ne ood 4s eX3denced ?= the 548>e nm?e8
o cstome8s. A cstome8 w4s he48d to 8em48H th4t the sec8et o the 8est484ntb
s sccess w4s 3ts 3ne che. Eo5d =o 8e>48d the che 4s 4n 4sset o the
?s3nessb K so wo5d =o 3nc5de the che on the ?454nce sheet o the
?s3ness 4nd 4t wh4t X45eb ;>>ested top3cs o d3scss3on: b
Asset de3n3t3on P Assets 48e 8eso8ces cont8o55ed ?= the ent3t= 4s 4 8es5t
o p4st eXents 4ndhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 8om
wh3ch t8e econom3c ?ene3ts 48e e9pected to 5ow to the ent3t=. Joes the
che p8oX3de t8e econom3c ?ene3ts to the ent3t=b ]es. Ks the che cont8o55ed
?= the ent3t=b Kn m4n= c4ses 3t 3s eX3dent th4t he/she co5d not ?e cont8o55ed
?= the ent3t= e.>. he/she c4n 8es3>n when he/she 53Hes c4n t4He s3cH d4=sa.
e/she c4nnot ?e 4cU38ed o8 so5d ?= the ?s3ness 3.e. the= do not h4Xe
83>hts to possess h3m/he8.
ow wo5d =o X45e the che 4s 4n 4ssetb Ls455= =o h4Xe some 3de4 o the
53e o the 4sset howeXe8 the 8est484nt wo5d not Hnow how 5on> the che
wo5d ?e wo8H3n> o8 them th3s 48>ment 8e54tes ?4cH to cont8o553n> the 4sseta.
b
Z.
Dhe 5oc45 p48H54nd 3s owned 4nd m43nt43ned ?= the 5oc45 >oXe8nment conc35. Ks
the p48H54nd 4n 4sset o the conc35 4nd sho5d 3t ?e 3nc5ded on 3ts ?454nce
sheetb ;>>ested top3cs o d3scss3on: `Dh3s 4nswe8 >oes we55 ?e=ond wh4t 3s
e9pectehttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5d o stdents ?t 3t
sho5d p8oX3de tho>ht o8 >ood d3scss3on.a b
AA; 27 F3n4nc345 Sepo8t3n> ?= Boc45 _oXe8nments st355 4pp53c4?5e 4t t3me o
w83t3n>a 8eU38es 455 4ssets 3nc5d3n> those wh3ch =3e5d the38 econom3c?ene3ts oXe8 5on> pe83ods o t3me to ?e 8eco>n3sed 3n the ?454nce sheet.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
9/68
http://doc.wendoc.com/
;o5t3ons 7e ?= o>>ett et 45
b
Dhe c83te834 o8 8eco>n3t3on o8 4ssets 3n AA; 27 3nc5de th4t 4a 3t 3s
p8o?4?5e th4t the t8e econom3c ?ene3ts em?od3ed 3n the 4sset w355 eXent4teg
4nd ?a the 4sset possesses 4 cost o8 othe8 X45e th4t c4n ?e me4s8ed 8e534?5=.
Dhe 5oc45 p48H54nd 8ep8esents 4 he83t4>e 4sset wh3ch 3s 4 ph=s3c45 4sset
th4t 4 commn3t= 3ntends on p8ese8X3n> ?ec4se o c5t845 h3sto83c o8
enX38onment45 4ssoc34t3ons 4nd the= 48e >ene8455= not pe8ce3Xed 4s 4ssets 3n 4n
econom3c 3n4nc345 o8 ?s3ness sense.
Ehen 4 he83thttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm54>e 4sset 3s
4pp53ed to AA; 27 3t h4s oten 435ed to meet the c83te834 o 4sset 8eco>n3t3on
?ec4se 3t 3s d33c5t to me4s8e 3ts X45e 8e534?5=. Dhe8eo8e he83t4>e
4ssets h4Xe not ?een 8eco8ded. Dh3s 3s 4n 48e4 th4t c88ent5= 3s mchde?4ted.
b
b
Ioss3?5e so5t3ons to 8eco>n3t3on 4nd me4s8ement p8o?5ems: T. 2.
e83t4>e 4ssets sho5d 3n3t3455= ?e 8eco>n3sed 4t the38 cost o8 whe8e 4ssets
p8eX3os5= 4cU38ed 48e to ?e 8eco>n3sed o8 the 38st t3me 4t the38 c88ent
costg e83t4>e 4ssets sho5d whe8e cont8o5 o he83t4>e 4ssets h4s ?een 4cU38ed
othe8 th4n ?= 4n e9ch4n>e e.>. >3t >84nt etc.a ?e 8eco>n3sed 4t the38 438
X45eg
e83t4>e 4ssets sho5d ?e s=stem4t3c455= 8eX45ed to the38 c88ent cost 4nd
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
10/68
http://doc.wendoc.com/dep8ec34ted the8e4te8g 4nd
e83t4>e 4ssets th4t cont3ne to p8oX3de ope84t3on45 se8X3ces sho5d ?e
8epo8ted 4s p48t o 3ts >ene83c 4sset >8op 84the8 th4n
?e3http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5n> 3nc5ded nde8
he83t4>e 4ssets.
Q. V.
\.
>ested top3cs
o8 d3scss3on 8e e
the= 48e not p8esent5= o?53>ed to s4c833ce t8e econom3c ?ene3ts h3s/he8
w4>e p43d 3n c4sha 3.e. not nt35 the e9pense h4s occ88ed wh3ch 3snbt
8eco>n3sed nt35 3t 3s p8o?4?5e th4t the consmpt3on h4s occ88ed 4nd c4n ?eme4s8ed 8e534?5=.
Dhe cont84ct 8em43ns npe8o8med ?= ?oth p48t3es nt35 the wo8H 3s comp5eted ?=
the emp5o=ee.
b
T0.
J3scss the s3>n33c4nce o the o55ow3n> 4ssmpt3ons 3n the p8ep484t3on o 4n
ent3t=bs 3n4nc345 st4tements: `4a
ehttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5nt3t= 4ssmpt3on
`?a 4cc845 ?4s3s 4ssmpt3on ca >o3n> conce8n 4ssmpt3on da pe83od 4ssmpt3on
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
11/68
http://doc.wendoc.com/`4a Cnt3t= Assmpt3on:
K the t84ns4ct3ons o 4n ent3t= 48e to ?e 8eco8ded c54ss33ed 4nd smm483sed
3nto
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
3n4nc345 st4tements the 4ccont4nt mst ?e 4?5e to 3dent3= c5e485= the
?ond483es o the ent3t= ?e3n> 4cconted o8. Lnde8 the 4ccont3n> ent3t=
4ssmpt3on the ent3t= 3s cons3de8ed 4 sep484te ent3t= d3st3n>3sh4?5e 8om 3ts
owne8 4nd 8om 455 othe8 ent3t3es. Kt 3s 4ssmed th4t e4ch ent3t= cont8o5s 3ts
4ssets 4nd 3nc8s 3ts 534?353t3es. Dhe 8eco8ds o 4ssets 534?353t3es 4nd
?s3ness 4ct3X3t3es o the ent3t= 48e Hept comp5ete5= sep484te 8om those o the
owne8 o the ent3t= 4s we55 4s 8om those o othe8 ent3t3es.
Dhe 4ccont3n> ent3t= 4ssmpt3on 3s 3mpo8t4nt s3nce 3t 5e4ds to the de83X4t3on
o the 4ccont3n> eU4t3ohttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5n.
