Financial Accounting Part 1

Introduction

• The importance of accounting

• Clay tokens, sheep, and Italy
• The basic equation
• Expanded accounting equation: SCF
• Expanded accounting equation: IS

• Assets: Planes, trains, and automobiles
• Definition of an asset
• Types of assets: Current
• Types of assets: Long term

• Obligations to suppliers, employees, governments, and customers
• Definition of a liability
• Types of liabilities: Current
• Types of liabilities: Long term
• Contingent liabilities

• Owner's equity: Paid-in capital and retained earnings
• Definition of equity
• Book value vs. net worth
• Other components of owner's equity

• Financial statements: Balance sheet for Walmart
• Where financial statements come from
• The Microsoft balance sheet
• Notes from Microsoft on the balance sheet
• Limitations of the balance sheet

• Differences between the balance sheet and the income statement
• Income statement
• Components of the income statement
• Revenues, expenses, gains, and losses
• Earnings per share
• The Walmart income statement

• Cash cows
• Statement of cash flows
• Statement of cash flows: Examples

• The importance of routine bookkeeping
• Impact of events on assets and liabilities, part 1
• Impact of events on assets and liabilities, part 2
• Impact of events on assets and liabilities, part 3
• Impact of events on revenues and expenses, part 1
• Impact of events on revenues and expenses, part 2
• Impact of events on revenues and expenses, part 3
• Impact of events on revenues and expenses, part 4

• The accuracy of debits and credits in the days of real books
• Debits and credits
• Journal entries, part 1
• Journal entries, part 2
• Journal entries, part 3
• T-accounts and posting
• Trial balance: The raw material for financial statements

• The market value of accounting adjustments
• Net income vs. cash flow
• Four general types of adjustments
• Adjusting journal entries, part 1
• Adjusting journal entries, part 2
• Adjusting journal entries, part 3
• Adjusting journal entries, part 4
• Closing revenue, expense, and dividend accounts
• Making the financial statements

• Next steps