LEARNING GOALS:

1
Chapter 1
1
LEARNING GOALS Describe types, forms of
business business stakeholders.
2
LG 1
What forms do businesses take and how do they
differ?
3
LG 1
3 FORMS OF BUSINESS

• 4 forms of business are
• Sole ___________ 70
• ____nership
• ____oration
• __mited ____ility Company

4
LG 1
5 DIFFERENCES

• 5 differences are
• Ease of formation
• Legal liability
• Taxation
• Limited life
• Capital access

5
DIFFERENCES IN FORMS OF BUSINESS
LG 1
6
EXERCISE 1-2a
LG 1
Identify companies with a low-cost emphasis.
7
LG 3
LEARNING GOALS
3
Define accounting, its role
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ROLE OF ACCOUNTING
LG 3
Accounting is an ___________ ___tem that
provides _______ to stakeholders about the
economic activities and condition of a business.
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LG 3
EXHIBIT 3
10
LG 4
LEARNING GOALS
4
Describe, illustrate basic financial statements
11
LG 4
4 FINANCIAL STATEMENTS

• 4 financial statements are
• _________ statement
• _______________________
• ______________ sheet
• Statement _______________

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FINANCIAL STATEMENTS
LG 4
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LG 4
EXHIBIT 8
Hershey Foods Corp Balance Sheet 12/31/2004
_____ _________
__________ Cash Buildings etc. Loans
Owed to others Owner invest. Retained


Earnings 1. NI or
NL

2. - Dividends
14
LG 4
EXHIBIT 8
Hershey Foods Corp Balance Sheet 12/31/2004
Assets (Cash 55)
Liabilities Equity (RE
3,469) 3,797 2,708 1,089
CASH FLOWS Operations 797 Investing
lt363gt Financing lt494gt Decrease lt60gt Cash
1/1 115 Cash 12/31 55
RETAINED EARNINGS 1/1 3,469 NI
591 -Div 386 12/31 3,469
INCOME STATEMENT Revenues 4,
429 Expenses 3,838 Net Income
591
15
INCOME STATEMENT(Slide 1 of 3)
LG 4

• Reports change in financial condition due to
  operations
• ____nues and ________ for a period of time
• Month, quarter, year

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INCOME STATEMENT(Slide 2 of 3)
LG 4

• The income statement uses the
• _______ing Concept
• Expenses for period are Matched against revenues
  for same period
• ___enue ___enses Net Income (loss)

17
LG 4
EXHIBIT 4
18
RETAINED EARNINGS(Slide 1 of 2)
LG 4

• Reports changes in financial condition due to
  changes in retained earnings during a period.
• Retained earnings is the ______________
  _______________________________.

19
LG 4
EXHIBIT 5
20
BALANCE SHEET(Slide 1 of 2)
LG 4

• Reports financial condition as of a point in time
• Accounting equation
• Assets Liabilities Stockholders Equity

21
LG 4
EXHIBIT 6
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STATEMENT OF CASH FLOWS(Slide 1 of 2)
LG 4

• Reports change in financial condition from
  changes in cash during a period that occur due to
• Cash flows from _____ing activities
• Cash flows from _____ing activities
• Cash flows from _______g activities

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LG 4
EXHIBIT 7
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EXERCISE 1-5a
LG 4
X ________
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EXERCISE 1-5b
LG 4
X ________
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EXERCISE 1-5c
LG 4
X _______
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INTEGRATED FINANCIAL STATEMENTS
LG 4

• Statement of cash flows linked to cash on balance
  sheet
• Net income from income statement linked to
  retained earnings statement
• Retained earnings linked to balance sheet in
  stockholders equity

28
LG 4
EXHIBIT 8
Hershey Foods Corp Balance Sheet 12/31/2004
Assets (Cash 55)
Liabilities Equity (RE
3,469) 3,797 2,708 1,089
CASH FLOWS Operations 797 Investing
lt363gt Financing lt494gt Decrease lt60gt Cash
1/1 115 Cash 12/31 55
RETAINED EARNINGS 1/1 3,469 NI
591 -Div 386 12/31 3,469
INCOME STATEMENT Revenues 4,
429 Expenses 3,838 Net Income
591
29
LEARNING GOALS
5
Describe 8 accounting concepts
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ACCOUNTING CONCEPTS
LG 5

• Generally accepted accounting principles (GAAP)

Business Entity Concept Cost Concept Going
Concern Matching Concept
Objectivity Concept Unit of Measure
Concept Adequate Disclosure Concept Accounting
Period Concept
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BUSINESS _______ CONCEPT
LG 5

• Applies accounting to a _________ entity
• Hershey
• For profit corporation
• Separate from accounting for other entities

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_______ CONCEPT
LG 5

• Applies accounting to a specific entity
• Only transactions related to that business
• Tax Practice
• Cost of tax software ________
• Cost of vacation rental - ____________

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______ _________ CONCEPT
LG 5

• Business expects to _________ in operations for
  an ________ period of time
• Hershey plans to build on land in future

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__________ING CONCEPT
LG 5

• ___enses for a period are ______ed with ______nue
  they generate
• Hershey subtracts expenses from revenues on
  income statement

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________IVITY CONCEPT
LG 5

• Entries into accounting records based on
  ________________
• Hersheys bank statements support entries in cash
  account

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_____ OF MEASURE CONCEPT
LG 5

• All economic data recorded in __________
• Hershey presents financial statements in dollars

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ADEQUATE DISCLOSURE CONCEPT
LG 5

• Financial statements include all _________ data
  needed to __________ financial condition and
  performance
• Hershey provides other disclosures in footnotes

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ACCOUNTING PERIOD CONCEPT
LG 5

• Economic data collected for a period of time in
  preparation of
• Hersheys income statement
• Hersheys retained earnings
• Hersheys cash flow statement

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RESPONSIBLE REPORTING

• Reliability of financial reporting important
• To economy
• For ability of business to raise money from
  investors
• Stockholders
• creditors

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LEARNING GOALS
6
Describe, illustrate horizontal analysis.
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HORIZONTAL ANALYSIS
LG 6

• Uses comparative financial statements to
• Compute percentage ______ ____eases
• Examine ______ year to year

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HERSHEY FOODSHORIZONTAL ANALYSIS
LG 6
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ANALYSIS
Hersheys operating income increased _____ as
much as its sales revenue Gross profit increased
more than cost of merchandise