`?a Dhe Acc845 [4s3s Assmpt3on
Lnde8 the 4cc845 ?4s3s o 4ccont3n> the eects o t84ns4ct3ons 4nd eXents
48e 8eco>n3sed 3n 4ccont3n> 8eco8ds when the= occ8 4nd not when the c4sh 3s
8ece3Xed o8 p43d. ence 3n4nc345 st4tements 8epo8t not on5= on c4sh
t84ns4ct3ons ?t 45so on o?53>4t3ons to p4= c4sh 3n the t8e 4nd on 8eso8ces
th4t 8ep8esent 8ece3X4?5es o c4sh 3n t8e. Kt 3s 48>ed 3n the F84mewo8H th4t
4ccont3n> on 4n 4cc845 ?4s3s p8oX3des s3>n33c4nt5= ?ette8 3no8m4t3on 4?otthe t84ns4ct3ons 4nd othe8 eXents o8 the p8pose o dec3s3on m4H3n> ?= se8s o
3n4nc345 st4tements th4n does the c4sh ?4s3s.
`ca Dhe _o3n> Gonce8n Assmpt3on
Acco8d3n> to the F84mewo8H 3n4nc345 st4tements 48e p8ep48ed on the 4ssmpt3on
th4t the e93st3n> ent3t= 3s e9pected to cont3ne ope84t3n> 3nto the t8e. Kt
3s 4ssmed th4t the 4ssets o the ent3t= w355 not ?e so5d o 4nd th4t theent3t= w355 chttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5ont3ne 3ts
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
12/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
13/68
http://doc.wendoc.com/45te8n4t3Xe co8ses o
4chttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5t3on nde8 cons3de84t3on.
A5so 3no8m4t3on 3s 8e5eX4nt 3 3t 3s 4?5e to he5p dec3s3on m4He8s eX454te
p4st dec3s3ons. Dhe 3no8m4t3on m4= con38m th4t 4 p8eX3os
;o5t3ons 7e ?= o>>ett et 45
dec3s3on w4s co88ect o8 3t co5d show th4t the 8es5ts o 4 p8eX3os dec3s3on
we8e ndes384?5e 4nd th4t 4 new dec3s3on 3s necess48=. Dhs 8e5eX4nt
3no8m4t3on 3s s43d to p54= 4 p8ed3ct3Xe 8o5e 4nd 4 con38m4to8= o8 eed?4cH
8o5e.
A 8the8 4spect o 8e5eX4nce 3s th4t the 3no8m4t3on mst ?e p8esented ?= the
4ccont4nt to the se8 3nte8n45 o8 e9te8n45a 3n t3me o8 4 dec3s3on to ?e m4de.
Dhe t3me53ness o 3no8m4t3on 3s 4n 3mpo8t4nt 4cto8 3n ens83n> th4t
3no8m4t3on 3s 8e5eX4nt.
Se534?353t=/F43th5 8ep8esent4t3on
Se534?353t= 4s d3scssed 3n the c88ent F84mewo8H me4ns th4t the se8 3s
4ss8ed th4t the 3no8m4t3on p8esented 8ep8esents
43th55=http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 w3thot ?34s o8
nde e88o8 the nde85=3n> t84ns4ct3ons 4nd eXents ?e3n> 8epo8ted 3n the
3n4nc345 st4tements. Accont4nts 8eU38e 3no8m4t3on to ?e 8e534?5e wh3ch
me4ns th4t the 3no8m4t3on 8epo8ted 8ep8esents econom3c 8e453t= 4s c5ose5= 4s
poss3?5e.
Note th4t the KA;[ J3scss3on I4pe8 3ssed 3n : Gh4pte8 2: O453t4t3Xe Gh484cte83st3cs 4nd
Gonst843nts o Jec3s3onse5 F3n4nc345 Sepo8t3n> Kno8m4t3on 3ssed 3n o
8e534?353t= w4s not c5e48 to const3tents 3t sho5d ?e 8ep54ced ?= the concept
o 43th5 8ep8esent4t3on.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
14/68
http://doc.wendoc.com/Acco8d3n> to the C9pos8e J84t 43th5 8ep8esent4t3on 3s 4tt43ned when the
dep3ct3on o 4n econom3c eXent 3s comp5ete net845 4nd 8ee 8om m4te8345
e88o8. F3n4nc345 3no8m4thttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm53on
th4t 43th55= 8ep8esents 4n econom3c phenomenon dep3cts the econom3c s?st4nce
o the nde85=3n> t84ns4ct3on eXent o8 c38cmst4nces wh3ch 3s not 45w4=s the
s4me 4s 3ts 5e>45 o8m.
J3st3n>3sh ?etween the concepts o cons3stenc= 4nd comp484?353t=b ;ho5d the
s4me 4ccont3n> method ?e 45w4=s 4pp53ed cons3stent5= 3n 3n4nc345 st4tementsb
As ment3oned 3n the KA;[ C9pos8e J84t An Kmp8oXed Goncept45 F84mewo8H o8
F3n4nc345 Sepo8t3n>: Gh4pte8 2: O453t4t3Xe Gh484cte83st3cs 4nd Gonst843nts o
Jec3s3onse5 F3n4nc345 Sepo8t3n> Kno8m4t3on 3ssed 3n ch484cte83st3c o 3no8m4t3on 3.e. 3t enh4nces the
se5ness o 3n4nc345 8epo8t3n> 3no8m4t3on 3n m4H3n> econom3c dec3s3ons.
Gomp484?353t= 3s the U453t= o 3no8m4t3on th4t en4?5es se8s to 3dent3=
s3m35483t3es 3n 4nd d3e8ences ?etween two sets o econom3c d4t4. Gons3stenc=
8ee8s to se o the s4me 4ccont3n> po53c3es
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm54nd p8oced8es e3the8 8om
pe83od to pe83od w3th3n 4n ent3t= o8 3n 4 s3n>5e pe83od 4c8oss ent3t3es. DheC9pos8e J84t 48>es th4t comp484?353t= 3s the >o45 4nd th4t cons3stenc= o
po53c3es 4nd p8oced8es 3s 4 me4ns to 4n end th4t he5ps to 4ch3eXe the >o45.
oweXe8 3t 3s no8 s4t3s4cto8= o8 po53c3es 4nd p8oced8es to ?e 4pp53ed
cons3stent5= 3 the 3no8m4t3on th4t the= p8odce 3s no 5on>e8 8e5eX4nt o8 4
43th5 8ep8esent4t3on o econom3c 8e453t=.
T2.
TQ. Ehen cons3de83n> the ch484cte83st3c o nde8st4nd4?353t= 3n the p8ep484t3on
o
3n4nc345 st4tements does th3s me4n th4t 3n4nc345 st4tements sho5d ?e s3mp5e
to nde8st4ndb J3scss.
Acco8d3n> to the KA;[ C9pos8e J84t An Kmp8oXed Goncept45 F84mewo8H o8
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
15/68
http://doc.wendoc.com/F3n4nc345 Sepo8t3n>: Gh4pte8 2: O453t4t3Xe Gh484cte83st3cs 4nd Gonst843nts o
Jec3s3onse5 F3n4nc345 Sepo8t3n> Kno8m4t3on 3ssed 3n
8e4son4?5e Hnow5ed>e o ?s3ness 4nd econom3c 4ct3X3t3es 4nd 3n4nc345
4ccont3n> 4nd who std= the 3no8m4t3on w3th 8e4son4?5e d353>ence to
comp8ehend 3ts me4n3n>. Kt sho5d ?e c5e48 th4t eXen tho>h 3t 3s des384?5e o8
3n4nc345 st4tements to ?e e9p8essed 3n s3mp5e 54n>4>e 8e5eX4nt 3no8m4t3on
sho5d not ?e e9c5ded me8e5= ?ec4se 3t m4= ?e too comp5e9 o8 d33c5t o8
some nt843ned se8s to nde8st4nd. Lnde8st4nd4?353t= does not me4n s3mp53c3t=.
K se8s c4nnot nde8st4nd the 3no8m4t3on cont43ned 3n 3n4nc345 st4tements
the= sho5d seeH the he5p o 4 t843ned 4dX3se8.
Lnde8st4nd4?353t= 3s 8the8 enh4nced when 3no8m4t3on 3s c54ss33ed
ch484cte83sed 4nd p8esented c5e485= 4nd conc3se5=.
TV.
Dhe concept o m4te83453t= 8e54tes to the e9tent to wh3ch 3no8m4t3on c4n ?e
om3tted m3sshttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5t4ted o8
>8oped w3th othe8 3no8m4t3on w3thot m3s5e4d3n> the 8epo8t se8s when the= 48e
m4H3n> the38 econom3c dec3s3ons. Dhs the p83ces p43d o8 3ns3>n33c4nt 3tems
48e not shown sep484te5= 3n the 3n4nc345 st4tements ?ec4se the= co5d
c5tte8 the 3n4nc345 st4tements w3th he4ps o 3ns3>n33c4nt o8 3mm4te83453no8m4t3on 3n the oXe8455 conte9t o the dec3s3on ?e3n> m4de ?= the se8.
oweXe8 3t 3s 3mpo8t4nt when 4ssess3n> m4te83453t= to ?e 4w48e o the
p48t3c548 dec3s3on ?e3n> m4de ?= the se8. Dhe s4me 3no8m4t3on m4= ?e m4te8345
o8 one dec3s3on 4nd 3mm4te8345 o8 4nothe8. Dhs cons3de84?5e id>ement 3s
needed 3n o8de8 to 4ssess wh3ch 3no8m4t3on 3s m4te8345 4nd wh3ch 3s 3mm4te8345
o8 the p48t3c548 dec3s3on 4t h4nd.
Acco8d3n> to the KA;[ C9pos8e J84t An Kmp8oXed Goncept45 F84mewo8H o8F3n4nc345 Sepo8t3n>: Gh4pte8 2: O453t4t3Xe Gh484cte83st3cs 4nd Gonst843nts o
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
16/68
http://doc.wendoc.com/Jec3s3onse5 F3n4nc345 Sepo8t3n>
Kno8mhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm54t3on 3ssed 3n the ent3t= 4ssmpt3on the 4ccont3n>
eU4t3on h4s ?een deXe5oped. Dh3s eU4t3on 8ep8esents 4 st4tement o the ent3t=b
s 3n4nc345 pos3t3on 4t 4 po3nt 3n t3me. Mne o8m4t o the 4ccont3n> eU4t3on
3s: Assets j B34?353t3es CU3t=
Dhe eU4t3on po3nts ot th4t when one o the ent3t=bs e5ements e.>. 4ssets 3s
3nc8e4sed the8e mst ?e 45so 4 ch4n>e 3n
4nohttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5the8 e5ement: e3the8
534?353t3es mst 3nc8e4se o8 eU3t= mst 3nc8e4se o8 4nothe8 4sset mst
dec8e4se. Dhe eU4t3on mst 45w4=s ?e 3n ?454nce 4te8 8eco8d3n> eXe8=
t84ns4ct3on. Dh3s phenomenon whe8e?= 4 ch4n>e 3n one e5ement 4sseta c4ses 4
ch4n>e 3n 4nothe8 e3the8 534?353t= o8 eU3t= o8 4nothe8 4sseta 3s 8ee88ed to
4s do?5eent8=. Jo?5e ent8= 4ccont3n> 3s the n4me >3Xen to th3s d458eco8d3n> p8ocess wh3ch 3s deXe5oped 8the8 3n ch4pte8 Q.
;o5t3ons 7e ?= o>>ett et 45
SM[
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
17/68
http://doc.wendoc.com/
SeU38ed: A. Lse these 3tems to p8ep48e 4 ?454nce sheet s3m3548 to the one 3n
3>8e 2.2. Note
th4t 4 m4io8 3tem 3s m3ss3n> 3n the 53st.
[. Sec4st the st4tement to p8esent 3t 3n n4884t3Xe o8m 4s 3n 3>8e 2.Q. A.
I8ep483n> 4 ?454nce sheet
Gh4pte8 2: F3n4nc345 st4tements
o8http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 dec3s3on m4H3n>
[.
;o5t3ons 7e ?= o>>ett et 45
Kncome st4tement 4nd 4n45=s3s
@MN;MN ;CSlKGC;
SeU38ed: A. I8ep48e 4n 3ncome st4tement o8 the =e48 o8 @ohnson ;e8X3ces. [.
Eho m4de mo8e ot o the pe8sonne5 ?s3ness P @ohnson o8 he8 pe8son45
4ss3st4ntb
Eh4t 4ct3on m3>ht @ohnson t4He to 3nc8e4se the p8o3t4?353t= o the ?s3ness 3nthe =e48 ended Q0 @ne 20TTb
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
18/68
http://doc.wendoc.com/
A.
[. Dhe pe8son45 4ss3st4ntbs s4548= o VY 000 3s >8e4te8 th4n @ohnsonbs 8epo8ted
p8o3t
o8 the =e48. Assm3n> the s4548= h4s ?een p43d to the 4ss3st4nt the 4ss3st4nt
h4s 45so t4Hen ot VY 000 c4sh 8om the ope84t3ons o the ?s3ness 4s 4
?s3ness e9pensea. Ee h4Xe no 3no8m4t3on on @ohnsonbs d84w3n>s 8om the
?s3ness so we do not Hnow how mch c4sh @ohnson h4s t4Hen ot o the ?s3ness
o8 pe8son45 se. oweXe8http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5
3 the owne8 we8e to w3thd84w 455 o the p8o3t she wo5d st355 not h4Xe
8ece3Xed 4s mch 4s he8 pe8son45 4ss3st4nt.
Do 3mp8oXe p8o3t4?353t= @ohnson needs to e3the8 3nc8e4se 3ncome o8 dec8e4se
e9penses. Do 3nc8e4se 3ncome @ohnson wo5d need to t4He on mo8e c53ents 4nd
h38e mo8e tempo848= wo8He8s th3s wo5d 45so 3nc8e4se he8 ?s3ness e9pensesa.
Knc8e4s3n> the ch48>e ot 84te wo5d 45so ?e 4nothe8 opt3on. Dh3s opt3on wo5dneed 4n e94m3n4t3on o the 3nc8e4sed 3ncome comp48ed to the 3nc8e4sed costs.
A5te8n4t3Xe5= @ohnson co5d dec8e4se the ho8s o the pe8son45 4ss3st4nt 4nd
t4He 4 mo8e 4ct3Xe 8o5e ?t she wo5d need to cons3de8 he8 4X4354?353t= o8 the
e9t84 ho8s.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
An45=s3s o eU3t=
;ASA MJ_C
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
19/68
http://doc.wendoc.com/SeU38ed: A. K ;484h d3d not cont83?te to o8 w3thd84w 8om the ?s3ness d83n>
the =e48 20http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm50\T0
wh4t w4s the p8o3t/5oss o8 the =e48b
[. K ;484h h4d w3thd84wn T2 000 d83n> the =e48 c45c54te the p8o3t/5oss o8
the
=e48.
G. K ;484h h4d cont83?ted TW 000 4nd w3thd84wn Z 000 p8ep48e 4 st4tement o
ch4n>es 3n eU3t= o8 the =e48 ended Q0 @ne 20T0.
G45c54t3on o CU3t= 4s 4t Q0 @ne 200\ 3s TY W00
`3.e. Q7 W00 2T 000a
G45c54t3on o CU3t= 4s 4t Q0 @ne 20T0 3s 2T 000
`3.e. Q\ 000 TZ 000a A. G4p3t45 Gont83?t3ons 4nd J84w3n>s 48e n35 o8 the
=e48. Cnd3n> CU3t= 2T 000 P [e>3nn3n> CU3t= TY W00
j I8o3t o V W00.
[. G4p3t45 Gont83?t3ons n35 4nd d84w3n>s T2 000 o8 the =e48.
Cnd3n> CU3t= 2T 000 [e>3nn3n> CU3t= TY W00 P J84w3n>s T2 000
j Net I8o3t TY W00.
G.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
20/68
http://doc.wendoc.com/
Boss 3s the ?454nc3n> 3tem.
;o5t3ons 7e ?= o>>ett et 45
KSlKNCk; ML;C EA;KN_ ;CSlKGC;
SeU38ed:
Jete8m3ne p8o3t/5oss e48ned ?= the ?s3ness 3n e4ch o the 2 =e48s ended Q0
@ne 200\ 4nd Jete8m3n3n> p8o3t 8om eU3t= ?454nces
Q0 @ne 20T0.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
Mpe84t3n> 3nXest3n> 4nd 3n4nc3n> 4ct3X3t3es
SeU38ed:
G54ss3= e4ch o the o55ow3n> 4ct3X3t3es 4s ?e3n> e3the8 ope84t3n> 3nXest3n>
o8 3n4nc3n> o8 the p8pose o p8ep483n> 4 st4tement o c4sh 5ows. Knd3c4te
whethe8 the8e 3s 4n 3n5ow Ka o8 ot5ow Ma o c4sh:
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
21/68
http://doc.wendoc.com/`4a s45e o 54nd 4nd ?35d3n>s o8 c4sh ?a p4=ment o w4>es to emp5o=ees ca
w3thd84w45 o c4sh ?= the owne8 da 8ep4=ment o 4 ?4nH 5o4n
`ea c4sh p8ch4se o 4 t8cH ?= 4 m4n4ct83n> comp4n=
`a c4sh p8ch4se o 4 5eet o moto8 Xeh3c5es
?http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5= 4 c48 de45e8sh3p `>a
?o88ow3n> o mone= 8om 4 3n4nce comp4n= on 4 5on>te8m ?4s3s ha c4sh
co55ected 8om the cstome8s o the ?s3ness `4a KnXest3n> K ?a Mpe84t3n>
M ca F3n4nc3n> M da F3n4nc3n> M ea KnXest3n> M a Mpe84t3n> M
`>a F3n4nc3n> K ha Mpe84t3n> K
;o5t3ons 7e ?= o>>ett et 45
KI ANJ MI
SeU38ed:
Knd3c4te whethe8 these 3tems wo5d 4ppe48 3n 3p 4nd opbs ?454nce sheet 3ncome
st4tement st4tement o ch4n>es 3n eU3t= 4nd/o8 st4tement o c4sh 5ows. Fo8
those 3tems 3nc5ded 3n the c4sh 5ow st4tement 3nd3c4te whethe8 the 3tem
8e54tes to ope84t3n> 4ct3X3t3es 3nXest3n> 4ct3X3t3es o8 3n4nc3n> 4ct3X3t3es.
3nt: ;ome 3tems m4= 4ppe48 3n mo8e th4n one 3n4nc345 st4tement. `4a
[454nce sheet st4tement o ch4n>es 3n eU3t= 4nd st4tement o c4sh 5ows
`F3n4nc3n> P t8e4ted 4s 4
cohttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5nt83?t3on o c4p3t45a
`?a [454nce sheet on5= ca Kncome st4tement 4nd st4tement o c4sh 5ows
`Mpe84t3n>a da Kncome st4tement 4nd st4tement o c4sh 5ows Mpe84t3n>a ea Not
8epo8ted 3n the 3n4nc345 st4tements 4s not p48t o the 4ccont3n> ent3t= 3p
4nd
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
22/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
23/68
http://doc.wendoc.com/o the ?s3ness.
_. Q. Dhe cost o st4t3one8= 3s not shown sep484te5= 3n the 3ncome st4tement.
[. V. ;e8X3ces p8oX3ded ?= 4 ?s3ness ent3t= 48e 8eco8ded ?eo8e the 8ece3pt o
c4sh.
C. W. te8m 5e4se 4884n>ement 3s
8eco8ded ?=
the ?s3ness 4s 3ts own 4sset.
J. Y. An e9pense 3s 8eco8ded 3n the =e48 3n wh3ch 4n 4sset o8
?ene3http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5t 3s consmed 3n the
p8ocess o c488=3n> on the ent3t=bs ?s3ness.
G. 7. Assets 48e not 8eco8ded 4t 53U3d4t3on p83ces.
. Z. Gons3stent 4ccont3n> po53c3es 4nd methods 48e sed 3n the p8ep484t3on o3n4nc345
st4tements 8om one =e48 to 4nothe8.
;o5t3ons 7e ?= o>>ett et 45
[s3ness t84ns4ct3ons
Fo8 e4ch o the o55ow3n> desc83?e 4 t84ns4ct3on th4t wo5d h4Xe the st4ted
eect on the 4ccont3n> eU4t3on:
T. Knc8e4se 4n 4sset 4nd 3nc8e4se 4 534?353t= 2. Knc8e4se one 4sset 4nd dec8e4se4nothe8 4sset Q. Jec8e4se 4n 4sset 4nd dec8e4se eU3t= V. Knc8e4se 4n 4sset 4nd
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
24/68
http://doc.wendoc.com/3nc8e4se eU3t= W. Jec8e4se 4 534?353t= 4nd dec8e4se 4n 4sset.
T. I8ch4se 4n 4sset on c8ed3t 2. I8ch4se 4n 4sset o8 c4sh
Q. Mwne8 w3thd84ws c4sh 8om the ?s3ness o8 pe8son45 se. V. Mwne8
cont83?tes c4shttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5h to the
?s3ness. W. Dhe ?s3ness p4=s c4sh to 3ts c8ed3to8s.
;tdents m4= h4Xe m4n= othe8 poss3?5e e94mp5es 3n e4ch o TW.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
I8ep484t3on o 4 ?454nce sheet
JAlC fSA th4t the th8ee months dete8m3ne the p8o3t o8
NoXem?e8 4nd Jecem?e8.
G. I8ep48e 4 ?454nce sheet o8 the ?s3ness 4t the end o Jecem?e8 20T0. Dhe
he4d3n>
sho5d 8e4d: J4Xe f84me8 ;o53c3to8a
A.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
25/68
http://doc.wendoc.com/
[4sed on the 4ccont3n> eU4t3on: Assets 5ess B34?353t3es j CU3t=
QT Mcto?e8 G4p3t45 [454nce j `\ T00 TY T00 700 2\ Z00 VT 000 Q 000a
P `T0 T00 W T00 QV 700a j V\
Z0http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm50
Q0 NoXem?e8 G4p3t45 [454nce j `Q \00 TW 000 T Z00 2\ 700 V0 Z00 Q
000a P`Q T00 V T00 QV Q00a j W2 700
QT Jecem?e8 G4p3t45 [454nce j `Q 000 Z 0W0 T Y00 Q\ Q00 V0 Y00 Q 000a
P`Q 000 V Z00 QQ \00a j WQ ZW0 [.
I8o3t o8 NoXem?e8 j W2 700 V\ Z00 j 2 \00 I8o3t o8 Jecem?e8 j WQ ZW0
W2 700 j T TW0
;o5t3ons 7e ?= o>>ett et 45
G.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
C9p543n3n> 4ccont3n> t84ns4ct3ons
sched5e shows the eect o seXe845 t84ns4ct3ons on the
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
26/68
http://doc.wendoc.com/4ccont3n> eU4t3on o t84ns4ct3ons
s: G4sh 4t [4nHg ;pp53esg CU3pmentg Bo4n I4=4?5eg Acconts
I4=4?5eg st 20T0 4nd 4 ?454nce sheet 4s 4t QT A>st 20T0.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
27/68
http://doc.wendoc.com/A 4nd [.
G4sh 4t [4nH
Assets
;pp53es
T Q70 T Q70
CU3pment
j j
B34?353t3es
Acconts Bo4n I4=4?5e I4=4?5e
T Q70 T Q70
T Q70 T Q70
0 0
CU3t=
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
28/68
http://doc.wendoc.com/
2W 000
2W 000 Q 000 2Z 000 T 200 2Y Z00
2Y Z00 770 2Y 0Q0
2Y 0Q0 YV0 2W Q\0
`Ta 2a `Qa `Va `Wa `Ya `7a `Za 2W 000 T0 000 TW 000 Q 000 TZ
000 T 200 TY Z00
TY Z00 770 TY 0Q0 T Q70 TV YY0
TV YYhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm50
j
TW 000 TW 000 j
TW 000 j
TW 000 j
TW 000 j
TW 000 j
TW 000 j
TW 000 j
W 000 W 000
W 000
W 000
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
29/68
http://doc.wendoc.com/
W 000
W 000
W 000
W 000
T Q70
T Q70 YV0 7Q0
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
G.
;o5t3ons 7e ?= o>>ett et 45
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
I8ep484t3on o 3ncome st4tement 4nd ?454nce sheet
[CALD [CAG GASAlAN IASf
A. I8ep48e 4n 3ncome st4tement o8 [e4t [e4ch G484X4n I48H o8 the =e48 ended
Q0
@ne 20T0.
[. I8ep48e 4 ?454nce sheet o8 the ?s3ness 4s 4t Q0 @ne 20T0.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
30/68
http://doc.wendoc.com/
G. C9p543n wh= =o h4Xe sed 4 p48t3c548 X454t3on o8 the ?35d3n>s 3n the
?454nce://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5p48
sheet.
A.
;o5t3ons 7e ?= o>>ett et 45
[.
No8m455= sep484te c4p3t45 4cconts 48e m43nt43ned o8 e4ch p48tne8 3n the
?s3ness ?t the Uest3on does not s4= whethe8 the= ?oth cont83?ted eU455= to
the p48tne8sh3p no8 how the= we8e sh483n> p8o3ts ?etween themse5Xes. G.
CXen tho>h the m48Het X45e o the ?35d3n>s h4d 83sen to W00 000 ?= Q0 @ne
20T0 the X454t3on p54ced on the ?35d3n>s 3n the ?454nce sheet 3s the38
p8ch4se p83ce. Dh3s 4ssmes th4t the ?s3ness 3s 4 >o3n> conce8n 4nd th4t the
owne8s 48e not >o3n> to se55 p 4nd c5ose the ?s3ness down >o3n> conce8n
4ssmpt3ona. ence the8e 3s no need to 8e5ect the c88ent se553n> p83ce 3n the
?454nce sheet.
NeXe8the5ess 3 the owne8s w4nted to 8eX45e the ?35d3n>s to W00 000 the=
co5d. Dhe 8eX454t3on o ?35d3n>s 3n the 4cconts
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5o 4n ent3t= 3s d3scssed 3n
4 54te8 ch4pte8.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
31/68
http://doc.wendoc.com/Cect o t84ns4ct3ons on 4 ?454nce sheet
NAMett et 45
G. I8ch4se o eU3pment Y0 000 o8 c4sh 4nd 20 000 ?4nH 5o4n
J.
C. E4>es p43d to 4n emp5o=ee T 000 3n c4sh
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
32/68
http://doc.wendoc.com/
;o5t3ons 7e ?= o>>ett et 45
Cects o t84ns4ct3ons on 3n4nc345 st4tements
Knd3c4te the eect o e4ch o the o55ow3n> t84ns4ct3ons pon 4n= o8 455 o the
o8 3n4nc345 st4tements o 4 ?s3ness. Ap48t 8om 3nd3c4t3n> the 3n4nc345
st4tement`sa 3nXo5Xed se 4pp8op834te ph84ses sch 4s 3nc8e4se tot45
4ssets dec8e4se eU3t= 3nc8e4se 3ncome dec8e4se c4sh 5ow to
desc83?e the t84ns4ct3on conce8ned.
T. I8ch4se eU3pment o8 c4sh
2. I8oX3de se8X3ces to 4 c53ent w3th p4=ment to ?e 8ece3Xed w3th3n V0 d4=s Q.I4= 4 534?353t=
V. KnXest 4dd3t3on45 c4sh 3nto the ?s3ness ?= the owne8 W. Go55ect 4n 4ccont
8ece3X4?5e 3n c4sh Y. I4= w4>es to emp5o=ees
7. Sece3Xe the e5ect83c3t= ?355 3n the m435 to ?e p43d w3th3n Q0 d4=s Z. ;e55 4
p3ece o eU3pment o8 c4sh
\. E3thd84w c4sh ?= the owne8 o8 p83X4te s4>e. T0. [o88ow
mhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5one= on 4 5on>te8m ?4s3s
8om 4 ?4nH T. 2. Q. V. W. Y. 7. Z.
Kn the ?454nce sheet 3nc8e4se 4n 4sset eU3pmentg dec8e4se 4n 4sset c4sh. Kn
the st4tement o c4sh 5ows dec8e4se c4sh 5ow 8om 3nXest3n> 4ct3X3t3esa. Kn
the ?454nce sheet 3nc8e4se 4n 4sset 8ece3X4?5esg 3nc8e4se eU3t=. Kn the
3ncome st4tement 3nc8e4se 3ncome.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
33/68
http://doc.wendoc.com/Kn the st4tement o ch4n>es 3n eU3t= 3nc8e4se eU3t=.
Kn the ?454nce sheet dec8e4se 4n 4sset c4shg dec8e4se 4 534?353t=.
Kn the st4tement o c4sh 5ows dec8e4se c4sh `p8o?4?5= 8om ope84t3n>
4ct3X3t3esa. Kn the ?454nce sheet 3nc8e4se 4n 4sset c4shg 3nc8e4se eU3t=.
Kn the st4tement o c4sh 5ows 3nc8e4se c4sh 8om 3n4nc3n> 4ct3X3t3esa. Kn
the st4tement o ch4n>es 3n eU3t= eU3t= 3s 3nc8e4sed.
Kn the ?454nce sheet 3nc8e4se 4n 4sset c4shg dec8e4se 4n 4sset 4cconts
8ece3X4?5e. Kn the st4tement o c4sh 5ows 3nc8e4se
c4shttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5h `8om ope84t3n>
4ct3X3t3esa. Kn the ?454nce sheet dec8e4se 4n 4sset c4shg dec8e4se eU3t=. Kn
the 3ncome st4tement 3nc8e4se e9penses.
Kn the st4tement o c4sh 5ows dec8e4se c4sh 8om ope84t3n> 4ct3X3t3esa. Kn
the st4tement o ch4n>es 3n eU3t= dec8e4se eU3t=.
Kn the ?454nce sheet dec8e4se eU3t=g 3nc8e4se 4 534?353t= 4cconts p4=4?5e.Kn the 3ncome st4tement 3nc8e4se e9penses.
Kn the st4tement o ch4n>es 3n eU3t= dec8e4se eU3t=.
Kn the ?454nce sheet 3nc8e4se 4n 4sset c4shg dec8e4se 4n 4sset eU3pment
3nc8e4se eU3t= 3 4 p8o3t w4s m4de on the s45ea.
Kn the 3ncome st4tement 3nc8e4se 3ncome 3 4 p8o3t w4s m4de on the s45ea. Knthe st4tement o c4sh 5ows 3nc8e4se c4sh 8om 3nXest3n> 4ct3X3t3esa.
Kn the st4tement o ch4n>es 3n eU3t= 3nc8e4se eU3t= 3 4 p8o3t w4s m4de on
the s45ea.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
Khttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5n the ?454nce sheetdec8e4se eU3t= dec8e4se 4n 4sset c4sh.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
34/68
http://doc.wendoc.com/
Kn the st4tement o c4sh 5ows dec8e4se c4sh 8om 3n4nc3n> 4ct3X3t3esa. Kn
the st4tement o ch4n>es 3n eU3t= dec8e4se eU3t=.
Kn the ?454nce sheet 3nc8e4se 4n 4sset c4shg 3nc8e4se 4 534?353t= 5o4n
p4=4?5e. Kn the st4tement o c4sh 5ows 3nc8e4se c4sh `8om 3n4nc3n>
4ct3X3t3esa.
\. T0.
;o5t3ons 7e ?= o>>ett et 45
Jete8m3n4t3on o p8o3t ?= e94m3n3n> eU3t= ch4n>es SKGASJ AB[AN]
SeU38ed
[= 4n45=s3n> the ch4n>es 3n eU3t= e4ch =e48 c45c54te the p8o3t 5ossa m4de
?= the ?s3ness o8 e4ch =e48 end3n> Q0 @ne 4ssm3n> the o55ow3n> eXents 45so
occ88ed:
T. Mn T @4n48= 20T0 S3ch48d w3thd8ew V0 000 3n c4sh 8om the ?s3ness o8
pe8son45 se
2. Mn 2Z A>st 20T0 S3ch48d 3nXested 4dd3t3on45 c4sh o 70
000http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 3nto the ?s3ness. Q. Mn
QT @5= 20TT S3ch48d 3nXested 4dd3t3on45 c4sh o W0 000 3nto the ?s3ness. V.
Mn 2Z @4n48= 20T2 S3ch48d w3thd8ew Q0 000 3n c4sh o8 pe8son45 se.
Assets m3ns 534?353t3es 4t the end o e4ch =e48
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
35/68
http://doc.wendoc.com/Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
;AFCD] KSC
SeU38ed:
I8ep48e 4n 3ncome st4tement o8 the month o @ne 4nd 4 ?454nce sheet 3n 4ccont
o8m4t o8 ;4et= 38e 4t Q0 @ne 200\.
I8ep483n> 3n4nc345 st4tements
;o5t3ons 7e ?= o>>ett et 45
I8ep483n> 3n4nc345 st4tements
NAMfMk; KNDCSKMS JCGMSADKN_
SeU38ed:
A. I8ep48e 4n 3ncome st4tement o8 the ?s3ness o8 the =e48 ended Q0 @ne 20T0
[. I8ep48e 4 ?454nce sheet 3n n4884t3Xe o8m4t 4s 4t Q0 @ne 20T0
A.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
36/68
http://doc.wendoc.com/
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5[.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
Jete8m3n3n> m3ss3n> e5ements 3n 4ccont3n> eU4t3on
SeU38ed:
G45c54te the two m3ss3n> 4monts o8 e4ch 3ndependent c4se.
;o5t3ons 7e ?= o>>ett et 45
Kdent3=3n> t84ns4ct3ons 8om ?454nce sheet ch4n>es
ABBANk; GAFC
SeU38ed:
Jesc83?e the n4t8e o e4ch o the o8 t84ns4ct3ons th4t tooH p54ce 3n @ne.
T. Mn V @ne 20T0 A554n opes 3nXested 7W 000 3nto the ?s3ness A554nbs G4.
2. Mn TQ @ne 20T0 eU3pment w4s p8ch4sed ?= the ?s3ness o8 c4sh 2\ 000.
Q. Mn TZ @ne 20T0 54nd 4nd 4 ?35d3n> we8e p8ch4sed o8 4 tot45 o Y0 000.
A 5o4n
p4=4?5e o V0 000 4nd c4sh o 20 000 we8e >3Xen 3n e9ch4n>e.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
37/68
http://doc.wendoc.com/
V. Mn 2Y @ne 20T0 ood spp53es o TZ 000 we8e p8ch4sed ?=
thhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5e ?s3ness on c8ed3t.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
I8ep484t3on o 3n4nc345 st4tements
JAE;MN KNJL;DSKC;
SeU38ed:
A. I8ep48e 4n 3ncome st4tement o8 J4wson Kndst83es o8 the =e48 ended QT
Jecem?e8
20TT.
[. I8ep48e 4 ?454nce sheet 4s 4t QT Jecem?e8 20TT. G. I8ep48e 4 st4tement o
ch4n>es 3n eU3t= o8 20TT.
A.
;o5t3ons 7e ?= o>>ett et 45
[.
G.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
38/68
http://doc.wendoc.com/
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
Go88ect3on o 3n4nc345 st4tements
_SANDk; ;EK>ett et 45
[.
G.
[e>3nn3n> ?454nce o c4p3t45 3s ond ?= wo8H3n> ?4cHw48ds n4me5=
VV Y00 TT 200 Q0 0W0. Dh3s 4ssmes th4t the owne8 d3d not m4He 4 c4p3t45
cont83?t3on d83n> the =e48.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
39/68
http://doc.wendoc.com/
Ie8o8m4nce 4ssessment 8om 3n4nc345 st4tements
DC >ett et 45
G.
]es. Kn 4cc845 4ccont3n> c4sh 5ows do d3e8 8om 3ncome 4nd e9penses. Fo8
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
40/68
http://doc.wendoc.com/e94mp5e c4sh 5ows 8om 3nXest3n> 4nd 3n4nc3n> 4ct3X3t3es w355 4ect c4sh
ot5ows ?t 48e not 3ncome 4nd e9penses conted 3n c45c54t3n> p8o3t. 4ct3X3t3es 45so 8es5t 3n 3ncome o8 e9penses ?t 3n
d3e8ent t3me pe83ods. 4nd 3n4nc3n> 4ct3X3t3es
neXe8 8es5t 3n 3ncome o8 e9penses e.>. c4sh 3nc8e4ses 8om ?o88ow3n>s. Kn
te8ms o p8o3t4?353t= p8o3t 3s mo8e 3mpo8t4nt P 3n the 5on> 8n 3 p8o3ts
48e not m4de the ?s3ness w355 435. oweXe8 53U3d3t= c4n 45so c4se m4io8
p8o?5ems 4nd c4sh 5ow 3s 45so 3mpo8t4nt. A ?s3ness c4n h4Xe pos3t3Xe c4sh
5ows wh35e t84d3n> 4t 4 5oss 3n the sho8t te8m ?t 3n the 5on>
tehttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm58m p8o3ts 4nd pos3t3Xe
c4sh 5ows 48e ?oth 3mpo8t4nt.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
Seco8d3n> t84ns4ct3ons 4nd p8ep483n> 3n4nc345 st4tements
;AGKN e4ch t84ns4ct3on.
G. I8ep48e 4n 3ncome st4tement 4 st4tement o ch4n>es 3n eU3t= 4nd 4 st4tement
o
c4sh 5ows o8 the month ended QT @5= 200\ 4nd 4 ?454nce sheet 4ccont o8m4t
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
41/68
http://doc.wendoc.com/4s 4t QT @5= 200\.
A. 4nd [.
G4sh 4t [4nH
Assets
Acconts M3ce Sece3X4?5e ;pp53es
TW 000 Z 000 7 000
7 000
7 000 Y Q00 TQ Q00
TQ Q00
TQ Q00
://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm58TQ Q00
TQ Q00
CU3pment
T W00
T W00
T W00
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
42/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
43/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
44/68
http://doc.wendoc.com/
TV 200
TV 200 2 \2W TT 27W 2 000 \ 27W
\ 27W
T W00 2V 000 j T2 000
;o5t3ons 7e ?= o>>ett et 45
G.
;AGKN 4ct3X3t3es
Q 27W GA; FBME; FSM< KNlC;DKN_ AGDKlKDKC; I8ch4se o eU3pment `Q 000a Net
c4sh sed 3n 3nXest3n> 4ct3X3t3es `Q 000a GA; FBME; FSM< FKNANGKN_ AGDKlKDKC;
J84w3n>s ?= owne8 `2 000a Net c4sh 8om 3n4nc3n> 4ct3X3t3es `2 000a Net
dec8e4se 3n c4sh he5d `T 72Wa G4sh 4t ?e>3nn3n> o =e48 TT 000 G4sh 4t end o
=e48 \ 27W
`Ta I43d Acconts I4=4?5e T
Z00http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 G4sh C9penses 2 \2W j
V 72W
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
45/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
46/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
47/68
http://doc.wendoc.com/TT WV0 V YW0 Y Z\0
Y Z\0
TQ 2W0
TQ 2W0 7 V00 W ZW0
W ZW0 W Z20 TT Y70
TT Y70
TT Y70
TT Y70 Y 7W0 V \20
V \20
T 000
T 000
T 000
T 000
T 000 QV0 T QV0
T QV0 720 Y20
Y20
Y20
j B34?353t3es
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
48/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
49/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
50/68
http://doc.wendoc.com/
Gh4pte8 2: F3n4http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5nc345
st4tements o8 dec3s3on m4H3n>
Kdent3=3n> t84ns4ct3ons 8om ?454nce sheet ch4n>es
N. fBCKN P I];KMDCSAIK;D
SeU38ed:
E83te 4n 4pp8op834te st4tement desc83?3n> e4ch o the 3Xe t84ns4ct3ons th4t
occ88ed d83n> @5= 20T0. T. Mn T @5= 20T0 N. f5e3n 3nXested ZW 000 3n
the ?s3ness. 2. Mn Z @5= the ?s3ness p8ch4sed 54nd 4nd ?35d3n> o8 \W
000. Dh3s w4s 3n4nced
w3th 4 c4sh p4=ment o QW 000 4nd 4 5o4n p4=4?5e o Y0 000.
Q. Mn TW @5= the ?s3ness ?o>ht o3ce spp53es on c8ed3t Q W00. V. Mn 22
@5= the ?s3ness 8ep43d W 000 on the 5o4n p4=4?5e. W. Mn QT @5= the
p8op83eto8 N. f5e3n w3thd8ew V 000 c4sh o8 he8 own se o8 p43d
e9penses o V 000.
;o5t3ons 7e ?= o>>ett et 45
Seco8d3n> t84ns4ct3ons 4nd p8ep483n> 3n4nc345 st4tements JANk;
;http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5MC SCIAKS;
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
51/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
52/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
53/68
http://doc.wendoc.com/CU3t= J. Mb48e
G4p3t45 2V 000
2V 000 Q 000 27 000 T 200 2W Z00
2W Z00 7W0 2W 0W0
2W 0W0 2Z0 2V 770
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
G.
G4sh p43d to spp53e8s j T 200 W00 2W0 T 700
;o5t3ons 7e ?= o>>ett et 45
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5
J.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
Go88ect3n> e88o8s 4nd p8ep483n> 3n4nc345 st4tements [AfCSk; [SCAJ ;MI
SeU38ed:
A. Assm3n> th4t the 4monts 4?oXe 48e co88ect p8ep48e 4 co88ected ?454nce
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
54/68
http://doc.wendoc.com/
sheet 3n n4884t3Xe o8m.
[. Jete8m3ne the 4mont o p8o3t 5ossa m4de ?= the ?s3ness d83n> the pe83od
o 3ts 38st ew weeHs o e93stence 4ssm3n> th4t the owne8 h4d 3nXested 4n
4dd3t3on45 20 000 3nto the ?s3ness ist ?eo8e the 4monts we8e c45c54ted ?=
the 8eco8dHeepe8.
G. I8ep48e 4 st4tement o ch4n>es 3n eU3t= o8 the pe83od.
A.
G4p3t45 cont83?t3on o TW0 000 5ess d84w3n>s o QY 000.
;o5t3ons 7e ?= o>>ett et 45
[. 4nd G.
I8o3t c45c54t3on dete8m3ned 3n the st4tement o ch4n>es 3n eU3t= 4s
?e5http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5ow.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
An45=s3n> 3n4nc345 st4tement e5ements
@f DLDMSKN_
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
55/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
56/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
57/68
http://doc.wendoc.com/B34?353t3es j Z WZ0
Gh4n>e.
G5os3n> c4p3t45 j Mpen3n> c4p3t45 Q Q00 Add3t3on45 cont83?t3ons 0 Net
I8o3t 7 ZTW P J84w3n>s Q 000 j Z TTW G5os3n> G4p3t45 j Z TTW.
Gh4n>e.
Net G4sh Kn5ow/`Mt5owa j G4sh 5ow 8om
ope84t3onshttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 G4sh 5ow 8om
3nXest3n> 4ct3X3t3es G4sh 5ow 8om 3n4nc3n> 4ct3X3t3es Kn3t345
cont83?t3on
G4sh 5ow 8om ope84t3ons j Dto83n> 8ece3pts Z 2W0 P I4=ments to spp53e8s
2 QWW j W Z\W.
G4sh 5ow 8om 3nXest3n> 4ct3X3t3es j I8ch4se o eU3pment Z 2W0a
G4sh 5ow 8om 3n4nc3n> 4ct3X3t3es j [4nH 5o4n 8ece3Xed \ 000 P [4nH 5o4n8ep4=ment T W00 P J84w3n>s Q 000 j V W00
Net G4sh Kn5ow/`Mt5owa j G4sh 5ow 8om ope84t3ons W Z\W G4sh 5ow 8om
3nXest3n> 4ct3X3t3es Z 2W0a G4sh 5ow 8om 3n4nc3n> 4ct3X3t3es V W00
Kn3t345 cont83?t3on Q Q00 j W VVW
Net G4sh Kn5ow/`Mt5owa j W VVW
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
I8ep484t3on o 3n4nc345 st4tements
ABKGKAk; ICD _SMM ;e8X3ce o8
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
58/68
http://doc.wendoc.com/the th8eemonth
pe83od 8om T NoXem?e8 http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm520T0
to QT @4n48= 20TT
[. I8ep48e 4 ?454nce sheet 4s 4t QT @4n48= 20TT 4nd 4 st4tement o ch4n>es 3n
eU3t=
o8 the th8eemonth pe83od.
G. Eh4t othe8 3no8m4t3on wo5d =o need to dete8m3ne how we55 A53c34 h4d done
d83n> the th8eemonth pe83odb
A.
[
;o5t3ons 7e ?= o>>ett et 45
G. ;eXe845 4dd3t3on45 3tems wo5d ?e se5 to dete8m3ne how we55 A53c34 h4d
done 3n the
th8eemonth pe83od: T. Dhe se5 53e o the >8oom3n> eU3pment so th4t 4n
e9pense co5d ?e
dete8m3ned o8 dep8ec34t3on
2. Dhe 4mont o 3nte8est th4t A53c34 co5d h4Xe e48ned on the W 000 3 she h4d
3nXested 3t 3n 4n 45te8n4t3Xe m4nne8
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
59/68
http://doc.wendoc.com/
Q. Dhe 4mont A53c34 co5d h4Xe e48ned d83n> the th8eemonth pe83od 3 4 io?
we8e
4X4354?5e
V. Dhe c88ent X45e o the 4ssets
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5o the ?s3ness 4s 4 who5e
on QT @4n48= 20TT.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
;cht^ [35d3n> ;e8X3ces 3n4nc345 st4tements
;GLDq [LKBJKN_ ;CSlKGC;
SeU38ed A. Ls3n> the 3no8m4t3on p8oX3de 4n 3ncome st4tement 4nd 4 ?454nce
sheet 3n n4884t3Xe
o8m o8 ;cht^ [35d3n> ;e8X3ces o8 the c88ent pe83od.
[. ow wo5d the 3n4nc345 st4tements =o p8odce he5p the spp53e8 o ?35d3n>
m4te8345s dec3de whethe8 o8 not to t84de w3th @oh4nb Eh4t p48ts o the
3n4nc345 st4tements wo5d ?e pos3t3Xe 3nd3c4to8s th4t ;cht^ [35d3n> ;e8X3ces
wo5d p4= o8 spp53es on t3me 4nd wh4t 3tems m4= c4se some conce8n o8 the
spp53e8b
A.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
60/68
http://doc.wendoc.com/
;o5t3ons 7e ?= o>>ett et 45
[.
Dhe tot45 eU3t= o TYZ Z00 comp48ed to tot45 534?353t3es o QQ W00 3s
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm54 >ood 3nd3c4t3on o the net
pos3t3on o the ?s3ness 3.e. Net 4ssets j Dot45 4ssets P Dot45 534?353t3es j
TYZ Z00. G88ent 4ssets o T02 Q00 we55 e9ceed the 534?353t3es o QQ W00.
Dhe on5= 8e45 conce8n co5d ?e w3th the 5eXe5 o 4cconts 8ece3X4?5e th4t m4=
s>>est th4t @oh4n 3s not Xe8= d353>ent 4?ot co55ect3n> 4monts 8om h3s
cstome8s.
Dhe spp53e8 wo5d need mo8e 3no8m4t3on on the ent3t=bs 4?353t= to p4= o8
m4te8345s 3n 4dd3t3on to the tot45 net 4ssets.
A st4tement o c4sh 5ows wo5d p8oX3de det435s on c4sh 5ows 8om ope84t3ons
c4sh 5ows 8om 3nXest3n> 4ct3X3t3es 4nd c4sh 5ows 8om 3n4nc3n> 4ct3X3t3es.
Dh3s wo5d 4ss3st the spp53e8 3n 4ssess3n> the 38mbs 4?353t= to p4= o8
m4te8345s.
Gh4pte8 2: F3n4nc345 st4tements o8 dec3s3on m4H3n>
;po8t3n> >5o8= P the >8e4t 3nt4n>3?5e
SeU38ed:
J3scss whethe8 8>?= p54=e8s 48e bX454?5ehttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm54ssetsb o 4n o8>4n3s4t3on
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
61/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
62/68
http://doc.wendoc.com/
SeU38ed:
Kn >8ops o thhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm58ee o8 o8
cons3de8 the o55ow3n> peop5e 4nd the38 s3t4t3ons:
b A stdent who h4s ist comp5eted second48= schoo5 4nd st48ted 4t Ln3Xe8s3t=
4nd 3s
53X3n> 4t home w3th p48ents b An 4d5t who wo8Hs 55 t3me.
Fo8 e4ch s3t4t3on p8ep48e 4 53st o 4ssets the pe8son wo5d t=p3c455= own 4nd
est3m4te the cost o e4ch 4sset 3n do5548s. Dhen p8ep48e 4 53st o 534?353t3es
4nd est3m4te the cost o e4ch 534?353t= 3n do5548s. Ls3n> the 4ccont3n>
eU4t3on c45c54te the eU3t= o e4ch o the two peop5e 4nd d84w p 4 st4tement
o 3n4nc345 pos3t3on o8 e4ch.
J3sp54= them on oXe8he4d t84nsp48enc3es 4nd comp48e them w3th those deXe5oped ?=
the othe8 >8ops 3n =o8 c54ss.
[e5ow 48e e94mp5es o the t=pes o 4ssets 4nd 534?353t3es th4t stdents o8
4d5ts m3>ht t=p3c455= h4Xe. Dhe 4monts o8 e4ch w355 X48= s3>n33c4nt5=
depend3n> on the c3t= the= 53Xe 3n soc3oeconom3c >8op etc. Dhe 3de4
http://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5o the e9e8c3se 3s to
demonst84te the 4ccont3n> eU4t3on to stdents 4nd to h3>h53>ht the 4ct th4t
once 4ssets 534?353t3es 4nd eU3t= 48e de3ned the w4= the= 48e ?= 4ccont4nts3t 3s not poss3?5e o8 the 4ccont3n> eU4t3on not to ho5d eXen o8 4n
3nd3X3d45.
;tdent 4t Ln3Xe8s3t=
D=p3c45 Assets:
b De9t ?ooHs b G5othes
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
63/68
http://doc.wendoc.com/b GJs/JlJs/3Iods b
Ad5t wo8H3n> 55 t3me
D=p3c45 Assets:
b G5oth3n>
b F8n3t8e 3nc5d3n> e5ect83c45 >oods b G48 b ose b ;h48es
b ;pe84nn4t3onhttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5 scheme
D=p3c45 B34?353t3es
b CG; de?t
b G8ed3t c48d de?ts
b Bo4n 8om 3n4nc345 3nst3tt3on e.>. ?4nH b 4>e
Ad5t eU3t= j t=p3c45 4ssets P t=p3c45 534?353t3es
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
64/68
http://doc.wendoc.com/;o5t3ons 7e ?= o>>ett et 45
[83?3n> >oXe8nment o3c345s
SeU38ed: A. Kn the 48t3c5e who 48e the st4Heho5de8s 3n th3s s3t4t3onb [. Eh4t
48e the eth3c45 3sses 3 4n=a 3nXo5Xedb G. K 3t 3s no8m45 ?s3ness p84ct3ce
to ?83?e o3c345s 3n 4 cont8= th4t =o 48e de453n>
w3th ?t not 3n =o8 cont8= do =o ?e53eXe 3t 3s eth3c45 to do sob A8e =o
4w48e o 4n= 5e>45 84m33c4t3ons 3n =o8 own cont8= o8 ?83?3n> someone 3n
4nothe8 cont8=b
J. Jo =o ?e53eXe one cont8= h4s the 83>ht to 3mpose 3ts X45es on 4nothe8b
Gons3de8
how =o wo5d ee5 3 4nothe8 cont8= t83ed to 3mpose 3ts X45es on =o8 cont8=4nd cons3de8 3 thttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5he8e 48e
oXe883d3n> hm4n 83>hts 3sses sch 4s s54Xe8=.
A. Dhe st4Heho5de8s 3n th3s s3t4t3on 48e 4po8ebs ?s3nesspeop5e to whom the ?ooH 3s 4dd8essed the
>oXe8nment o ;3n>4po8e 4nd the peop5e 4nd >oXe8nment o 4po8e h4s st83ct 54ws >oXe8n3n> co88pt3on ?t h4s 455owed the p?53c4t3on
o th3s ?ooH
b b b b b
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
65/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
66/68
http://doc.wendoc.com/
SeU38ed: T. Joes J4X3d @ones B3m3ted se h3sto83c45 cost 4ccont3n> o8 some
othe8 ?4s3sb 2. Eh4t we8e the tot45 4ssets 4t the end o the 3n4nc345 =e48b Q.
Eh4t we8e the tot45 534?353t3es 4t the end o the 3n4nc345 =e48b V. Eh4t w4s
the tot45 4mont o eU3t=b W. ;t4te the 4ccont3n> eU4t3on o8 J4X3d @ones
B3m3ted 3n do5548 3>8es 4t 8epo8t3n>
d4te o8 the end 4nd ?e>3nn3n> o the 54st 3n4nc345 =e48.
Y. J3d the c88ent 4ssets 3nc8e4se o8 dec8e4se oXe8 the =e48b [= how mchb 7.
J3d the c88ent 534?353t3es 3nc8e4se o8 dec8e4se oXe8 the =e48b [= how mchb Z.
J3d nonc88ent 4ssets 3nc8e4se o8 dec8e4se oXe8 the =e48b [= how mchb \. Eh4t
ch4n>ehttp://doc.wendoc.com/?Vde0eVT\VdWccWd4Zde2Z.htm5s h4Xe occ88ed 3n the
comp4n=bs nonc88ent 534?353t3es oXe8 the =e48b
C9p543n these ch4n>es.
T0. Joes the ch4n>e 3n tot45 4ssets eU45 the ch4n>e 3n tot45 534?353t3es p5s
the ch4n>e 3n
tot45 eU3t=b C9p543n.
Dhe so5t3on ?e5ow 3s ?4sed on the J4X3d @ones B3m3ted Ann45 Sepo8t o8 200Z
4X4354?5e on the J4X3d @ones we?s3te: .
T. 2. Q. V. W.
Dhe 38st note to the 3n4nc345 st4tements 3nd3c4tes th4t J4X3d @ones B3m3ted
ses the h3sto83c45 cost ?4s3s o 4ccont3n>. oweXe8 the8e 48e e9cept3ons 3n
the c4se o de83X4t3Xe 3n4nc345 3nst8ments whe8e 438 X45es 48e sed. ;ee
Note T`?a p. YV. F8om the ?454nce sheet st4tement o 3n4nc345 pos3t3ona tot45
conso53d4ted 4ssets o the >8op 4t the end o the 200Z 3n4nc345 =e48 we8e T
W2\ YVW 000.
http://doc.wendoc.com/http://doc.wendoc.com/8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
67/68
8/10/2019 ch02_sm_FA7e-1[doc.wendoc.com].doc
68/68